The top strategist at one of the world’s most influential investors is warning Canadians to prepare for much weaker returns from the Toronto Stock Exchange.
After the TSX shot up more than 20 per cent from its low in January, BlackRock says the valuations here aren’t as compelling.
"Canada is a market today where the valuations are no longer as compelling, it's exposed to global growth and it is held back by that low interest rate environment," Richard Turnill, BlackRock’s Global Chief Investment Strategist, told BNN in an interview. "Like other markets, Canadian investors need to prepare themselves for low returns."
He said that while Canada has benefited from the low interest rate environment and from the stabilization in commodity prices over the course of this year, it does face some of the headwinds, like low interest rates, that have been seen elsewhere.
The Brexit effect
Turnill explained that even though the recent Brexit vote has created political and economic uncertainty, it only exacerbates trends of the low global growth environment that has already existed since the 2008 global financial crisis.
“Brexit is likely to have a material impact on the U.K. economy, but it’s just going to add to some of the headwinds slowing global growth which have been around for years,” he said.
Turnill also noted that there’s been good consumer spending in many countries, but that high level of political uncertainty from Brexit is one of the reasons BlackRock expects investment spending, in particular, to remain low for some time.
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