Morning Market Brief
Canada’s main equity index, the S&P/TSX Composite Index, has returned 1.75% year-to-date as of February 26. Despite the increase, performance has lagged several other major economies. US equities have been particularly strong, with the S&P 500 Index returning 6.28% to February 26. However, Craig Jerusalim, senior portfolio manager of Canadian equities at CIBC Asset Management, says there might be opportunities in Canadian equities this year.
- The S&P/TSX Composite Index has lagged the performance of equities in many major economies thus far in 2024. However, strong earnings growth and relatively lower valuations could make Canadian equities an attractive investment opportunity. Craig Jerusalim believes Canadian equities might be poised for growth in 2024.
- Jerusalim noted Canadian equities are trading at their biggest discount compared to US equities in decades. Canada’s high exposure to cyclical stocks, particularly in sectors such as energy and materials, might help it close the gap. Should the economy stabilize and show signs of growth, these sectors could be positioned for growth and offer attractive opportunities for investors.
- US equities have been relative outperformers this year and last. Much of that growth has been driven by technology heavyweights given the enthusiasm for artificial intelligence (AI).
- While Canada doesn’t have the big names in AI like the US, it does have its own players with exposure to AI capabilities. One such example is Shopify Inc. There are other names in the small-cap space, as well as infrastructure companies, with different levels of exposure and investment in AI capabilities.
Canadian equities have lagged in recent years, but that doesn’t mean they will forever. The Canadian market is filled with high-quality companies that have proven their ability to grow over the long term. Should global economic activity improve, cyclical sectors might benefit. To learn more and listen to the podcast, see: Why Canadian equities are poised for a rebound.
Please contact me to discuss the benefits of holding Canadian equities in your portfolio.