Canadian stocks are rallying the most in three years, pushing the benchmark equity index to the highest level since 2011, as economic growth accelerates and gold rebounds from its worst year in more than three decades.
Investors should buy Canadian banks and insurers as companies such as Manulife Financial Corp. benefit from beefed up wealth-management activity and a switch from bonds to other assets, according to BMO Capital Markets.
Valuations in the Standard & Poor’s 500 Index increased by the most since the financial crisis last year as 460 stocks rose, more than any year since at least 1990. Neither are reasons to bet against equities now.
U.S. companies including Ford Motor Co. and Microsoft Corp. are poised to boost business investment to a record in 2014, using a growing cash hoard to propel corporate spending past last year’s $2 trillion.
Oppenheimer & Co. Chief Investment Strategist Brian Belski cut his 2010 and 2011 estimates for the Standard & Poor’s 500 Index, becoming at least the third strategist in two weeks to reduce his outlook on U.S. stocks.
Stocks would suffer after an initial jump should the Federal Reserve decide to extend economic stimulus beyond the June expiration of its current quantitative easing program, Oppenheimer & Co.’s Brian Belski said.
The Canadian stock market is forecast to improve next year to at least match the performance of the U.S. for the first time since 2010, led by companies raising their dividends such as Rogers Communications Inc. and Brookfield Asset Management Inc.
Cheap is converging with expensive in the American equity market, narrowing options for investors looking for bargains after the broadest rally on record lifted almost 90 percent of the Standard & Poor’s 500 Index this year.