It it weren\u0027t for Shopify’s 70% plunge, the TSX would be down less than two per cent this year instead of six per cent. Read on.
The e-commerce software provider has lost $161 billion in market value in 2022, causing a 978-point drag on the S&P/TSX Composite Index. Without it, the index would be down less than two per cent in Canadian dollars this year, rather than six per cent.Start your day with a roundup of B.C.-focused news and opinion delivered straight to your inbox at 7 a.m., Monday to Friday.By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc.
It’s not the first time a single tech stock has been a huge anchor on the key Canadian index. Nortel Networks Corp.’s collapse was a 353-point drag in 2001, the index’s inaugural year. BlackBerry Ltd., then called Research In Motion, was the TSX’s biggest negative contributor in 2008, pulling the index down more than 300 points.
Despite Shopify, Canadian stocks have outperformed the S&P 500 Index by more than 11 percentage points this year. Unlike some European and U.S. equity gauges, the S&P/TSX Composite did not enter an official bear market this year: its peak-to-trough decline was 17.6 per cent.Article content Soaring oil and metals prices have lifted energy and mining stocks, which make up about a 30 per cent weighting. At the same time, U.S. megacap tech stocks have been pummelled by the relentless rise in interest rates: seven FANG+ stocks are responsible for about half of the S&P 500’s 17.5 per cent decline in 2022.
“Concentration risk matters in an index,” said Craig Basinger, Purpose Investments Inc.’s chief market strategist. Shopify’s problems “sucked for Canada” but the tech sector makes up a smaller proportion of the index here, he noted. There’s only one other tech company on the TSX with a market capitalization of more than $40 billion.
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'Sucked for Canada': Shopify’s 70% plunge almost single-handedly dragged the TSX into the redIt it weren\u0027t for Shopify’s 70% plunge, the TSX would be down less than two per cent this year instead of six per cent. Read on.
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Shopify's $118 billion rout slows Canada's stellar stock-market runShopify Inc.’s 70% plunge has almost single\u002Dhandedly dragged the Canadian stock market into the red this year, taking the shine off what would otherwise be one…
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