MARKET COMMENTARY

It Pays to Be Picky

With the broader Canadian market stuck in the mud, Les Stelmach and Izabel Flis discuss where they’re finding opportunities.

07.25.2017

Canadian Equities: It Pays to Be Picky

Canada reached a new benchmark recently, honouring its 150th birthday with fireworks and fanfare. Canadian equities, on the other hand, have generally given investors less to celebrate over the past six months, turning in a more subdued performance than its market-leader days of 2016. Les Stelmach and Izabel Flis discuss the dynamics at play and what is working in a market that seems stuck in the mud.

Q: What is your sense of the current environment?
Les Stelmach:The market is a real mixed bag at the moment. Generally speaking, Canadian equities have been underperforming relative to the United States and it is pretty easy to see why. Together, the Energy, Materials and Financials sectors make up two-thirds of the S&P/TSX Composite Index. All three sectors have been facing headwinds, making it difficult for the broad market to outperform. Looking at Energy, for example, weaker commodity prices and a challenging investment outlook for Canadian energy equities have prompted a generally tough go in the first half of 2017. I believe a lot of factors, which lie beyond companies’ control, underpin the current malaise. This can range from shifting public policy decisions or indecision, to the realities of overused US production data skewing the picture of global oil production, which in turn influences crude oil supply projections and pricing.

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