• Three quarters of DIY investors expect the FTSE 100 to be above 7,000 by the end of 2021, according to a survey of 2,000 AJ Bell Youinvest customers*
• One quarter think it will be above 7,500, which would put it close to, or even over, its previous record high of 7,877 reached in May 2018
• Half of investors expect technology stocks to continue their strong run of outperformance
• Investors think Asia could be the sweet spot for 2021 performance
• Two thirds of investors think vaccines will mean an end to lockdowns from March 2021
Laith Khalaf, financial analyst at AJ Bell:
“Investors are pretty bullish about prospects for the Footsie next year, with most of them pencilling in a rise of at least 7% from current levels. A significant minority are expecting better still, with a quarter anticipating the Footsie will rise over 15%, to 7,500, or beyond. The benchmark index doesn’t include dividends which would typically add another 3 to 4% on top of these figures.
“However, less than one in five investors think the UK will be the best performing market next year which shows confidence in global stocks more broadly. Investors are fairly split on which region will be the best performer in 2021, but Asia gets the most votes. That’s perhaps because China was first into the pandemic and managed to contain the virus relatively well. Indeed the OECD forecasts China will actually post a modicum of economic growth over the course of 2020, though at a predicted 1.8%, that would still be significantly below the 6% plus expected under normal circumstances.
“Just over half of investors expect technology stocks to continue on their winning run next year with only one in five expecting a reversal of fortunes for the sector. A significant proportion of investors were undecided too. It’s becoming harder and harder to cast doubt on the seemingly limitless rise of the tech stocks, though the fact the Tesla share price has risen eightfold in the course of twelve months sets alarm bells ringing. Amazon’s valuation of 90 times earnings now looks positively pedestrian compared to Tesla’s PE ratio of over 600 times earnings. But the plentiful short sellers who have bet against Tesla’s meteoric rise have been continually burnt, badly.
“Around two thirds of investors think that vaccines will prevent the need for lockdowns from March 2021 onwards. It’s clear then that vaccine hopes underpin a lot of investors’ confidence, and the outlook would be nowhere near as positive if we were still waiting for the outcome of trial results. However that still leaves around a third of investors who aren’t convinced vaccines will ride to the rescue by Easter. Perhaps after a testing year, they are hoping for the best, but expecting the worst.”
*Survey of 2,038 AJ Bell Youinvest customers between 5 December 2020 and 9 December 2020
AJ Bell DIY Investor Survey Results
|
The FTSE 100 currently sits at 6,550.23 (as at 4 December), approximately what level do you expect it to be at the end of 2021? |
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|
Answer Choice |
Response Percent |
|
|
1 |
Under 4,000 |
0.3% |
|
2 |
4,000 |
0.2% |
|
3 |
4,500 |
0.1% |
|
4 |
5,000 |
1.1% |
|
5 |
5,500 |
3.1% |
|
6 |
6,000 |
6.6% |
|
7 |
6,500 |
14.0% |
|
8 |
7,000 |
48.1% |
|
9 |
7,500 |
22.4% |
|
10 |
8,000 |
3.0% |
|
11 |
Over 8,000 |
0.9% |
|
Which stock market do you think will perform best in 2021? |
||
|
Answer Choice |
Response Percent |
|
|
1 |
UK |
17.7% |
|
2 |
US |
22.0% |
|
3 |
Europe |
4.1% |
|
4 |
Asia |
36.5% |
|
5 |
Japan |
3.8% |
|
6 |
Emerging markets |
15.8% |
|
How do you think technology stocks will perform in 2021? |
||
|
Answer Choice |
Response Percent |
|
|
1 |
Outperform the wider market |
51.1% |
|
2 |
Underperform the wider market |
20.8% |
|
3 |
Don’t know |
28.1% |
|
How confident are you that a Coronavirus vaccine will prevent the need for lockdowns from March 2021? |
||
|
Answer Choice |
Response Percent |
|
|
1 |
Very confident |
13.7% |
|
2 |
Quite confident |
53.2% |
|
3 |
Not convinced |
23.4% |
|
4 |
I expect more lockdowns throughout 2021 |
9.8% |
