Toronto, Ontario — In this week’s Tuesday Ticker, we cover global stock market meltdowns and how Canadian companies fared through it all.
Market Meltdown
Last week, stock markets around the world posted significant losses, with the Dow and the Nasdaq dropping almost four-and-a-half percent in on day, and close to 10 percent over recent peaks. Around the world, major stock exchanges have posted similarly brutal losses. Even gold prices were down, posting a drop of almost two percent.
The drop is being blamed on the coronavirus outbreak, which has caused major supply disruptions for businesses reliant on global trade. This is particularly true for businesses with manufacturing services particularly reliant on Chinese facilities.
The Ides of Magna
In Canada, the effects have been somewhat mitigated. While the TSX posted losses of more than two percent, the relatively limited reliance on Chinese manufacturers has actually curbed its general losses.
One Canadian auto parts company’s stock market slips may have served as a harbinger of the broader financial drop across global markets. Magna International, which had been forced to disrupt its operations in China, took a hit in late January. Magna International has seen its stock value drop from $71.7 on January 20, to $67.08 on January 31.
Since the broader collapse, Magna stock is trading just above the $60 threshold.
Bombardier’s Brief Boom
Bombardier, which manufactures heavy transportation equipment within Canada, saw its value briefly buoyed on February 27, rising 2.5 percent–more than any other TSX stock.
This was erased on February 28. It is down about 13 percent from the week before.
Boyd’s Bad Week
Canadian companies more heavily invested in the United States have been particularly badly rocked by the recent market correction.
In the collision repair sector, the Boyd Income Fund, one of the TSX’s best-performers over the past decade, saw its shares drop by 14 percent since last week.
As the Canadian economy has struggled to match gains by the U.S. economy, Boyd had invested significantly in acquiring U.S. businesses. While a hot U.S. market and a low Canadian dollar helped bring in excellent returns, it is more vulnerable to fluctuations of the American market.
