Canadian stocks poised for solid growth in 2014

Thu Dec 12, 2013 12:06pm EST
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By John Tilak

TORONTO (Reuters) - The Canadian stock market may deliver its best performance in four years in 2014 as a global economic recovery gathers steam, driving up sagging commodity prices and natural resource shares, a Reuters poll found.

The median forecast in a poll of 40 market analysts taken in the past week showed the benchmark Toronto Stock Exchange's S&P/TSX composite index .GSPTSE gaining over 9 percent from current levels to reach 14,363 by the end of next year.

The index is forecast at 13,650 in mid-2014.

While investors in Canadian equities have been largely left out of the global stock market party of 2013 - the TSX's 5.6 percent growth this year compares with the S&P 500's 25 percent - many strategists see a rebound in sentiment.

With Europe pulling itself out of a recession, China showing signs of stabilizing, Japan feeling positive effects of a record stimulus and the U.S. economy entering higher gear, analysts expect the global demand outlook to brighten. And the export-focused Canadian market is seen a beneficiary.

"It's the first time since 2011 that all the major economic blocs are going to be in a growth mode," said Elvis Picardo, strategist at Global Securities.

He noted significant contributions from the heavyweight financial, energy and material sectors will be required to take the index higher: "The expectation is that all three of those groups will contribute nicely to earnings growth next year."

Their performance this year has been mixed. Material stocks are down 34 percent in 2013 to date, the energy group is up 8 percent, and financials have run up almost 20 percent.   Continued...

A man walks past an electronic board displaying the midday TSX index in Toronto February 16, 2011. REUTERS/Mark Blinch