Toronto TSX to hit new record high; some worry about correction: Reuters poll

Wed Mar 29, 2017 9:17am EDT
 
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By Fergal Smith

TORONTO (Reuters) - Canada's main stock index will post modest gains but still reach a fresh all-time high by the end of 2017, a Reuters poll found, but some investors worry the index is overvalued and vulnerable to a correction.

Median forecasts from the poll of more than 20 portfolio managers and strategists were for the Toronto S&P/TSX composite index .GSPTSE to rise 3 percent to 16,000 by the end of 2017 from Tuesday's close of 15,598.57, eclipsing the record high of 15,943.09 set in February.

It rose 17.5 percent in 2016 and has more than doubled from a trough in March 2009, set during the global financial crisis, and is expected to climb by mid-2018 to 16,470.

"The equity rally is eight years old but rallies don't die because of old age, they end because of recessions," said Ben Jang, portfolio manager at Nicola Wealth Management.

A recent pick-up in the global economy could help support Canada's commodity-linked stock market, while domestic growth has also strengthened. Also, last week the government held off from raising taxes on investors in its budget.

Investors had worried increased taxes on capital gains and dividends would reduce the competitiveness of Canada's businesses, just as the administration of U.S. President Donald Trump focuses on trade deals and tax reform.

Trump's administration last week approved TransCanada Corp's (TRP.TO: Quote) Keystone XL pipeline, which would bring more than 800,000 barrels of heavy crude per day from Canada's oil sands to U.S. refineries and ports along the Gulf of Mexico.

But Canada, which sends about 75 percent of its exports to the United States, could suffer badly if the North American Free Trade Agreement is renegotiated or the United States implements a border adjustment tax.   Continued...

 
FILE PHOTO -  A TMX Group sign, the company that runs the Toronto Stock Exchange (TSX), is seen in Toronto, June 23, 2014.  REUTERS/Mark Blinch/File Photo