We're now, somehow, in the back end of 2023. With 2024 just over three months away, it's a good time to discuss what next year might hold in store for the S&P/ASX 200 Index (ASX: XJO) and ASX 200 shares.
Let me start by saying that I think any predictions about what ASX shares may or may not do in the future are pretty much worthless. No one, not Warren Buffett, Bill Gates, Elon Musk or this writer knows what might happen next year on the market. But that doesn't mean it's not beneficial to hold a lighthearted discussion over what could happen.
So today, let's talk about three of my predictions on what 2024 might bring for the ASX 200 Index.
What could 2024 have in store for ASX 200 shares?
A positive 2024 for ASX 200 investors
As I said earlier, I don't hold much in store when it comes to predicting the markets. But if I had to put money on it, gun to the head, I would bet on a positive year for the share market next year.
Why? Well, that's what history tells us is the most likely outcome. ASX shares go up far more often than they go down. That's why today, the ASX 200 is just over 7% off of its all-time high of over 7,600 points that we saw back in 2021 and a long way from even the COVID-lows of 2020 (around 4,800 points).
Don't get me wrong, I wouldn't be shocked if we do have a negative 2024. But going off of history, I think it would be foolish to assume we do.
Another year of lower dividends
2021 and 2022 were years that saw an unprecedented level of dividend income from ASX 200 shares, mainly the big miners of the ASX. This was driven by record-high commodity prices, especially from iron ore.
Sadly, 2023 has seen these dividends come off the boil. For example, BHP Group Ltd (ASX: BHP) shares paid out an annual total of $4.63 in dividends per share in 2022, but will only pay out a total of $2.61 per share this year.
Commodity prices look to have stabilised this year and remain way off of their highs of 2021 and 2022. As such, I think the dividends from ASX 200 shares as a whole in 2024 will more closely resemble those of 2023, rather than 2022 or 2021.
Something that won't change
Many things might change for the ASX 200 Index in 2024. But one thing I'm confident in predicting is that the general structure of this flagship Index will stay the same.
As most ASX investors know, the ASX 200 Index is dominated by two sectors – bank shares and mining stocks. Right now, the ASX 200's top six holdings are as follows:
- BHP Group Ltd (ASX: BHP) with an approximate index weighting of 10.54%
- Commonwealth Bank of Australia (ASX: CBA) at 7.9%
- CSL Limited (ASX: CSL) at 5.87%
- National Australia Bank Ltd (ASX: NAB) at 4.26%
- ANZ Group Holdings Ltd (ASX: ANZ) at 3.54%
- Westpac Banking Corp (ASX: WBC) at 3.51%
Overall, 28.1% of the ASX 200's weighted holdings are in financials stocks, with another 23.95% in mining and materials shares.
I don't expect this to change too much next year. Sure, the banks might play a bit of leapfrog with each other, as they usually do. But you can expect BHP, the big four and CSL to continue to pretty much dictate what happens with the ASX 200 Index.
