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Canada’s TSX notches Best Quarter in 4 Years


The Canadian main stock index recorded its largest quarterly numbers in a little over 4 years. Interestingly, experts expect the stock market to keep growing as the year progresses. Some of the contributing factors to this are the increased oil prices meant to boost energy shares, and pot being made legal. With pot being made a commercial enterprise, investors and companies have been quick to make deals.

During the second quarter, there was a noticeable 16 percent hike in the energy sector, a department that is responsible for about a fifth of the index weight

Other smaller, growth-focused sectors like healthcare and technology also played a key role in the numbers. Analysts shared that strong cannabis stocks lead to improved healthcare performance. The senior portfolio manager at Manulife Asset Management, Steve Belisle, mentioned that it was his expectation for energy to be the primary benefactor from the high oil prices. Oil has long been known to help boost cash flows an enhance Canadian prospects of landing oil in the market. Some of Belisle’s holding include some shares of Suncor Energy Inc. and the Canadian Natural Resources Ltd.

The price of oil in the U.S. has steadied on to an incredible three-and-a-half year high at $74 a barrel. This has contributed to a 5.9 percent increment in the Toronto Stock Exchange’s S&P/TSX compound index in the 2nd quarter. The move represents the largest step forward since the last quarter of 2013 when the S&P index made 2.9 percent gains. The records show that Belisle has major gains in CGI,  a technology service company. He described the initiative as a defensive growth company, an ideal setup for the current stage of the cycle.

Growth

Despite the fact that the technology sector rose by an incredible 10 percent, it was well beaten by the healthcare sector which rose by 16 percent. Cannabis stocks were the key reason behind the great performance

Given the backdrop, the Canadian government is working towards legalizing recreational marijuana by  October. Speaking to members of the press, Greg Taylor, a portfolio manager at Purpose Investments shared that he expects to see plenty of M&A and joint venture getting into the mix. He also added that those in the know could clearly see the little hints of the companies that would be able to meet their targets, and those that would be unable to.

Elvis Picardo, the portfolio manager at HollisWeath Inc mentioned that he favored some Canadian insurance companies like Manulife Financial Corp. The company had notably lost a footing after a rough start to the year. Still, Picardo expects the company to benefit from the current rising interest rate scenario.

Picardo’s logic is that higher bond yields tend to lower the value of liabilities on an insurance company’s liabilities. He remains of the opinion that there will be another leg to the global stock market rally. He shared that he’s hopeful that TSX would be able to participate on the global stage if the global economy kept up its momentum over the next annum.

Change

Plans are currently underway to legalize the drug for recreational use. Between November 2017 and the very end of January 2018, Horizons Marijuana Life Sciences Index EFT drastically rose in stock value by about 92 percent. The peak was documented on January 9th at $24.33. The figure represented a significant improvement on other benchmarks like the TSX-V which had experienced a remarkable 9% increment in the same space of time. Following the incredible high, the Horizons Marijuana Index adjusted 17% down to today’s $19.81.

The Canadian cannabis legalization bill, labeled Bill C-45, has already received consent from the Royals. In so doing, they have already made the bill become Canadian law. Legalization is expected to happen on October 17. While the marijuana stocks are flourishing at the moment, experts believe that one should not go blindly into the market without accessing possible risks.

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