On Bloomberg, there is a popular screen, WEI (World Equity Index), that shows the major stock indices in the Americas, EMEA (Europe Middle East and Africa) and Asia/Pacific It gives a good snapshot of how all these indices are doing on the day and year to date (YTD, or several other time periods you can chose).
Green means the index is up over the period of time and red means it is down over that period of time. Here is the WEI page at the close for Thursday July 6, 2017:
Focus on the second column from the right...the %YTD which is in each country's home currency.
Anything stick out? That's right, the S&P/TSX (Toronto Stock Exchange Composite Index) is the only major stock index on this screen that is "red" or down YTD (at -1.37%). Crazy. As the title says, "It Ain't Easy Being Green"...and it sucks being red - the only red.
It has been a tough equity investing market in Canada the past 6 months, that is for sure. I thought I would drill down a little bit more to see how certain industry sectors have done YTD.
Given over half of our Index is in three sectors, I took a smattering of some of the biggest stocks to see how they have performed on an individual daily total return basis YTD. As follows by industry sector and by stock YTD at today's close (Source: Bloomberg YTD to July 6, 2017).
Banks are 24% of the Index
Royal Bank +6.6%
Mostly up but also off their highs from March 2017. Remember, total return includes dividends and those dividends being reinvested back in the individual company's stock.
Materials are 11.4% of the Index
Barrick Gold -5.0%
Given the rout in the commodity space, it is hard to find any individual names that are anywhere close to positive YTD. And I just took the two largest ones for a sample. Midsize and small companies have been hurt far more.
Energy is 20% of the Index
Imperial Oil -21.1%
If these large, integrated, diversified energy companies are off 15-20%, what do you think smaller Exploration and Production companies are off? Try 40-50% YTD. Yikes.
Maybe it is time for some "reversion to the mean" and some global portfolio rebalancing by International money? That would sure be nice for We The North during our 150th Birthday but for that to happen, I fear we will need to see an overall turn in the commodity markets. Now the C$ strengthening as it has of late, will not help with International security flows into Canada.
The key to investing in some of these beaten down sectors, like oil, is to get the macro call correct first and then drill (pardon the pun) down to the security selection process. So far, oil is much less volatile than it was in 2015 and 2016 and way less volatile than in 2008 and 2009. Regardless, even though volatility has come down at these lower prices, and most oil producing companies can produce Free Cash Flow at U$45 WTI, the equities of these companies are volatile as all get out and on a weakening trend overall. We remain extremely cautious on our overall energy exposure.
Sure would be nice to see Canada painted green.