Canada’s Stock Market Kept Afloat By Just A Few Strong Names

Canada’s largest stock index has been buoyed this year largely on the back of a handful of mega-cap stocks outperforming the wider markets.

Bloomberg identifies these names and provides some color on what the TSX returns would look like without them:

While finance, energy and materials account for two-third of the S&P/TSX Composite Index, three of the top five gainers currently are outside these sectors: Canadian National Railway Co., Restaurant Brands International Inc. and Rogers Communications Inc. The other two are usual suspects Brookfield Asset Management Inc. and Royal Bank of Canada.

Removing these five contributors would reduce the index’s gain by 1.3 percentage points this year, leaving it with a 1 percent advance, which would be among the smallest of more than 100 global peers tracked by Bloomberg.

Canada’s overall market performance this year has been held back largely by weakness in energy companies, which are mired in a major slump amid one of the worst crude oil markets in history. Energy makes up over 21% of the weighting of the TSX Composite index. Meanwhile, Financials top the index’s holdings with a massive nearly 34% weighting.

The iShares MSCI Canada Index ETF (NYSE:EWC) was unchanged in premarket trading Thursday. Year-to-date, EWC has gained 0.84%, versus a 7.31% rise in the benchmark S&P 500 index during the same period.

EWC currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #2 of 5 ETFs in the Canada Equities ETFs category.