Canadian stocks expected to mark first down year since 2011: poll

Wed Sep 30, 2015 1:37pm EDT
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By Alastair Sharp

TORONTO (Reuters) - Investors have soured further on the prospects for Canadian equities given slumping energy prices and worries about slowing growth in China, a Reuters poll showed, although a slight rise from the market's current beaten-down level is expected.

The Toronto Stock Exchange's S&P/TSX composite index is now forecast to post a loss for the year in 2015, its first year in the red since 2011. In 2016, it is seen making only plodding progress higher.

"Slow growth is coming to Canada with the potential for further decay in the commodity space," said Jay Bryant, from MacNicol and Associates. "This will mute returns."

While the index has steadily slipped since April, the outlook among those polled last week was much darker than three months ago, when the index was at around 14,500 points. It closed on Tuesday at 13,036.96.

The median forecast of around 25 strategists was for the TSX to eke out gains to 13,850 by year-end and to get to 14,150 by the middle of 2016. It should reach 14,800 by the end of next year, around where it ended 2014.

In late June, strategists were looking for 15,200 by the end of 2015, sentiment little changed from the poll in March..

"With the benefit of hindsight, the rally we saw earlier this year ... was obviously a head-fake," said Elvis Picardo, strategist at Global Securities.

He said the "intensely bearish environment for commodities and energy" could create a surprisingly deep recession in Canada and that optimistic earnings expectations despite the threats "could set the stage for massive disappointment".   Continued...