As the new calendar year begins, we thought we would share our top 4 predictions for the ASX in 2024.
We hope all investors have a Happy New Year, although we cannot guarantee a Happy New Year from betting on any of these instances happening – anything is possible in this business. At the same time, we thought we’d join in the chorus of analysts making predictions for the year ahead – both for the broader market and individual stocks.
We are steering clear of predicting the direction of the broader market and opting to focus on individual companies and sectors. Without any further ado, here are our predictions.
4 predictions for the ASX in 2024
1. Opthea to pass the Phase 3 clinical trial stage
While most companies with news between Christmas and New Year have bad news and are trying to hide it from investors, Opthea had good news in the form of a further US$85m in non-dilutive funding from Carlyle and Abingworth.
Opthea (ASX:OPT) has a solid drug called OPT-302. It prevents the abnormal growth of blood vessels and leakage of fluid and protein from the vessels, which can cause wet AMD. Wet AMD is the leading cause of blindness, impacting 3.5m people annually across the globe.
It passed Phase 2 with flying colours, but that was back in 2019. The company took a while to start its Phase 3 trial and it has taken over 2 years. However, we expect that some time during the year, the company will complete the trial and potentially report results. If they are positive, we expect the company’s shares to re-rate to levels seen in 2019 and for an FDA submission to follow shortly thereafter.
2. Zip to be delisted from the bourse
We think Zip will no longer be on the ASX by the end of the year. We won’t predict whether or not the company will bite the dust and go into liquidation, if it will be taken over at a barrel bargain price or merge with another company – in all cases, delisting from the ASX.
The BNPL sector is substantially out of favour with investors as interest rates rise, competition becomes ever more intense and the departure of Afterpay reminded investors of the latter fact.
3. A boom in uranium stocks
2023 was a good year for uranium with spot prices reaching levels not seen since the GFC. Nonetheless, prices remain below pre-GFC levels and we expect yet another boom year for yellowcake in 2024. It will follow that uranium stocks on the ASX, particularly those recommending production at mothballed projects, will benefit.
Uranium was in the doldrums for so long because of public fears over nuclear power after Fukashima. A decade on, the public have realised that uranium had nothing to do with Fukashima. And also that uranium is one of the few commodities with a decarbonisation angle. And keep in mind that it can be used for non-nuclear power purposes medical research and other industrial processes. And just as was the case in the mid 2000s bull market, countries are once again keen for either their own energy sources or those from geopolitically stable countries. Most importantly though, demand is not keeping up with supply, a fact that will remain true throughout 2024 and will see ASX companies exposed to this commodity to benefit.
4. Liontown to attract takeover interest and to be successful this time
We are gobsmacked that Liontown was not taken over this year.
Liontown owns the Kathleen Valley Lithium Project in Western Australia. It has a current Mineral Resource Estimate of 156Mt at 1.4% lithium. Over 80% of this is Measured or Indicated. The project, which Liontown made the Final Investment Decision on last year, is one of the most significant new, long-life lithium projects being constructed anywhere in the world.
It had a $6bn+ takeover bid from Ablemere but the deal was called off. Albemarle announced it was due to concerns undercovered in its due diligence. Investors also suspect that it was scared of a bidding war with Gina Rinehart, who accumulated a substantial stake in the company. It seems there are concerns with investors generally about the funding to bring this project online, which could be just under $900m. Nonetheless, the company already has the bulk of funding in place.
In CY24, Kathleen Valley is set to enter production and we expect plenty of suitors to turn their attention to this project.
So there you have it, our 4 predictions for 2024. Feel free to hold us to account in 12 months time, but please don’t make investment decisions on the basis of this article (as goes with everything we publish).
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