Why the story of the Canadian stock market isn’t just about resources
Citing data from Bloomberg, he said the combined weight of energy and materials in the S&P/TSX Composite Index is close to 30%, slightly behind the financial sector and its larger banks. He also notes that like the rest of the world, Canada’s demographic and economic mix is always changing and evolving – meaning that resources don’t tell the full story about Canada’s market performance.
There are few differences between the two major North American indices over the longer time frame spanning the 1990s, while the TSX Composite has outperformed the benchmark S&P 500 index in the United States based on price return excluding dividends over the past six months. Hence.
The most obvious sign, in part, is that Canada’s economy is still heavily dependent on natural resources.
Over the past 30-plus years, the average return in the United States has exceeded returns in Canada with 8.5% US returns versus returns. 5.4% Canadian return, both in local currency terms — thanks in large part to the presence of high-flying tech stocks.
Perhaps more interesting is the fact that, in terms of both the worst-to-average spread and maximum/minimum time each year, the average spread of returns in Canada is much larger than in the United States. Clearly, the resource dependence of Canada’s economy (and stock market) has resulted in increased regional instability over time.