(By Eric Lam, Bloomberg)
Canada is the orphan equity market nobody wants.
Hammered by the commodity meltdown all year, shares of some of its biggest corporate icons are now also sliding, driving the benchmark Standard & Poor’s/TSX Composite Index toward its lowest level in two years. On Friday, the resource-heavy index capped its longest losing streak in more than a decade, worse than any stretch during the 2008 financial crisis.
“There will be more pain for Canada,” said Sadiq Adatia, chief investment officer at Sun Life Global Investments in Toronto. His firm manages about C$11.5 billion ($8.6 billion), and has been underweight Canadian investments for three years in favor of U.S. and international markets. The S&P/TSX will likely fall below 13,000 points in the near term, levels not seen in two years, he said.
“There will be more downside here," he said. “We’re just starting. There’s nothing on the horizon that will paint a brighter picture for Canada.”
The S&P/TSX, the benchmark equity gauge for the world’s 11th largest economy, has slumped almost 11 percent this year, posting the third-worst decline ahead of only Singapore and Greece among 24 developed markets.
After a brief 1.7 percent rally in October, the S&P/TSX declined for eight days in a row through Friday to 13,075.42, the longest losing streak since June 2002. A break through the 13,004.58 low on Sept. 28 would take it to October 2013 lows. The index rebounded 0.4 percent Monday as commodities producers increased with the price of oil and gold.
“There is so much apathy and negativity against Canada,” said Greg Taylor, a fund manager at Aurion Capital Management in Toronto. His firm manages about C$7.2 billion. “Nobody wants to put a pin in this, take a stand and fight back. You have uncertainty about the Fed, the U.S. dollar strengthening, commodities getting crushed. Canada, psychologically, has been hurt.”