Despite inflation’s recent retreat, there is a very real chance it could move higher again next year, says Lisa Conroy, fundamental equity product specialist with Connor, Clark & Lunn Investment Management. And if it does, Canadian equities should do well.
Speaking on the Soundbites podcast, Conroy said the Canadian equity market is well positioned for the current late-cycle environment and offers strong inflation hedges.
“Commodities typically do well in rising-inflation environments. And, as we know, the Canadian equity market has above-average exposure to copper, gold and oil,” she said. “We do expect it to do well as we look forward.”
She said the economy is showing a number of late-cycle characteristics, including:
- economic growth remaining positive but slowing;
- the risk of inflation moving higher;
- increased volatility and uncertainty in the macro-economic outlook and within equity markets; and
- equity…
