Wednesday, April 11, 2012

Today's Major Market Move: S&P TSX Venture Composite Index Down 8.4% in April

The Canadian economy is one that we haven't discussed very often in this blog, which indicates that it hasn't experienced very many wild swings over the past year and a half, in either the upward or downward direction. So when we saw a Canadian equity index on the bottom end of the spectrum of our global equity index table, it piqued our interest. The S&P TSX Venture Composite Index is down 8.4% in April making it the worst performer for the month so far.

Click here to go to the live table.
 Here's a description of the components of the index from the horse's mouth:
The S&P/TSX Venture Composite Index is a broad market indicator of Canadian micro cap securities in Canada. Its constituents are listed on the TSX Venture Exchange. The index is market capitalization weighted. The Toronto Stock Exchange (TSX) serves as the distributor of both real-time and historical data for this index.
The other thing that has caught our attention is that the index today is not all that far from the lows of 2011.
Canada has not seen the same surge over the past 6 months as the U.S. Many people have argued that the Canadian housing bubble still has a lot of deflating left to do. Here's our equity index/GDP growth comparison chart for Canada:

Click here to go to the live chart.

Compare that chart to the one for the United States:

Click here to go to the live chart.

U.S. Equities took a bigger hit during the crash and GDP growth has suffered more, but because the U.S. economy has already dealt with a higher % of it's bad debt relative to Canada (particularly in real estate), the U.S. economy is faring much better at the moment. Don't get us wrong, if there is a 2nd major global wave to this crisis, we think the U.S. still has more pain in store. However we believe Canada has many more cockroaches that weren't rooted out during the first wave and take a bigger hit subsequently.

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