While low interest rates are a thorn in financial equities’ side, and concerns remain surrounding the real estate market, it is the price of oil that has been copping the most flak.
But according to Gaelen Morphet, senior vice-president and chief investment officer with Empire Life Investments, the concerns about oil could be misplaced.
“Oil is certainly a component of the picture and it’s a large one, but we have many other industries and sectors that make up the market that are doing well,” says Morphet. “It’s not just about oil. There are a lot of other considerations when you forecast for the market in Canada.”
Six or seven years ago, when oil was around its peak at $150 a barrel, the energy sector made up over 30 per cent of the TSX. But it now only represents roughly 20 per cent of the Canadian economy as other parts have appreciated, lessening the potential damage it can do.
“The market has much less exposure to oil than there was in the global growth scenario,” says Morphet. “That’s one of the reasons why I say some of the pessimism has been discounted because, as a component of our market, the energy stocks, when you strip out the pipelines, have a much smaller impact.”
With all the concern swirling around Canada perhaps it’s no surprise Morphet is looking outside the country.
“In my 30-year career, I’ve never been more exposed to non-domestic securities than we have been in the last four years,” says Morphet.