1Q26_ Quarterly Outlook Report_Final_EN - Flipbook - Page 125
T H E P LUMB LI N E | A RETU RN TO F I RS T PRI N CI PL ES
Global valuation multiples are above historical averages
23.1x
17.2x
19.5x
15.6x
13.9x
15.7x
11.4x
14.2x
12.6x
11.2x
Canada
US
LatAm
Current
International
Emerging Markets
10-year average
Sources: Bloomberg Finance LP, Scotia Wealth Management. NTM P/E ratios from December 31st, 2025.
Canada
Mona Nazir
Senior Manager, Equities
Felix Fang
Senior Manager, Equities
Key Points:
•
Materials accounted for roughly ~40% of the TSX’s relative outperformance in 2025,
driven primarily by strength in gold and copper.
•
Canada faces near-term economic headwinds – historic lows in population growth,
subdued hiring, weak housing – disconnecting with market strength.
•
2026 equity leadership should stem from diverse Canadian firms that leverage AI
productivity gains and structural growth trends.
Despite Canada’s modest economic growth, rising unemployment, and subdued consumer
sentiment, the TSX Composite Index outperformed the S&P 500 by double digits in 2025 – a result
few would have anticipated. This disconnect between market performance and the economic
backdrop not only emerged but widened throughout the year, highlighting the influence of sector
composition and structural tailwinds that supported performance. As illustrated below,
approximately 40% of the TSX Composite’s price return in 2025 was attributable to the Materials
sector, which surged 92% during the year. Excluding Materials, the TSX delivered a 17% price
return, broadly in line with the performance of the S&P 500.
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