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With Canada’s major stock index posting its best year in more than a decade, it was the bullish forecasters who came out on top in 2019.

Just not too bullish.

To evaluate market mavens’ predictions, The Globe and Mail looked back at the Reuters poll of forecasts for the 234-stock S&P/TSX Composite Index for 2019. The broadest measure of Canadian stocks closed Tuesday at 17,063.43, up 19.1 per cent from its close at the end of 2018. That return was the biggest since 2009, when global markets were rebounding from the 2008-09 financial crisis.

Three firms just about nailed it. The winners were Manulife Investment Management and Fiera Capital Corp., which submitted forecasts of 17,250, and a small Toronto outfit called RKH Investments, which suggested a 17,000 close.

Seven financial companies, however, forecast finishes of 18,000 or more, led by Laurentian Bank Securities at 19,000. They all overshot by 5 per cent or more. Thirteen companies forecast finishes of 16,200 or less, undershooting by 5 per cent or more. According to the Reuters poll, four firms saw the S&P/TSX Composite finishing at 14,000 or less, including two that were among the most accurate in their 2018 predictions: Montreal’s Phases & Cycles, which forecast 14,000, and the StennerZohny Group, a San Francisco-based affiliate of Morgan Stanley.

All told, the group of 28 averaged a forecast of just over 16,000, missing the finish by more than 4 per cent.

Holding the forecasters’ feet to the fire for 2019 is a little more difficult than in more normal periods. The companies submitted their forecasts by November, 2018 – partly through a dismal fourth quarter that saw the index fall almost 11 per cent.

That decline meant Canadian stocks needed to gain much more to match the forecasts made just a few weeks earlier. For example, a forecast of 16,000 for year-end 2019 would have been a gain of 6.5 per cent from the Oct. 31, 2018, level of the index. By that Dec. 31, after the decline, 16,000 represented an 11.7-per-cent gain.

A number of forecasters likely revisited their numbers soon after submitting them. One was Brian Belski, the equity strategist at BMO Nesbitt Burns Inc.'s U.S. affiliate. Reuters has BMO with an 18,000 forecast, but Mr. Belski cut it to 17,000 early in 2019.

Manulife Investment Management chief investment strategist Philip Petursson, however, held fast with his 17,250 for most of 2019. In an interview Monday, he said Manulife felt the fourth-quarter correction was justified, “a garden variety repricing of equity risk against a backdrop of higher interest rates.”

He said Manulife believed in November, 2018, that there would not be a recession in the next 12 months and that Canadian equity markets could continue to move higher on positive earnings growth – particularly with an increase in the price of oil. (The Composite has a much higher correlation with energy prices than the U.S. S&P 500 index, given Canada’s concentration of resource companies.)

Ron Meisels of Phases & Cycles, which uses technical analysis of stocks for its forecasts, said the market’s declines late in 2018 prompted him to forecast a recovery rally in early 2019 to 17,000 for the Composite, followed by another decline toward the end of the year, to 14,000.

“The strength of the early months of 2019 negated this forecast,” he said, so he revised his year-end target to 18,000. “The right direction but, as it turned out, too optimistic.”


After a robust 2019, market forecasters are hesitant to predict another boom year for Canadian equities.

The median forecast for the S&P/TSX Composite Index for the end of 2020 is 17,625, which would represent a gain of just more than 3 per cent, according to a survey of 26 market prognosticators conducted by Reuters.

Certainly, there are bulls and bears: The highest forecast was 20,000 by Toronto’s Selective Asset Management. If that comes true, Canadians can look forward to a 17-per-cent gain in the Composite this year. StennerZohny Group, which missed its 2019 projection badly by forecasting an index sinking to the 12,000 mark, has reiterated the number for 2020.

The figures were submitted to Reuters in late November and, for some of the forecasters, the revisions for 2020 have already begun.

Manulife Investment Management Inc.’s chief investment strategist Philip Petursson submitted an end-of-2020 Composite forecast of 17,000 to Reuters, essentially predicting a flat market. But after extensive analysis of the profit potential of Canadian companies and their stocks’ price-to-earnings multiples, he has bumped his forecast up to 18,500 – a gain of about 8.4 per cent. “We anticipate that oil prices will continue to move higher at least in the first half of 2020, and that puts the TSX in a very favourable light relative to what we see in the United States.”

Michael Sprung of Sprung Investment Management, however, is forecasting a 14,500 close for the Composite, a 15-per-cent decline from current levels. The value-oriented investor sees the risk of recession at “a little higher than 50-50."

"I just think that there are more risks building up in the market than there are huge positives that are readily apparent,” he said, citing global trade worries and the lack of investment as one of his primary concerns. “There’s just too much that could be out there that I think that any one of them could trigger a re-valuation in the market.”

TSX forecasts for the end of 2020

Firm nameForecast
Selective Asset Management 20,000
Avenue Investment Management 18,500
HollisWealth 18,500
timingthemarket.ca 18,400
Nicola Wealth Management 18,350
Fiera Capital Corp. 18,300
Lorne Steinberg Wealth Management 18,150
Eight Capital 18,000
SIA Wealth Management 18,000
SW8 Asset Management 18,000
AGF Investments 17,750
National Bank of Canada 17,700
Desjardins Securities 17,650
Dai-ichi Life Research Institute 17,600
Edward Jones 17,500
FCI Advisors 17,500
Laurentian Bank Securities 17,500
Purpose Investments 17,500
Portfolio Management Corp. 17,300
Manulife Asset Management 17,000
Phases & Cycles 16,500
First Asset Investment Management 15,500
Sun Life Global Investments 15,000
Sprung & Co. Investment 14,500
ETF Capital Management 14,000
StennerZohny Group 12,000
Median 17,625
High 20,000
Low 12,000

Source: Reuters

Editor’s note: An earlier version of this article included an incorrect date for an updated forecast.

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