Industrial metals have posted their longest run of weekly gains since 2006 and gold’s had its best month since January, but the commodity-heavy equity benchmark in the world’s mining capital just can’t seem to gain any traction.
It’s the latest frustration for Canada’s S&P/TSX Composite Index, which has lagged all but one of its developed-market peers this year even as base metals have rallied on stronger Chinese demand and gold has gained amid geopolitical uncertainties.
Chalk it up to the previous base-metal slump from 2011 to early 2016 which has shrunk the industry and scarred investors. The materials sector, dominated by miners such as Barrick Gold Corp. and Teck Resources Ltd., is about half as important as it was to Canada’s equity benchmark six years ago.
“It’s less impactful when we get a bit of a snap-back, in particular on the base-metals side,” Paul Taylor, chief investment officer for asset allocation at BMO Asset Management, said in a phone interview.
In addition to a smaller sector, investors are also wary. Materials stocks haven’t kept pace with the gains in either gold or industrial-metal prices since the beginning of August, when prices really began to take off.
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