The aftershocks of the country’s new mortgage rules may extend well
beyond the housing market and to Bay Street, according to market
analysts reviewing the performance of the S&P/TSX.
"The S&P/TSX may decline as much as 10 percent over the next year
should government measures such as tighter mortgage restrictions spur
declines in housing prices," Sadiq Adatia, chief investment officer at
Sun Life Global Investments in Toronto, told reporters Monday.
The warning comes on the heels of news that the exchange's SPTSX
compositie index dropped 0.5 per cent this year through Aug. 10. That's
quite removed from the 8.1 per cent gain for the MSCI World Index. The
gap between the two is, in fact, the biggest since1998.
The performance in Canadian shares this year has trailed behind most other markets in developed countries.
Forecasts for a stagnant Canadian economy in 2013 and the new, tighter
mortgage rules are now raising concerns that that poor performance will
only worsen.
Ironically, real estate may ultimately benefit from any slump in the
capital markets as Canadians turn to property to make up for an
shortfall in their stock market portfolios.
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