Canada’s year of ‘serial disappointments’ leave investors reeling
Bank of Canada Governor Stephen Poloz summed up the Canadian economy best by calling it “another year in the serial-disappointment series.”
For investors in Canadian assets the disappointments ran the gamut from stocks to bonds to the currency as the collapse in commodity prices sapped growth in the world’s 11th-largest economy. So let’s catalog the pain, say good riddance to Canada’s horrible year and contemplate sunnier days ahead:
1. Among Developed World’s Worst Stock Markets
The Standard & Poor’s/TSX Composite Index has plunged 11 per cent since the beginning of the year for the worst showing among its Group of 10 peers as crude oil’s 35 per cent tumble weighed on stocks. Of the world’s 24 developed markets, only the exchanges of Greece and Singapore have performed worse.
“There’s really been no place to hide in the Canadian equities side,” said Bruce Cooper, chief investment officer at the asset management arm of Toronto-Dominion Bank, which has about $260 billion under management. Resources have been “atrocious,” banks have lost money and everything else has been a mixed bag, he said. Next year is going to be challenging too because the same fundamental headwinds are in place. “We live in a low-growth world.”
2. Spectacular Swoons
The carnage in the S&P/TSX has been wide and deep with about 65 per cent of 240 stocks in the equity gauge ending the year in the red. Also evident were the flame outs of some of the country’s most high-profile stocks. Valeant Pharmaceuticals Inc., which had doubled earlier in the year to briefly eclipse Royal Bank of Canada as the most valuable company in Canada, tumbled 56 per cent from its peak amid scrutiny over its pricing practices. Bombardier Inc. slid 67 per cent as the struggling planemaker had to seek a cash infusion from the Quebec government as well as raising debt and equity to keep its jetliner programs on track. Baytex Energy Corp. was hit by a perfect storm of sliding oil prices and high debt. Its 81 per cent drop this year made it the worst-performing stock in the index.
“The Canadian market did not have a good year at all. It’s been the kicking bag globally,” said Greg Taylor, a Toronto- based fund manager at Aurion Capital Management Inc. which has about $7.2 billion under management. “Everyone’s been trying to get off of it for fear of commodities, for fear of the slowdown in western Canada, for fear of a potential housing crisis.”
Bearishness on Canada has created a buying opportunity for 2016 because there are so few active managers in the market right now, he said. The U.S. dollar will peak after last week’s Federal Reserve interest rate hike, giving investors a bounce in gold and oil and creating a short-term buying opportunity in commodities, Taylor said.
...way more....
Canada’s year of ‘serial disappointments’ leave investors reeling
Bank of Canada Governor Stephen Poloz summed up the Canadian economy best by calling it “another year in the serial-disappointment series.”
For investors in Canadian assets the disappointments ran the gamut from stocks to bonds to the currency as the collapse in commodity prices sapped growth in the world’s 11th-largest economy. So let’s catalog the pain, say good riddance to Canada’s horrible year and contemplate sunnier days ahead:
1. Among Developed World’s Worst Stock Markets
The Standard & Poor’s/TSX Composite Index has plunged 11 per cent since the beginning of the year for the worst showing among its Group of 10 peers as crude oil’s 35 per cent tumble weighed on stocks. Of the world’s 24 developed markets, only the exchanges of Greece and Singapore have performed worse.
“There’s really been no place to hide in the Canadian equities side,” said Bruce Cooper, chief investment officer at the asset management arm of Toronto-Dominion Bank, which has about $260 billion under management. Resources have been “atrocious,” banks have lost money and everything else has been a mixed bag, he said. Next year is going to be challenging too because the same fundamental headwinds are in place. “We live in a low-growth world.”
2. Spectacular Swoons
The carnage in the S&P/TSX has been wide and deep with about 65 per cent of 240 stocks in the equity gauge ending the year in the red. Also evident were the flame outs of some of the country’s most high-profile stocks. Valeant Pharmaceuticals Inc., which had doubled earlier in the year to briefly eclipse Royal Bank of Canada as the most valuable company in Canada, tumbled 56 per cent from its peak amid scrutiny over its pricing practices. Bombardier Inc. slid 67 per cent as the struggling planemaker had to seek a cash infusion from the Quebec government as well as raising debt and equity to keep its jetliner programs on track. Baytex Energy Corp. was hit by a perfect storm of sliding oil prices and high debt. Its 81 per cent drop this year made it the worst-performing stock in the index.
“The Canadian market did not have a good year at all. It’s been the kicking bag globally,” said Greg Taylor, a Toronto- based fund manager at Aurion Capital Management Inc. which has about $7.2 billion under management. “Everyone’s been trying to get off of it for fear of commodities, for fear of the slowdown in western Canada, for fear of a potential housing crisis.”
Bearishness on Canada has created a buying opportunity for 2016 because there are so few active managers in the market right now, he said. The U.S. dollar will peak after last week’s Federal Reserve interest rate hike, giving investors a bounce in gold and oil and creating a short-term buying opportunity in commodities, Taylor said.
...way more....
Canada’s year of ‘serial disappointments’ leave investors reeling