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FTSE will surge above 6,500 next year, say experts

As 2012 draws to a close, fund managers and investment analysts tell FE Trustnet where they think the FTSE 100 will be this time next year.

Alex Paget

By Alex Paget, Reporter
Friday December 21, 2012

Investors will easily surpass its current levels by this time next year, according to industry experts, with some estimating the index will climb as high as 7,000.

At the time of writing, the FTSE 100 index is at 5,966 points. With this in mind fund managers and investment analysts told FE Trustnet that they think this progress will continue over the next 12 months.

Though all the experts were light-hearted in their forecasts, they say UK equity markets should perform strongly in 2013, with three of the five saying it will surpass 6,500.

FE Alpha Manager Chris Burvill (pictured right), manager of the Henderson Cautious Managed fund

“I’m going to for the FTSE 100 exactly at 6,623 this time next year – it is so specific because I have cleverly worked it out and the conclusion was drawn as a result of complicated mathematical calculations,” he joked.

“In all seriousness, I think we can expect 10 per cent return on equities next year – I think that is reasonable.” 
“I think the economic outlook could improve in the short term. In Europe, people tend to ignore the underlying positives coming out.”

“Yes, there are problems going on in China and the US, but there are always going to be problems in global markets.”

Mike Jennings (pictured left), manager of Premier Global Alpha Growth

 “The problem with predicting the FTSE at the moment is that markets move about so much, so if you are out a by a week you could get it massively wrong,” he said. 

“I think he FTSE could be near the upper end next year so possibly 6650, because what we have seen is the regular misconception that we are in a very negative environment. The bull case is that we should see a small amount of growth next year.”
“We will see a continuation of ultra-loose monetary policy on the part of the central banks. Also, corporate margins remain as strong as ever and corporate balance sheets are similarly as strong. This means they can raise earnings at historically cheap levels”

“In terms of asset allocation, I think equities will continue to provide an unnatural home for income investors next year,” he added.

Ross Henderson, manager of EFM OPM UK Equity

“I am going to go for a very bullish prediction – 7,000 this time next year,” he said. “Why not? I think equity markets will continue to gain support from troubles in the fixed income market. “

“There is plenty of cash sitting on the side-lines and I think we can expect some sort of growth next year.”

“So yes I’ll go for it, the FTSE will be at 7000 at the back end of December 2013.”

Tim Cockerill (pictured right), head of collective research at Rowan Dartington

“I think the FTSE will be higher than it is at the moment, but not by a lot,” said a more cautious Cockerill. ALT_TAG

“I would say somewhere between 6300 and 6400. I think in 12 months time we will be closer to having all aspects sorted in the eurozone, and the US should have got to grips with their fiscal issues. Even if they do fall off the fiscal cliff, we will know what the impact of the enforced spending cuts and increased taxes will have.”

“All in all, I think the outlook for next year is quite positive.”

“The FTSE will be slightly up but I don’t think it will race away, because I don’t think equities are particularly cheap at the moment.”

Richard Troue (pictured right), investment analyst at Hargreaves Lansdown

“I am reasonably optimistic going into next year,” he said. “Although there are certainly risks on the horizon for the stock market, I think we have and will continue to make some progress.”

“With that in mind I think that the FTSE 100 will be a little bit higher, so probably in and around 6350 points.”

“That isn’t an amazingly bullish prediction as there are a number of potential headwinds for markets to deal with. I think investors can expect a pretty up and down 2013, like we have seen this year.” 

“However, obviously there are no guarantees in the market so who knows what will happen.”

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Data provided by FE. Care has been taken to ensure that the information is correct, but FE neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.

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