Prab Sagoo, associate director at Nasdaq Advisory Services, explains in his weekly market commentary why Canadian investors are especially sensitive to the global nature of financial markets.
- The volatility caused by Greece is indicative of how interconnected global markets have become. The Greek economy was but a small blip in terms of GDP compared to the larger players, but it managed to cause notable bouts of both volatility and losses as traders watched every headline. The current Chinese market, with gains and losses in excess of 5% per day, continues to prove this.
Read: Commodity prices shaky
- Since the resource sector carries such a significant weighting on the TSX, Canadian markets are more susceptible to international developments than the U.S. Hence, Canadian investors need to be especially mindful of the impact of global issues on their investments.
- The silver lining: there are now significantly more avenues to hedge against or gain further exposure to international markets than ever before. The myriad of passive and actively managed strategies on offer should help investors create more informed and better rounded global portfolios that can withstand shocks to the system while benefitting from disparate regional advances.