Canadas top stock index shines as investors seek inflation hedge – Reuters.com


REUTERS/Mark BlinchRegister now for FREE limitless access to Reuters.comRegisterTORONTO, March 14 (Reuters) – As Russias intrusion of Ukraine disrupts the global economy and drives up oil, gold and commercial metal rates, financiers are accepting Canadas commodity-linked stock market to safeguard their portfolios from the effect of supply scarcities and skyrocketing inflation.Financial markets globally have been rattled in current months by increasing inflation as economies recover from the coronavirus pandemic, with matters made even worse by the spike in commodity prices after sanctions against Russia, the worlds top wheat exporter and second-biggest oil exporter.Canada uses a hedge of sorts. GSPTSE), has a 27% weighting in energy and products, showing that the incomes of a large portion of the market are directly connected to rising product prices.Register now for FREE limitless access to Reuters.comRegisterInflation-linked bonds are a more traditional hedge for financiers fearing cost spikes, but some prefer to keep exposure to equity markets. The Toronto markets large concentration of resource shares “provides a great hedge for global financiers against the possibility of an extended product supply-shock,” said Angelo Kourkafas, investment strategist at Edward Jones in St. Louis, Missouri.Foreign financiers have taken notification, raking a net C$ 46 billion ($ 36 billion) into Canadian equities last year, the most given that 2016, according to data from Statistics Canada.Among the companies that investors favor are copper miner Hudbay Minerals Inc (HBM.TO), which trades at a forward price-to-book ratio of 1.24 versus the market average of 1.61, Refinitiv data shows.Its valuation should play catch-up as the business has “laid the foundation” for development, said Michael Sprung, president at Sprung Investment Management.Paul Gardner, a portfolio manager at Avenue Investment Management, says the gold sector is “usually cheap” relative to the price of bullion.
Modifying by Denny Thomas and Paul SimaoOur Standards: The Thomson Reuters Trust Principles.


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