Mar 20, 2020
Damage control: Inside the TSX's 34% slide from record high
TSX suffers a month of huge losses after notching record high
It’s been a stunning selloff for the S&P/TSX Composite Index, with Canada’s benchmark stock market shedding a third of its value in only a month after reaching an all-time high on Feb. 20.
There’s been almost no place to hide for equity investors, with only one of the composite’s 230 members in positive territory from last month’s peak: grocer Metro Inc.
Here’s a look at the market action in the face of the COVID-19 virus fallout.
Energy: -48.9 per cent
Consumer Discretionary: -43.0 per cent
Health care: -41.7 per cent
Real Estate: - 39.0 per cent
Financials: -35.0 per cent
Not a single sector on the TSX has been spared from the selloff, with all eleven deep in the red. The energy sector has been sent to the mat, losing half of its value amid concerns over falling crude demand due to the virus and the oil price war launched by Saudi Arabia hammering the Canadian producers in an unprecedented manner.
The health care names have been hard hit as well. The sector, which is dominated by volatile cannabis stocks, has plunged deep into a bear market under current conditions. Aurora Cannabis Inc. and Hexo Corp. have been the hardest hit.
Shawcor Ltd.: -88.9 per cent
Vermilion Energy Inc.: -83.9 per cent
Whitecap Resources Inc.: -81.5 per cent
Cenovus Energy Inc.: -80.5 per cent
Secure Energy Services Inc.: -80.2 per cent
The energy sector has been rocked by the current market conditions. Energy services company Shawcor lost nearly 90 per cent of its value after suspending its dividend in the face of the crisis, sending shares plunging. Shares of Vermilion plunged after the company, which has production in Southwest Saskatchewan and Europe, slashed its dividend. Whitecap, Cenovus and Secure were similarly caught up in the damage.
While the TSX energy index is under pronounced pressure, Ninepoint Partners partner and senior portfolio manager Eric Nuttall said he expects a strong recovery once fundamentals solidify.
“We are literally in the valley of death for Canadian energy, but those [companies] with good hedges can make it out of this,” he said. “The Canadian energy industry is under severe pressure, but it will survive.”
Nuttall said he thinks mid-cap companies will see the biggest rebound in any rally.
In the wake of the selloff, investment industry professionals are urging calm. In a phone interview with BNN Bloomberg, Richardson GMP chief investment officer Craig Basinger said investors should stay the course in times of volatility.
“It’s time likes these that you can do more damage to your portfolios than good – this too shall pass,” he said. “Don’t panic, think things out.”
Goodreid Investment Counsel senior vice-president and portfolio manager Brian Madden echoed that response, adding clients used to nothing but upside action in equities should remain sanguine.
“People think their portfolios are bullet-proof. They don’t want to eat their vegetables, but volatility happens,” he said. “We’re looking through the greatest economic dislocation of our lifetime. Be calm, be objective and don’t let emotion take hold.”