After a sinusoidal performance in 2017, the Australian share market is expected to grow into next financial year with more or less the same pace; and below are the major sectors that gained attention this year and will stay in focus in 2018.
 
Mining Sector a good earning driver in 2018
The Metals and Mining Sector is the largest industry sector which is led by over 700 companies involved in mineral exploration, development and production across multiple countries. The sector comprises the world’s largest diversified resource companies, including global giants such as BHP Billiton and Rio Tinto, and might see emergence of a potential future industry leader in the mid-tier producers and junior miners. Major Mining stocks like BHP Billiton have been performing well in terms of financial and operational level, and BHP is accelerating its growth because of increase in production of copper. Another player, Rio Tinto is maintaining a strong relationship with China and is targeting a significant free cash flow from its five-year programme. Fortescue whose price is about few times its full year profits, has also been seen to boost the lowest iron ore production costs in the world. Independence Group will also ramp up the production which was planned earlier, and its revenue also grew by 2% which was led by zinc, copper and nickel realizations. Northern Star Resources Ltd showed a huge increase in stock price and has been progressing well on its exploration activities. Overall, we saw growth stemming from better commodity prices in 2017, increased maintenance activity, and a rise in public infrastructure spending like in roads and rails. These and many key mining companies are tipped for positive performance this year and beyond; and also, the weakening of Australian Dollar can provide another tailwind for earnings in mining sector. While the overall stance is bullish, a slowdown in Chinese construction activity poses some bit of a threat to this sector.
 

 
Infrastructure stays a valuable sector for investing
Infrastructure stocks are often attractive to investors who are looking for predictable returns as infrastructure projects are typically characterised by low levels of competition and high barriers to enter the market. Investors have already been betting big on infrastructure stocks in 2017 and as the budget of $75 billion (2017-18 to 2026-27) has been approved by federal government so the infrastructure stocks remain to stay ahead in focus. During 2017, one of the biggest Australian construction groups, CIMIC jumped to their highest levels for nine years. Also, Macquarie is increasing its opportunities as it is spending more now on rail, road, and airport. Rapid surge in house prices over the past few years has raised fears of property and of market crash. With 6.5% growth predicted per year in public infrastructure spending to fiscal 2021 and Aussie’s property boom nearing its end, infrastructure area is on the radar for many investors. In such a case, stocks like Boral and Transurban (with return on equity above 5%), which are trading at a lower level than many giant peers can be looked at.
 
Technology to boom up further
While US is one of the countries where maximum number of tech stocks are listed and performance of companies like Amazon, Facebook, Google and Apple are reported more than most of ASX- listed businesses; many Australian technology companies are making up the move to perform better. Stocks that have performed well with better profitability, cash flow generation with strong returns for investors include Appen, now trading at higher level. Another is Gentrack, which upgraded its earnings by approximately 20%. Integrated Research is yet another IT success story which is operating in many countries. Then two technology stocks that have moved up in 2017 in terms of stock prices include Xero and WiseTech Global, which have been expanding client base with increasing market share. With investors looking for growth, the sector is expected to continue to gain traction.
 
Retail sector trying to maintain its Fizz
Australia is dominated by large retail businesses such as Wesfarmers, Woolworths, Super Retail Group, Harvey Norman Holdings, JB Hi-Fi, and Premier Investment. The Australian listed retailers, specially the departmental store-based retailer, will need to gear up to maintain their market share and their profitability given Amazon’s entry and heavy demand for online retailing. Some of the players in this retail market showing growth despite challenges include Greencross and RCG Corporation. So, we consider retail businesses to still showcase the potential for growth in the long term. The sector also seems to be trading relatively in-line with the rest of the market, which may mean investors might be looking to sell out stocks at a reasonable price. At the moment, the arrival of Amazon in Australia has failed to stifle retailers as earlier expected, but any improvement in offers over the coming years can lead the retailers to think of strategies to manage competition. Meanwhile, online players such as Kogan.com have been gaining traction. This sector would thus be an interesting one to watch out for in 2018.
 

 
Financial sector still luring investors
Australia’s ‘four pillars’ banking sector is under attack with current Federal Government finding itself under pressure on many things including the apparent poor corporative behaviour of the country’s largest financial institutions. On the other hand, the major Australian banks have achieved a status of being at ‘unquestionably strong’ position as prescribed by the Australian Prudential Regulatory Authority (APRA). After the announcement of Royal Commission into the financial services industry, the big four banks had a rough performance. With many challenges, banks like NAB and ANZ with good fundamentals might still be worth looking in 2018. Some investors are also eying Westpac Banking Corp which has a dividend as one of the best on the market at this point. Along with few banks that have been held exposures in, LICs are looked for potential value. ASX now has over 100 LICs listed with a combined market capitalisation of about $33 billion and with the LIC market continuing to grow strongly, investors can explore this space with many stocks operating in the sector.

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