IG Wealth Management, one of Canada’s biggest asset managers, is cooling on the US stock market while boosting its position on its home country as valuations sink to some of their lowest levels on record.
“When you look at the Canadian market relative to the US, it’s nowhere near as expensive, and it’s substantially cheaper relative to its own history,” IG Wealth Management’s Chief Investment Strategist Philip Petursson said. “The Canadian market is already priced for the worst case scenario, whereas the US isn’t. But this also comes back to the earnings versus valuations versus how deep a recession could go.
Investment managers are searching for clues to make sense of the volatile markets. While Canada’s benchmark S&P/TSX Composite index has outperformed the S&P 500 this year, the US market narrowed the gap on better-than-expected earnings. Meanwhile, foreign investors are dumping Canadian stocks at the fastest pace since 2007.