The Vanguard FTSE Canada All Cap ETF (TSX:VCN) was down 1.2% in late afternoon trading on August 15. The Canadian stock market was not able to escape the impact of a global rout as Turkey’s currency crisis continues to intensify.
The lone bright spot was the performance of major cannabis producers after a $5-billion investment from Constellation Brands was announced.
The Vanguard Canada All Cap ETF has increased 2.7% in 2018 so far. Mirroring the TSX, the top holdings of the ETF include Royal Bank of Canada, Toronto-Dominion Bank, and energy giants like Suncor Energy Inc. and Enbridge Inc. The TSX closed down over 180 points on August 15.
Global markets have managed to stay relatively stable in spite of rising geopolitical tensions and the threat of a trade war in 2018. This is largely because of the still-solid economic performance in the world’s largest economies.
Canada has also posted solid numbers. GDP grew 0.5% in the month of May and the economy added 54,100 jobs in July.
Still, top bank executives and money managers have warned of investment flight from Canada. This has been exacerbated by the U.S. Tax Cuts and Jobs Act. An election now looms in 2019 and the economy will likely take centre stage.
Plunging oil prices may also hurt the energy-heavy TSX in the near term. Investors should look to sectors of strength rather than rely on a broader rally for the Canadian stock market.
