While most of the world is experiencing a rather horrific year, except for the declines of the Black March, the capital market is enjoying the market conditions of zero interest rates and the support of central banks and has generally almost completely ignored the global epidemic. In the forecast for 2021, the research division of Discount Brokerage believes that the markets will continue to climb and most of them will be in the green field.
“Significant recovery is expected and beyond positive growth in the various economies around the world, against the background of the implementation of the vaccination process and the support of the measures of governments and central banks. The consensus predicts global growth of about 5%,” the research division wrote. “Throughout 2021, a strong positive trend is expected to be recorded in the global stock market and in risk assets, against the background of the transition to growth, high liquidity and more profitable pricing compared to solid assets.”
“The rise in global stock markets will support this rise and is also expected to support the rise of the domestic stock market,” they continued. “In addition, strong growth in the Israeli economy, progress in the adoption of vaccines, and continued low interest rates are expected to give rise to increases.
“As for the uncertainty stemming from the additional elections, we believe this is a less threatening world situation compared to what has been the case so far. Elections may lead to a government that promotes budgets and reforms, which will support the economy and improve markets,” the research division added. “The fact that the local stock market is largely based on sectors that have undoubtedly been hit by the corona, and are expected to reverse, also reinforces our assessment that by 2021 the local stock market will show high positive returns.”
High-tech and cyber is where it’s worthwhile to be
“For 2020, we recommend high exposure to the technological field, which includes cyber companies. Most companies in the field are traded abroad, with an emphasis on the United States, and some have an Israeli affiliation. Along with continuing a recommendation for high exposure to the field, we believe that Palo Alto shares Cloud security companies will continue to show excessive returns, “wrote analyst Michal Alsich.
In the field of agrochemistry, Alsich recommends shares of ICL, KHL and industry companies traded abroad, which in its opinion we will witness an improvement in profits in the sector as well as a continued preference for the MOSAIC share. “The companies that are in the fertilizer sector in Israel and around the world are expected in our estimation to show a significant improvement in results in 2021.
“We continue to recommend the MOSAIC share in light of its high exposure to the phosphate sector, which enjoys price increases. MOSAIC differs from the other companies in the sector, which operate in the field at low rates. We recommend ICL at a market yield of NIS 16. ICL is expected to improve significantly. “2021 But the current pricing in our estimation embodies this. Further to that, we also do not see a preference now for the Israel Company over ICL.”
In the field of food retail, the bank expects a slight decline in profits, although these are still strong numbers, with the bank recommending that it be “overexposed to the sector with a preference for Shufersal.” “After an amazing year in 2020, in 2021 we anticipate that there will be a slight decline in the volume of the food market, against the background of a gradual decline in corona effects, especially in the second half of 2021.
“We anticipate that the decline will be due to a decline in volumes, and this will be partially offset by rising market prices. In light of this, we estimate that most companies will record a decline in profits, but only slightly, on a single-digit scale. Although we forecast a slight decline in corporate profits, especially in the -2, this is an expectation that still reflects strong numbers.
At the same time, some companies are expected to benefit from improved profitability in some activities due to streamlining (such as Shufersal in BE) and some will enjoy opening branches (with an emphasis on Yochananoff). Among the sector shares, we recommend Shufersal to buy at a target price of NIS 31 With a target price of NIS 223. We also recommend being exposed to a fresh market that operates well and is also expected to enjoy opening branches.
Commercial real estate is expected to rise; offices are uncertain
Discount is also bullish on the real estate sector, with analyst Shai Sasson recommending an over-yield to the sector with a preference for residential and commercial, while there is an upside in established firm companies as well. In Sasson’s opinion, the low interest rate will continue to support the real estate sector. .
“Commercial real estate is expected to register an increase,” Sasson wrote. “The public will want to return to routine soon, and is expected to embark on a shopping and entertainment trip. Even if stock prices are not expected to reach the prices at which they were traded before the corona crisis, there is still meat in them. The main beneficiaries of this move are Gazit, Melisron and Azrieli, “he added.
“In the office sector, a mixed trend is expected. On the one hand, there is a risk in the speculative entrepreneurial activity, in which we are expected to experience a decrease in demand for new office space. On the other hand, strong and established companies with properties in key areas and strong tenants.
“Therefore, they still have an upside. Azrieli and Amot are among these companies. Gev Yam is also one of these companies, and the risk is low in relation to the industry, but due to pricing we recommend it with a market return. The residential market industry is also expected to rise. “On the frame and the decline in construction starts will push the market up,” he wrote.