Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
The title of Scotiabank strategist Hugo Ste-Marie’s most recent report is blunt –“While the TSX Composite is posting solid gains this year and in the past year , foreign investors show little appetite for Canadian equities. In fact, the latest data from Statistics Canada for the month of June shows that foreign investment in Canadian equity and investment fund shares dropped by C$5.5B ...
“We make a few changes to our models and our Q3/24 core EPS estimates modestly increase; we increase our Canada P&C loan growth assumptions in line with RBC Elements’ model predictions and adjust our capital markets estimates . We continue to view credit quality as one of the key areas to watch for the Canadian banks as we have seen signs of credit quality deterioration . We expect impaired PCL ratios to increase 3 bps QoQ and 12 bps YoY on average.
BofA Securities analyst Arjun Goyal believes that the rapid fall in the VIX index is a signal to hedge against risk, “Vol markets have rapidly stabilized from 5 Aug’s spike, with the VIX having already retraced almost all the way back to its pre-August YTD average level. In fact, the speed of this retracement has been historic, with the VIX dropping from its peak to below its long-term median in just 7 days .
“With the housing market continuing to languish through spring under the pressure of high interest rates and high prices, mortgage activity has remained similarly under wraps. Mortgage balances grew by 3% annualized in Q2, the second slowest quarterly pace since 2000. Last week’s July home sales figures showed a small decline, suggesting that Canadians are maintaining a cautious view on housing even as interest rates are starting to come down .
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