February 2020 Portfolio Management Team Update

Elvis Picardo

February 5, 2020

Market & Economic Environment: The first month of 2020 commenced on an inauspicious note for financial markets, as two “wild cards” injected significant uncertainty in the outlook for the year. The TSX Composite and S&P 500 equity markets had recovered from the initial spike in geopolitical risk – caused by the killing of a top Iranian general in a U.S. airstrike on January 3 – to reach new all-time highs on January 22. However, investors have been rattled by the worldwide spread of the Wuhan coronavirus, which has killed hundreds of people and infected more than 17,000, primarily in mainland China. The TSX gained 1.5% at the end of a tumultuous month, as gains by the Information Technology and Industrials sectors, as well as defensive groups like Utilities, Real Estate and Consumer Staples, offset declines by Health Care, Materials and Energy. Base-metal producers such as Teck Resources and HudBay Minerals were among the worst performers on the index as commodity prices plunged on concerns about the negative effect of the virus on global growth, while energy stocks were dragged lower by the 15% slide in crude oil prices on similar concerns. In the U.S., the Dow Jones Industrial Average retreated 1%, the S&P 500 was marginally lower at -0.2% and the Nasdaq Composite rose 1.8%. Asian bourses endured steep declines, with China’s benchmark index plunging more than 9% on February 3 in its first trading day since January 23. (Data Source: FactSet)

Our Strategy: While market reaction to the virus outbreak has been largely muted in North America, the Portfolio Management Team (PMT) expects volatility to be elevated in the near term. The PMT commenced deploying recent contributions made by clients to their registered accounts in the last week of January, and will continue to monitor market developments in order to make appropriate portfolio adjustments should the virus impact worsen.

Please contact any member of the PMT if you have any questions or concerns regarding your accounts.