The asset management firm is cautious on equities this year, but Canada is likely to outperform the U.S. again, according to Sebastien Page, head of its global multiasset group. The country’s commodities-heavy market is reasonably priced and offers exposure to China’s reopening, he said.
“If I look at Canadian stocks, I think the valuation is more interesting, cheaper,” Page said in an interview in Montreal. Agriculture, fertilizer, and oil and gas stocks all stand to benefit from China’s move away from its Covid Zero policy, he said. Canada’s S&P/TSX Composite Index gained 7.1 per cent in January, the second-biggest rise for that month since 1990. The Canadian benchmark fell 8.7 per cent last year but beat the S&P 500 by more than 10 percentage points, thanks to strong performance from energy, consumer staples and transportation stocks.
Baltimore-based T. Rowe Price, with US$1.3 trillion in assets under management, is managing recession risks by being underweight on stocks, neutral on bonds and long on cash. Within equities, it’s overweight to Canada, Page said. Still, Page can’t hide his worries over the Canadian housing market, which he sees as one of the biggest threats to the country’s economy.