*** What to expect in 2005...
*** Cairn Energy's big surprise
*** Don't forget the hoteliers...why the dollar mustfeel let down...a hearty pat on the back...andmore.. ------------------ Welcome to 2005. Here at Money Morning, we hope youhad a great New Year... and you're ready for anotherbout of market bustle.
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So what's 2005 got in store for us? Well, let'sfirst have a look at how 2004 came to an end...
The blue chip index closed 2004 at 4,814 points a7.5% rise during the year. Not bad, but outdone bythe mid-cap 250 index, which surged 19.3% during2004. It closed at 6,923 after starting the year at5,800. The All Share index saw gains of 8.5% -trading at 2,412 before today's market opening.
The best index for 2004? Well, that would be thejunior Aim index. Aim climbed 19.8% over the last 52weeks, closing the year at 1,001 while alsoadmitting its 1,000th member last month. In fact, thesurge in IPOs on Aim last year meant it matched thefundraising from flotations of the chief Londonmarket.
Yet the surprise of the year came from oil and gasstock, Cairn Energy. The group, which started 2004 asan all-too average sized mid-capper soon shot intothe FTSE100 after announcing it had found deposits inIndia.
Is there more to come from Cairn in 2005? Well,despite surging 175% during the year, Cairn fell ahard 27% in December after it admitted having topay heavy taxes on its India find. Cairn closed at£10.80, and may find 2004's success a hard act tofollow this year.
The oil and gas sector only managed a 13% climb in2004. Sector heavyweights BP and Shell traded 13% and7% up respectively last year despite the price ofcrude hitting all-time highs in October. Dated Brenttraded 12 cents up at $40.36 by late yesterday.
The rocketing oil price may not have helped thesector leaders, but mid cap stock Burren Energysurged 250% last year, to close at 462p, asprospective finds in the Congo tickled investors intothe trade. Tullow Oil also added 75%, while PaladinResources rocketed over 100%. In fact, Paladin'ssales have ballooned in the past six years, from £9mto around £280m last year. ------------------ The real estate sector added 40% over the year.Thanks largely to Quintain Estates, which has added63% in the last 52 weeks. Full-year results pushedthe group's share price up to all-time highs on 29December, to close 2004 at 576p. British Land climbed55% to close at 905p, while Land Securities traded42% up during the year.
The losers for 2004? Well, if you steered clear ofpharmaceutical stocks last year, a hearty pat on theback for you. The sector fell 12% over the year, withdrug makers AstraZeneca sliding 30% in value to tradeat £18.90 by 2004's end. GlaxoSmithKline also shed5%, to trade at £12.22.
Prospective smoking bans in the UK have not putinvestors off tobacco stocks. The sector traded 25%up, to hit an all-time high on 30 December.
And for 2005, don't forget the hotel sector.Hoteliers have pulled the sector up in a steady twoyear bull run, which peaked at record highs on 30December. In fact, the sector traded 30% up last year and nearly 120% up since early-2003. Is there moreto come? Well, Money Morning will keep you in theloop in 2005.
One can't nitpick about 2004, without mentioningthe commodity surge...thanks largely to China'sexplosive growth. As a result, the steel sectorsurged over 50% in the past year. And the sector'stop performer Corus Group did much the same, tradingjust under 50% up last year.
We've mentioned the hike in the price of crude in2004, but don't forget the sixteen-year highstriggered by gold last year. During early December,gold hit $454 per ounce, although it closed 2004 downat $437 per ounce.
America's currency, on the other hand, may havefelt let down by its rulers. The pundits are allagreed...Alan Greenspan and his Federal Reserve arenot concerned about the greenback.
In fact, a lower dollar will help the Bushadministration ease its throbbing deficits. Againstthe euro, the dollar opened last year at around$1.275. But things had changed by the end of 2004 as the currency closed 7% weaker, at $1.364.Yesterday it traded 0.2% up versus the euro. Andsterling gained around 6% against the dollar in 2004,to close at $1.926.
So what to expect for 2005? Well, it's not been thebest start to a year. The earth-shattering tsunamisthat hit South East Asia and East Africa will notonly continue to claim human lives...a number offlourishing economies in the region may struggle tocome to terms with the disaster. There'll be more onthis to come in Money Morning.
But in the meantime, here at Money Morning we hopeyou're ready for another dose of City scandal...stockmarket bustle...and even more investment ideas in themonths to come.
Until tomorrow Heather D'AltoMoney Morning
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