In this episode we discuss the Canadian equity market with Mark Rutherford, co-manager of Mawer's Canadian equity strategy. Mark highlights the key drivers behind Canadian equities' strong 2024 performance, highlighting standout sectors like technology, financials, energy midstream, and gold. He also examines challenges in telecommunications and real estate, discusses risks from slower economic growth, inflation, and higher mortgage rates, and emphasizes strategic portfolio adjustments.
Key Takeaways:
- Canadian equities excelled in 2024, driven by strong performance in technology, financials, energy midstream, and gold companies. Elevated valuations now prompt focus on sustainable growth and identifying new opportunities.
- In 2024, banks benefited from moderated loan growth, margin expansion, cost controls, and strong wealth management and capital markets earnings.
- Canadian insurance companies transitioned to stable earnings through improved product mixes, rational competition, and capital efficiency.
- Industries facing challenges or weaknesses in Canada include telecommunications (regulatory pricing pressures, rising competition, and higher refinancing costs) and real estate (expensive debt refinancing, softer industrial demand, and slower rent growth).
- Looking ahead to 2025, key risks for Canada include slower economic growth, inflation-driven policy shifts, a weakening Canadian dollar, and higher mortgage refinancing rates.
- To maintain strong portfolio performance, the focus will be on recycling capital into undervalued opportunities, prioritizing bottom-up analysis, and consistently selecting companies with strong fundamentals, aligned management, and reasonable valuations.
Host: Andrew Johnson, CFA, Mawer Institutional Portfolio Manager
Guest: Mark Rutherford, CFA, Mawer Portfolio Manager
For more details and full transcript visit: https://mawer.com/the-art-of-boring/podcast
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Founded in 1974, Mawer is a privately owned independent investment firm managing assets for institutional and individual investors. Mawer employs over 250 people in Canada, U.S., and Singapore. Visit Mawer at https://www.mawer.com.
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