2022 has already been a notable year with Omicron and a big increase in volatility. I have a few predictions for what might happen in the ASX share market in 2022.
Keep in mind, it’s best to invest in ASX shares for the long-term, not just a one-year timeframe. I’m going to keep investing in investments that look good value and have solid long-term potential regardless of what’s going on with the overall market.
But, just for a bit of fun, I have a few predictions for the year:
High-growth ASX shares to finish higher
I think a lot of pessimism has been priced into the share prices of businesses like Temple & Webster Group Ltd (ASX: TPW), Adore Beauty Group Ltd (ASX: ABY), ELMO Software Ltd (ASX: ELO) and Airtasker Ltd (ASX: ART).
Whilst I’m not saying that every high-growth business will end up higher, I believe that the market has become very negative on some of these businesses. In my opinion, there is too much pessimism on these names. With another year of growth under their belts, I think names like the ones I’ve mentioned will end up finishing higher, even if higher interest rates are a drag on the valuation.
It’s times like this that could be the best time to buy – when there is fear in the market.
Interest rates to rise
I think it seems almost certain that there are going to be multiple increases of the interest rate by the US Federal Reserve.
However, I’m also thinking that the RBA is going to implement an interest rate increase as well. Wage growth is starting to come through, according to businesses like Airtasker and Commonwealth Bank of Australia (ASX: CBA). I think that inflation will remain stronger than the RBA is thinking as well, particularly with supply chains continuing to be affected and Australia’s international borders still shut.
Acquisitions to continue
2021 was a big year of mergers and acquisitions for the ASX share market. But I think that 2022 could be another year of deals. The drop in valuations of lots of businesses could make them very attractive.
Despite interest rate rises just being around the corner, a 1% interest rate is still very low. I think businesses will be happy to make deals, as long as they make financial sense.
Which businesses are going to do deals? Well, there’s a rumour that Zip Co Ltd (ASX: Z1P) is looking at Sezzle Inc (ASX: SZL). Aristocrat Leisure Limited (ASX: ALL) wants to buy Playtech.
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