DESPITE deep reservations about domestic political instability and shaky conditions in the resources sector, professional investors expect local shares to shrug off May's malaise and see the All Ordinaries index retest 5000 points by Christmas.
This follows a dismal end to the financial year which saw the market almost wipe out five months of slowly accrued gains.
The experts expect the banks to rediscover their appeal as yield plays, despite the recent global sell-off that heightens the appeal of cash investments.
The declining Australian currency is also expected to be a catalyst for recovering activity on the eastern seaboard, as well as supportive of US dollar commodities.
In the short term, the spectre of political uncertainty looms as a heavy drag on consumer confidence and capital investment.
"The politics is a disgrace and the quality of politician is appalling," Clime Capital chief investment officer John Abernethy said. "There's no vision and no plan. Australia needs a think-tank summit urgently because the political process could well send Australia into recession."
