Canadian Stocks Continue Surge, Hit Record
The hottest of the world’s major stock markets this year is in a country better known for ice.
The Toronto Stock Exchange’s 300-share index surged 222.58 points, or 2.2%, to a record 10,572.85 on Wednesday, lifting its year-to-date gain to 25.7%.
That dwarfs the gains recorded so far this year in other major world markets. Indeed, in the United States, the Nasdaq composite index on Wednesday just climbed back into positive territory for the year.
In Europe, the best of the major markets is the Swedish market, up 15.1%.
Canada’s market has been stoked primarily by two industry sectors: technology and energy.
Communications equipment giant Nortel Networks, which accounts for a whopping 33.7% of the TSE-300 index’s market capitalization, rose to a record Wednesday with the broad rally in U.S. and Canadian tech shares.
Nortel’s U.S. shares (ticker symbol: NT), which track the Canadian shares, jumped $3.25 to $75.
“Technology and Nortel were driven by a big surge in the Nasdaq [market], coming off better financial results out of Yahoo Tuesday,” said Peter Chandler, senior vice president director at Canaccord Capital in Toronto.
Nortel, up 49% this year, has accounted for a big share of the Canadian market’s gains. Another Canadian telecom giant, BCE, is up 19% this year.
But Canada’s oil and gas giants also have buoyed the market this year, as energy prices have surged to levels few analysts expected at the start of the year.
Alberta Energy, for example, has surged 28% this year in Canadian dollar terms; Petro Canada is up 41% and Imperial Oil is up 23%. Those three stocks are among the biggest energy companies in the TSE-300 index.
Some Canadian banks, meanwhile, have bucked the downtrend in U.S. bank shares. Bank of Nova Scotia has risen 14% this year. By contrast, U.S. banking giant Bank of America is down 6% this year.
The Toronto share index also has gotten a lift from its No. 2 stock in terms of capitalization, media and beverage titan Seagram Co. The planned takeover of Seagram by France’s Vivendi has driven Seagram’s stock up 23% this year.
For U.S. investors in Canadian shares, the U.S. dollar’s strength has clipped returns this year: While the TSE-300 index is up 25.7% in Canadian dollar terms, it’s up 22.7% when translated into U.S. dollars.
That has weighed on returns of the Fidelity Canada fund, the only open-end U.S. mutual fund that specifically targets Canadian stocks.
The Fidelity Canada fund was up 19.5% year to date through Tuesday.
One U.S. dollar now buys about $1.48 Canadian, versus $1.45 at the end of 1999.
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Yo, Canada!
After struggling in 1997 and 1998, the Canadian stock market roared up last year and has rocketed 25.7% this year, as measured by the Toronto Stock Exchange’s 300-share index. That’s the best performance of any major market worldwide. Monthly closes and latest for the index:
Wednesday: 10,572.85
Source: Bloomberg News
