The Canadian stock market has been through a rough start this year. At the moment, the top five banking stocks of the nation are down by 4% to 5%. Experts say that the losses are significantly high when we compare them to a 52-week high. There is an increase in the volatility levels in the stock market, and this has given rise to a bearish situation that makes it harder for investors to hold it out. At the same time, the market experts assure the local and foreign investors that it will be the Canadian bank stocks that will pioneer the recovery.
Canadian bank stocks are still going strong
The Canadian banks have enough stability to ride out the dip in the market. These investments have higher chances of generating dividends at regular intervals. Most of these companies have their balance sheets in place that can add stability to a trader’s portfolio. One of the leading reasons for the stability is the practice of these banks to distribute about 50% of their dividends and expand them. Bank of Nova Scotia and CIBC currently have their annual profit of around 4%. These are presently your best opportunities for investment in the Canadian stock market once you learn how to buy stocks online.
The Canadian dollar is still strong
Yes, there is some volatility in the market, and it is more than it was yesterday. However, volatility works in two ways. It poses a threat to the investors since the value of the dollar might fall, but it also gives you the chance to make some sweet money when the value goes up. One of the most recent examples is the Singaporean dollar. When the cost fell to 2.5 ringgits against one Singaporean dollar, the investors in Singapore experienced a significant setback. The Singaporean dollar is now worth over 3.1 ringgit. That shows how the volatility in the market has two faces and the Canadian dollar is expected to show similar trends in 2019-20.
Adding diversity to your trading portfolio
Price volatility depends on a nation’s political scenario, management of natural resources and foreign business ties. There is a multitude of factors that contribute to the status of an equity market, and Canada is no exception. While the Chinese government and the Singaporean share market have served as terrible examples in 2015 and 1998 respectively, market experts see the Canadian stock market as an opportunity of the US-based investors to add diversity to their portfolio.
Experience faster growth
All foreign stocks provide a quicker growth opportunity to the investors. Diversifying a trading portfolio reduces the risk and volatility an individual trader faces. It is an excellent opportunity for investors coming from countries facing a stock market downfall. Investing in a foreign economy can help you stay afloat even when your national currency takes a plunge due to international politics or threats.
Most importantly, foreign stocks give you the chance to explore high-quality picks. There are hundreds of inter-listed Canadian companies in the US market. Any investor from the latter country can choose to invest in Canadian company shares and purchase stocks without bearing a hefty tax burden.