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. Mahaffy, a McGill University graduate who has been working under Lori Calvasina, RBC’s head of US equity strategy, set a 12-month target of 38,600 for the S&P/TSX Composite Index, implying roughly 7% upside.
That target sits above the average 37,150-point forecast compiled by Bloomberg. Prime Minister Mark Carney recently courted global investment firms and sovereign wealth funds at a 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 US when inflation is picking up, which could give an edge to Canada if pressures prove to be stickier,” Mahaffy wrote. The S&P/TSX has climbed 13.4% this year, outperforming the roughly 12% gain of the S&P 500, thanks in part to a heavy weighting in energy and financials, which make up more than 50% of the benchmark.
RBC did not comment further on the appointment beyond confirming Mahaffy’s role.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing