Investors were left reeling in 2015

Carnage on stock market wide, deep

Bank of Canada governor Stephen Poloz summed up the Canadian economy best by calling it “another year in the serial-disappointment series.”

For investors in Canadian assets the disappointments ran the gamut from stocks to bonds to the currency, as the collapse in commodity prices sapped growth in the world’s 11th-largest economy.

So let’s catalogue the pain, say good riddance to Canada’s horrible year and contemplate sunnier days:

1. Among developed world’s worst stock markets

The Standard & Poor’s/ TSX Composite Index has plunged 11 per cent since the beginning of the year for the worst showing among its Group of 10 peers as crude oil’s 35 per cent tumble weighed on stocks. Of the world’s 24 developed markets, only the exchanges of Greece and Singapore have performed worse.

“There’s really been no place to hide in the Canadian equities side,” said Bruce Cooper, chief investment officer at the asset management arm of Toronto-Dominion Bank. Resources have been “atrocious,” banks have lost money and everything else has been a mixed bag, he said. Next year is going to be challenging, too, because the same fundamental headwinds are in place.

2. Spectacular swoons

The carnage in the S&P/TSX has been wide and deep with about 65 per cent of 240 stocks in the equity gauge ending the year in the red. Also evident were the flame outs of some of the country’s most high-profile stocks.

Valeant Pharmaceuticals Inc., which had doubled earlier in the year to briefly eclipse Royal Bank of Canada as the most valuable company in Canada, tumbled 56 per cent from its peak amid scrutiny over its pricing practices. Calgary-based Baytex Energy Corp. was hit by a perfect storm of sliding oil prices and high debt. Its 81 per cent drop this year made it the worst-performing stock in the index.

“The Canadian market did not have a good year at all. It’s been the kicking bag globally,” said Greg Taylor, a Toronto- based fund manager at Aurion Capital Management Inc.

The U.S. dollar will peak after last week’s Federal Reserve interest rate hike, giving investors a bounce in gold and oil and creating a short-term buying opportunity in commodities, Taylor said.

3. Junkiest of the Junk

Canada’s status as one of the costliest places to drill and mine for oil also made the country’s high-yield bonds the least desirable among its industrialized peers this year.

Junk bonds had lost nearly 12 per cent as of Dec. 18, the worstperforming among G-10 countries, according to Bank of America Merrill Lynch data.

“Towards the end of the year, because a lot of high-yield managers have taken their bruises in certain pockets, there’s a general aversion to risk,” said Nicholas Leach, highyield portfolio manager at CIBC Asset Management.

Bond investors should see above-coupon returns in consumerdriven sectors in 2016 because the lower commodity prices will leave consumers with more money in their pockets, he said.

4. Loonie Plummet Worst of G10

The Canadian dollar has slumped alongside the price of oil this year, reaching an 11-year low as crude dipped below $35 a barrel in December.

The weak oil price and the Federal Reserve’s plans for further hikes to the key U.S. interest rate in 2016 mean the loonie still has further to fall, said Emanuella Enenajor, senior economist at Bank of America Merrill Lynch.

She sees the dollar at $1.45 in the first quarter of 2016, from about $1.40 now, she said.

5. We’ll Always Have Housing — Except in Calgary

The torrid pace of housing price increases continued — at least, the do in Toronto and Vancouver.

In Eastern Canada, prices were flat, while in Alberta, they plummeted, once again due to the oil price crisis.

This “trifurcation” of the housing market, as the Bank of Canada termed it, prompted the government and regulators to cool markets in the hottest regions, including the doubling of down payments to 10 per cent on homes above $500,000.

House prices jumped 10 per cent in Toronto and 18 per cent in Vancouver, while they slumped 2 per cent in Calgary.

That’s compared with a 7 per cent average national gain, according to the Canadian Real Estate Association.