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My top predictions for ASX All Ords shares in 2023

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My top predictions for ASX All Ords shares in 2023

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All Ordinaries Index (ASX: XAO), or All Ords, shares saw plenty of volatility last year and I think 2023 could be another year of big movements.

The All Ords is an index of approximately 500 of the biggest businesses listed on the ASX.

Typically, the index’s performance is heavily influenced by the returns of the biggest companies, because they make up such a large percentage of the All Ords.

I’m talking about names like BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), CSL Limited (ASX: CSL), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC) and ANZ Group Holdings Ltd (ASX: ANZ).

Other All Ords ASX shares that have sizeable positions in the index include Woodside Energy Group Ltd (ASX: WDS), Macquarie Group Ltd (ASX: MQG), Wesfarmers Ltd (ASX: WES) and Telstra Group Ltd (ASX: TLS).

Here are my thoughts on some of the sectors.

ASX tech shares

While none of the tech names are among the biggest holdings, collectively the way they were punished in 2022 did have an effect on the All Ordinaries. Just look at how far the Xero Limited (ASX: XRO) share price dropped last year.

Higher interest rates may have been the key culprit for hurting the valuations last year. But, I think these heavily hit ASX tech share names could look like opportunities to investors when interest rates finally stop going up, if not before.

Some of the businesses that saw the biggest declines in 2022 could have the best chance of outperformance during the rebound. Names with attractive long-term revenue growth outlooks include Xero, Megaport Ltd (ASX: MP1), Frontier Digital Ventures Ltd (ASX: FDV) and Life360 Inc (ASX: 360).

Resource shares

On Friday I outlined my thoughts in a separate article regarding S&P/ASX 200 Index (ASX: XJO) mining shares.

I suggested that it is likely to be a good year for many ASX 200 mining shares with China coming out of lockdowns. This could be good news for All Ords ASX shares iron ore miners, copper miners and other commodities if strong Chinese buying returns.

Unless Russian energy production is reintegrated back into the global system in 2023, I can’t see ASX coal shares or ASX energy shares having a bad year either.

The global demand for lithium still seems promising for the coming years, so I think it could be a good year of cash flow for ASX lithium shares.

ASX bank shares

The banking sector is going through rapid change with the Reserve Bank of Australia (RBA) interest rate now much higher than it was a year ago.

All Ords ASX bank shares are increasing interest rates faster for borrowers than savers, so it’s increasing their profitability. I think this has been a good boost for share prices of names like Westpac already.

I think bigger profits and dividends are likely in 2023. I’m not sure if the share prices can rise much more from here. It may depend on when banks start reporting an increase in arrears amid the higher interest rates – a large increase in arrears could worry investors. A small rise could be positive and allay fears.

All Ords ASX retail shares

Some areas of retail are seen as cyclical. People need to keep buying food, but new TVs and new cars may be seen as less essential.

However, the share price reaction is another part of the equation. A number of ASX retail shares have fallen significantly. I don’t believe that retail conditions are going to seem tough forever.

So, I believe names like Temple & Webster Group Ltd (ASX: TPW), Adore Beauty Group Ltd (ASX: ABY), Adairs Ltd (ASX: ADH) and Universal Store Holdings Ltd (ASX: UNI) could be longer-term opportunities .

By the end of 2023, the outlook could be more positive for retailers, compared to today.

Foolish takeaway

Overall, I think it’s going to be a positive year for All Ords ASX shares, particularly when including the dividend income.

I wouldn’t be surprised to see tech as the best-performing sector this year after the difficult year last year.

My investment strategy will continue to be to find ASX shares I think can perform over the long term.

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