Investors see value in Toronto's commodity-linked stock market and expect it to rebound in 2019 as the global economy continues to grow and on hopes for the price of Canadian heavy crude to recover, a Reuters poll shows. The median forecast of 28 portfolio managers and strategists polled was for a more than 9 percent increase in the S&P/TSX composite index from its Monday close to 16,425 by the end of 2019. The TSE dipped 0.3 percent to 14,967 on Tuesday.
Of 10 investors who answered a separate question on the index's valuation, six said it was cheap and four said it was fairly valued. None said it was expensive. "We view the equity market in Canada to be attractively valued not only against its own history but also relative to the S&P 500 Index," said Philip Petursson, chief investment strategist at Manulife Investments. The price-earnings ratio, a measure of valuation, for the TSX is 14.2, according to Refinitiv Eikon data, much less than the 18.6 price multiple for the S&P 500.
Toronto's index has declined 9.5 percent since it notched a record high of 16,586.46 in July as a slump in oil prices, rising global trade tensions and higher bond yields offset a boost to sentiment from a deal to revamp the North American Free Trade Agreement.
Since the start of the year, the index is down more than 7 percent. Investors expect economic growth to remain strong enough for companies to continue to increase profits even if some expect earnings growth to be slower.
Comments
Comments are closed.