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Why Canadian stocks are down, but not out

The chief investment strategist at BMO Capital Markets expects the S&P/TSX to outperform the U.S. for the first time since 2010.

It is a miserable start to the year for equity markets in Canada, but a high rally is in the cards for the country’s benchmark index, predicts Brian Belski, chief investment strategist at BMO Capital Markets Corp.

The S&P/TSX Composite Index opened the week at 12,389 points, down 5 per cent for 2016. By year end, Belski says the index will leap 23 per cent to fifteen,300, as Canada’s stocks become more correlated with the U.S. economy.

According to a research note, Belski sees the S&P/TSX outperforming the U.S. for the first time since 2010, “mainly due to the leverage from any recovery in emerging markets and commodity prices.” Many global portfolio managers were also net sellers by end of 2015, leaving the index “heavily under-owned globally.”

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