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Why Is Retail Leading The TSX?

Research Weekly Insights TSK Retail Hero
I don’t usually discuss stocks, but let’s take a quick look at the TSX... the leaders aren’t the mighty sectors of energy, financials and telecom. These industries, home to high profile companies like RBC, Rogers, and Suncor, are some of the worst performers. No, it’s the humble consumer sector leading the way. And that’s not just my analysis – a study by Scotiabank highlighted the continued upside of investment in Sea-doo, Tim Horton’s and Cineplex.

This aligns with discussions I’ve had about industrial leasing slowing down a little, even in the hottest markets. Trucking and ecommerce has levelled off, and as the article notes there is ”a shift from pandemic winners like home renovation ... to pandemic losers including travel, entertainment, movies and restaurants.” Travel mania continues: Canadian airline revenue was up 41% year-over-year in May, a combination of fuller planes, more flights and higher prices.

This has huge implications for Colliers and the CRE market. Not just our hotel and retail brokerage, but a bigger shift in the economy. The biggest office occupiers (and investors) generally fall in those weaker-performing sectors: think Manulife, GWL and Brookfield. Dollarama and Aritzia don’t need nearly as much office space.

We seem to be in a much more volatile economic era, where sectors rise and fall dramatically over the course of a year instead of a decade. I’m legitimately unsure if this is just a fad that will cool off in the next year, or a new more permanent orientation to ”OOHE” (media jargon for ”out of home entertainment”).

Weekly Research Insights TSX Retail Graph

Summary
Consumer stocks such as clothing, movies and travel outperformed in the past year, while finance, energy and telecom lagged the overall TSX index.

By the way: weren’t rate hikes supposed to change all this? The whole point was to cool off ”discretionary” spending... wasn’t it? I look forward to hearing from you as always.

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Pour plus d’informations, veuillez contacter:

Adam Jacobs

Head of Research | Canada

Toronto Downtown

Colliers Canada's head of research, leading a cross-country team of 20 mapping, analytics and research professionals. Formerly head of Canada research at Cushman Wakefield and Director of Analytics at Oxford Properties. Featured in mainstream publications such as the Toronto Star, industry publications and podcasts. Specializing in the big picture and the fundamentals driving real estate - demographics, the macro environment and the global economy. 

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