Canadian Stocks Add $191 Billion of Value in Longest Rally Ever

(Bloomberg) -- The Canadian stock market posted its longest streak of gains ever as a rally in commodities pushed the benchmark higher for a 14th straight session.

The S&P/TSX Composite Index rose 0.3% to an all-time high Monday. It has added about C$237 billion ($191 billion) in market value during its recent winning streak, according to data compiled by Bloomberg. U.S. oil prices hit $85 a barrel for the first time since 2014 and metals prices also climbed, fueling Monday's rally. Energy and materials make up about 25% of the Canadian benchmark.

“The TSX is one of the best inflation hedges you can find,” Stefane Marion, chief economist and strategist at National Bank of Canada, said via phone. In a recent analysis, Marion found that the S&P/TSX posted an annualized return of 2.3% during inflationary periods due to its commodity exposure, versus a decline of 5.9% for the S&P 500.

The Canadian stock market has been on a tear amid a surge in cyclical and value stocks as the nation's economy reopens thanks to a waning Covid-19 pandemic. Energy, real estate and financials are the top gainers on the S&P/TSX this year.

Last week, the nation's most populous province unveiled a plan to lift all public health restrictions related to the pandemic in the next six months, bringing a return to normal life into view for residents.

Foreign investors are also optimistic on the nation's equity market. They've added more than $22 billion as of the end of August, thanks in part to the run in cyclicals and also due to a strong Canadian dollar. The loonie is the best-performing currency against the U.S. dollar among its G-10 peers this year, rising about 2.7%.

While the S&P/TSX has gained 22.1% this year, slightly surpassing the 21.6% advancement in the S&P 500, Canadian stocks are still cheap compared to the U.S. The price to earnings ratio for Canadian equities is about 15.8 times compared to the 21 times for the S&P 500.