Canadian confidence renewed on pot, US and emerging markets

Performance gains across 10 out of 14 asset classes have prompted bullishness among investors and advisors

Canadian confidence renewed on pot, US and emerging markets

After a divergence in outlooks for Q1 2019, it seems investors and advisors are once again on the same page in terms of which areas they’re bullish on.

Based on the firm’s previous Q1 2019 polls, volatility in late Q4 2018 dampened bullish expectations among advisors and investors. With performance gains registered across the majority of indices tracked by Horizons ETFs, both advisors and advisors expressed confidence in 10 out of 14 asset classes evaluated in the firm’s Q2 2019 Advisor and Investor Sentiment Surveys.

The loss of confidence in sentiment for pot stocks in Q1 has been replaced by 70% bullishness in the space among investors; advisors also registered a 16% increase in confidence to reach 47% bullishness. Driving the bounceback is the North American Marijuana Index’s 54.55% return in Q1 2019, which was the best among all indices tracked in the Q2 surveys.

“Many Cannabis companies have surged in 2019 – buoyed by revenue growth and growing legitimization,” said Horizons ETFs President and CEO Steve Hawkins. “With growing global opportunities, including in the burgeoning US Cannabis market, we expect that sentiment could continue to grow.”

Both investors and advisors also saw opportunities outside Canada, particularly in US equities and emerging markets. A strong comeback in the NASDAQ-100 index inspired a 16.57% increase in advisors’ confidence in the NASDAQ to reach a record 67%; investors revised their bullish positions from 41% in Q1 to 54% in Q2. The rally in the S&P 500, meanwhile, translated into a 62% positive outlook among advisors, and a shift from negative to neutral among investors.

After a 9.91% gain in Q1,the MSCI Emerging-Market Index benefited from substantial growth in bullish sentiment. Advisors’ bullish outlook rose 18% to reach 66%, while investors’ bullishness strengthened by 8 points to reach 45%.

US fixed income was an area of uncertainty for both groups. While the US 7-10 Year Bond Index climbed by 2.85%, investors and advisors remained overwhelmingly neutral on the benchmark. Investors’ bearishness overwhelmed bullishness, but advisors’ bullish outlook edged out their bearish sentiment by 5%.

“China was one of the strongest-performing equity markets of the first quarter, as concerns about trade tariffs dissipated,” Hawkins said. “A big reason for the resurgence in the U.S. equities could be due to the resurgence in technology stocks. We can see that advisors are strongly favouring the tech-heavy NASDAQ-100 vs. the broader S&P 500 Index.”

On the Canadian side, Canadian equity indices saw across-the-board positive performance, but advisors’ and investors’ sentiments were mixed. The S&P/TSX 60’s 12.54% return — which made it the best-performing Canadian equity metric in Q1 — was met with a 7% bullishness boost among investors and a 7% retreat among advisors. Faith in the S&P/TSX Capped Financials Index declined by 6% and 14% among investors and advisors, respectively; both updates created a near-equal distribution of bulls and bears.

The S&P/TSX Capped Energy Index’s 12.19% in Q1, which followed a 28.02% plunge in Q4 2018, fuelled an 8% increase in sentiment among investors; advisor bullishness was only budged up by 3%. Both advisors and investors were also shown to be outright bearish on the loonie, with investors registering three times the bearish sentiment seen among advisors.

Following a 21.16% gain in Q4 2018, S&P/TSX Global Gold Index eked out a 4.98% increase in Q1, earning it a 10% advance in bullish sentiment among advisors; investors were mildly disappointed, however, as opinion dropped 8% but remained firmly positive. The overall confident feeling on Crude Oil One-Month futures remained virtually unchanged with just a 1% drop in bullishness; natural gas, however, saw overall bearish ratings of 33% and 45% among investors and advisors, respectively.


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