Mahaffy sees domestic policy, cash deployment, investor sentiment and positioning as 'green flags' for the TSX
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Royal Bank of Canada’s capital markets division named Sara Mahaffy as head of Canadian equity strategy, marking the first time in a decade it’s had a dedicated strategist covering the domestic stock market.
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A spokesperson for the bank confirmed the appointment of Mahaffy, a McGill University graduate who has been working under Lori Calvasina, RBC’s head of United States equity strategy.
In her note launching coverage of the S&P/TSX Composite Index, Mahaffy set a 12-month target of 38,600 for the benchmark, implying roughly seven per cent upside. That’s above the average 37,150-point target for the S&P/TSX, according to data compiled by Bloomberg.
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Prime Minister Mark Carney courted some of the world’s largest investment firms and sovereign wealth funds at a recent summit in Toronto, where he unveiled a tax break to stimulate investment. Mahaffy sees domestic policy, cash deployment, investor sentiment and positioning as “green flags” for the TSX and “no clear red flags.”
She recommends investors overweight the consumer staples and energy sectors.
“Canada has historically outperformed the U.S. when inflation is picking up, which could give an edge to Canada if pressures prove to be stickier,” Mahaffy wrote in a note.
The S&P/TSX has climbed 13.4 per cent this year, outperforming the roughly 12 per cent gain of the S&P 500 Index, thanks in part to a heavy weighting in energy and financials. Combined, those two sectors make up more than 50 per cent of the benchmark.
—With assistance from Laura Dhillon Kane.
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