The chances are you’re feeling pretty crook in the stomach thinking about your finances and investments right now.

“The nights are long, life is eye-wateringly expensive, the world and his wife are on strike and your investments are probably worth a bit less than they were a year ago,” Fidelity International investment director Tom Stevenson said in the UK’s The Telegraph.

“Happy new year.”

So what can we expect in 2023? Stevenson gazed into his crystal ball for some answers.

Stock markets are not the economy

It was about a year ago when stock markets peaked then spent all of 2022 in a quagmire of pessimism.

This behaviour was the perfect demonstration of how shares are far more forward-looking compared to the economy.

“The rest of the world has now caught up, with the International Monetary Fund predicting that a third of the world will be in recession this year.”

So the first piece of advice from Stevenson is to keep looking ahead during 2023 when there will be much noise about how awful the world is going.

“Investors’ first new year resolution should be to lift their gaze above what is certain to be a gloomy cocktail of headlines.”

Second thing to remember is that Stevenson reckons stock markets will start rising well before the real-time economy even looks like it’s recovering.

“They fell in 2022 ahead of the economic challenges we are starting to feel now and they will turn the other way before the green shoots of recovery actually appear,” he said.

“That is directionally what will happen. The exact timing of the market pivot, however, is harder to predict.”

Patience will be handsomely rewarded

Stevenson’s analysis of 150 years of movements in the US suggests that the current cycle has more to run.

“The duration of the current bear market is short if, as is likely, we do suffer a recession this year. This certainly argues against the October low being the trough for the current cycle.”

But to counter this, “deteriorating sentiment” seems to be already priced in.

“That part of the reset has already happened. The 32% decline in the market’s price-to-earnings multiple is in line with the long run average.”

Therefore, Stevenson’s advice is that patience will be required for a revival in stock prices.

“I expect the October low to be retested, perhaps more than once this year. The principal driver of that will be lower earnings rather than a further fall in valuation.”

He noted from history that it’s not impossible for the market to fall in two consecutive years, but it’s highly unusual.

And staying invested will ultimately prove fruitful for those who can stick it out.

“The average gain from a bear market low to the next peak is almost 90% over three-and-a-half years,” said Stevenson.

“So, really, despite it all, happy new year.”

The post Get ready for shares to take off in 2023: expert appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Every other week it seems that there’s another ASX lithium share trading on the Australian share market.

And while many lithium shares have proven to be very successful investments, the industry’s outlook has changed recently and uncertainty is starting to creep in regarding future prices of the white metal.

The likes of Allkem Ltd (ASX: AKE) and Pilbara Minerals Ltd (ASX: PLS) are printing money right now thanks to sky high prices for the battery making ingredient, but will this be the case when explorers like Aruma Resources Ltd (ASX: AAJ), Azure Minerals Ltd (ASX: AZS), and Red Dirt Metals Ltd (ASX: RDT) finally dig something out of the ground?

Goldman Sachs doesn’t appear to believe it will be the case. This week, the broker reiterated its view that it believes lithium prices will start to tumble from the second half of 2023. This is supported by recent weakness in lithium futures contracts. Its analysts explained:

Our commodity team expect lithium prices through 1H23 to reflect the near-term tightness and lagging spodumene contract price pass-through (highlighted by PLS’ recent offtake repricing) before declining over 2H23, where we note 2024 futures have continued to pull back. While we see earnings support for the Australian stocks over 12-18 months on price lags, we expect lithium stock prices to reflect lithium commodity price movements as prices decline from record peaks.

Lithium price forecast

Goldman is now forecasting the following average prices for these lithium types in the coming years compared to current spot prices:

• Lithium carbonate (per tonne)
  • Spot: US$66,750
  • 2023: US$53,300
  • 2024: US$11,000
  • 2025: US$11,000
• Lithium hydroxide (per tonne)
  • Spot: US$76,650
  • 2023: US$58,650
  • 2024: US$12,500
  • 2025: US$12,500
• Lithium spodumene 6% (per tonne)
  • Spot: US$5,990
  • 2023: US$4,330
  • 2024: US$800
  • 2025: US$800

Are these forecasts absurd?

When you look at the prices above, you might be forgiven for thinking that Goldman Sachs’ analysts have made a huge mistake. How could prices collapse so much?

But the reality is that these forecasts are more than realistic. In fact, the prices are still better than what lithium was commanding in 2020.

At that point, the different lithium types were commanding the following per tonne:

• Lithium carbonate – US$6,943
• Lithium hydroxide – US$9,978
• Spodumene 6% – US$429

So, while it would be a huge drop from current spot prices, it isn’t inconceivable that this could happen if supply starts to outpace demand.

All in all, these are interesting times for ASX lithium shares.

The post Own ASX lithium shares? Here’s the latest lithium price forecast appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Allkem. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX 200 energy shares appear set to continue flying in 2023, as the world continues to adapt to a complete restructuring of global energy supply chains due to Russia’s invasion of Ukraine

In a show of unity against Russian aggression, many countries have sought alternative sources of energy so they can boycott Russian exports.

This has led to a surge in global commodity prices for coal, oil, and gas. The beneficiaries: ASX 200 energy shares.

During a shocker of a year for ASX 200 shares in general, energy shares shined megawatts in 2022.

The S&P/ASX 200 Energy (ASX: XEJ) rose by 40% while the S&P/ASX 200 Index (ASX: XJO) dipped 5.5%.

The top-performing ASX 200 energy shares of 2022 delivered unbelievable gains, led by Whitehaven Coal Ltd (ASX: WHC) with an extraordinary share price rise of 261%.

So, what’s ahead for ASX 200 energy shares in 2023?

The Federal Government forecasts continuing record earnings from resource and energy exports. This bodes well for ASX 200 energy shares.

The Office of the Chief Economist says resource and energy export earnings are tipped to set another new record at $459 billion for FY23.

Then, it predicts a drop back to $391 billion in FY24 — still the third-highest level of earnings on record.

According to a report published last month, lower demand due to a slowing global economy and eased supply disruptions will reduce commodity prices after FY24.

The report gave this overview:

Energy commodity prices have fallen from record highs … but will likely stay above prewar levels in 2023, as some Russian energy supply becomes stranded.

Australian thermal coal prices have declined from record levels, but remain high historically.

Metallurgical coal prices have steadied … Prices are likely to drift down over 2023, as supply recovers.

Oil prices have steadied below the US$90 a barrel mark, as weak demand more than offsets the impact of supply cuts.

[Spot LNG] prices are likely to stay well above pre-war levels, as some Russian gas output is stranded.

After 2023–24, earnings from [LNG and thermal coal] are likely to fall back towards pre-COVID-19 levels, as gains in world supply bring down prices.

What do the market experts think?

United States investment behemoth BlackRock Inc (NYSE: BLK) is backing global energy shares for the short and long term.

In the short term, ongoing supply constraints make them especially appealing. But in the long term, fossil fuels will also play a critical role in decarbonisation for some time yet.

In its 2023 outlook, BlackRock says:

Western sanctions have triggered a pursuit of economic selfsufficiency. Energy security is now a priority: As Europe weans itself off Russian oil and gas, we’ve seen energy shortages and higher prices.

In the U.S., we see a push to favor trading partners when sourcing the metals and materials needed in the net-zero transition.

Oil and gas will still be needed to meet future energy demand under any plausible transition.

If high-carbon production falls faster than low-carbon alternatives are phased in, shortages could result, driving up prices and disrupting economic activity.

Should you buy ASX 200 energy shares now?

As every investor knows, you’ve got to be careful when buying cyclical stocks like ASX 200 energy shares at a time of historically high share prices and commodity prices.

Some investors may see the justification for doing so. Continuing relatively high commodity prices — at least for now — is likely to mean greater dividend income for shareholders in FY23 and FY24.

Top ASX 200 energy shares like Woodside Energy Group Ltd (ASX: WDS) and Whitehaven Coal paid record dividends in FY22.

Continuing high commodity prices could make 2023 a huge year for passive income.

This could be important for many investors, with brokerage Investors Mutual saying dividends are now ‘critical’ because capital growth is likely to be lower for the next decade.

So, even at today’s prices, ASX 200 energy shares might still be attractive to some investors on these grounds.

Which ASX 200 energy shares will pay the highest dividends?

Looking ahead to FY24, ASX 200 coal share New Hope Corporation Limited (ASX: NHC) is expected to pay the biggest dividend of the ASX 200 energy shares, as my Fool colleague James reports.

Consensus estimates are $1.30 per share, which equates to a 22% dividend yield.

Citi is expecting even bigger things. It reckons New Hope could end up paying $1.93 per share. That’s a 32% yield — which equates to party time for shareholders.

Whitehaven coal is also expected to pay out big.

Consensus estimates of an FY24 dividend of 91 cents per share equate to a 10.5% dividend yield. Bell Potter reckons the dividend could go as high as $1.66 per share, which equates to a 19.3% yield.

Coal miner Coronado Global Resources Inc (ASX: CRN) is expected to pay 24.1 cents in FY24, according to consensus estimates. That’s a 12% dividend yield.

Bell Potter is also far more bullish on this one, tipping 45.5 cents per share, which is a 23% yield.

The post Burning hot: The outlook for ASX 200 energy shares in 2023 appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has positions in Woodside Energy Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The benchmark S&P/ASX 200 Index (ASX: XJO) is home to 200 of the largest listed companies on the Australian share market.

And while some speculative companies sneak in at the low end now and then because of irrational exuberance, the majority of the constituents of the index are high quality businesses.

But given that there are 200 ASX shares to choose from on the index, it can be hard to decide which ones to buy above others.

But don’t worry, to help you on your way, listed below is an ASX 200 share that analysts rate very highly right now.

CSL Limited (ASX: CSL)

CSL could be an ASX 200 share to buy in 2023.

It is one of the world’s leading biotherapeutics companies with a collection of industry-leading therapies. This includes therapies such as Privigen, Hizentra, Idelvion, and Afstyla.

In addition, CSL reinvests in the region of 12% of its sales back into research and development (R&D) activities each year. Given that CSL delivered sales of US$10.7 billion in FY 2022, that’s clearly a large spend on R&D. But it has proven to be more than worth it in the past, with CSL earning a compelling return on investment.

This also looks likely to be the case in the future, with CSL’s R&D pipeline containing some potentially lucrative therapies and vaccines.

Combined with its new plasma collection technology, which is expected to yield stronger results and boost margins, the future looks bright.

It’s no wonder then that Citi is forecasting strong earnings growth in the coming years. It expects earnings per share growth of 20% in FY 2023, 23.1% in FY 2024, and then 15.9% in FY 2025.

It’s also no surprise following recent weakness in the CSL share price and its positive outlook, that Citi sees major upside potential for its shares this year.

The broker currently has a buy rating and $340 price target. Based on the current CSL share price of $282.98, this suggests that the company’s shares could rise 20% between now and the end of the year.

Overall, Citi appears to believe this makes CSL an excellent ASX 200 share to buy now.

The post Is CSL the best ASX 200 share to buy in 2023? appeared first on The Motley Fool Australia.

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• I’d listen to Warren Buffett and invest in ASX shares with wide economic moats

Motley Fool contributor James Mickleboro has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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