The Scotiabank Canadian hedge fund asset weighted index, which tracks hedge funds that have been around for at least a year and have $15-million or more under management, was up 4.5 per cent as of the end of April, beating the S&P/TSX composite index, which returned 4 per cent.MARK BLINCH/Reuters
Canada's main stock index slumped almost 1.5 percent on Wednesday in a widespread selloff, as market turmoil in China eclipsed Greece's debt crisis as the focal point of concern for global investors.
Crude oil tumbled further, pressuring energy shares. And the declines on Bay Street included traditional safe havens such as financials, health-care and consumer stocks that had found favor with investors last week.
U.S. indexes also closed sharply lower, as fears that a rout in Chinese stocks could seriously harm the country's economy and spread beyond its borders pushed the S&P 500 below its 200-day moving average for the first time since October and into negative territory for 2015.
"It's pretty hard not to be concerned when you see what's happening with the usual culprits, between Europe and the meltdown in China, oil prices where they are and the fact that there's a possibility we could be in a technical recession in Canada," said Michael Sprung, president at Sprung Investment Management Inc. "There's not a whole lot to make people happy."
The TSX energy sector dragged, shedding 2.2 per cent as U.S. crude oil prices fell. Shares of gold companies were among the few gainers as gold prices edged higher.
But the TSX was unable to overcome the global flight to safety after China's stock market resumed its rout, raising concerns that the turmoil will destabilize China's economy.
The volatility in China exacerbated nervousness over whether Europe would act to keep Greece in the euro zone. The country's prime minister pleaded in the European Parliament for a fair deal for Greece.
"It's still Greece and China all over the headlines and what those implications are," said Paul Hand, managing director at RBC Capital Markets. "Canada is kind of a bystander in all this, collateral damage in the sense that we are impacted by the global economy."
The Toronto Stock Exchange's S&P/TSX composite index ended down 212.43 points, or 1.45 percent, at 14,412.07. All of the index's 10 main groups fell, with all but one off at least 1 percent.
The heavyweight financial sector retreated 1.1 percent, with Toronto-Dominion Bank down 1.3 percent at $52.22 and Royal Bank of Canada off 1.1 percent to $75.60.
Goldcorp shares rose 1 percent to $21.31 and New Gold gained 4.6 percent to $3.40. Gold futures rose 1 percent to $1,158.70 an ounce. Declining issues outnumbered advancing ones by 219 to 26, for a 8.42-to-1 ratio on the downside.
The NYSE, a unit of Intercontinental Exchange Inc., resumed trade late in the session after a technical problem forced a suspension for more than three hours in the biggest outage to strike a U.S. financial market in nearly two years.
Chinese shares have fallen more than 30 percent in the last three weeks, and some investors fear China's turmoil is now a bigger risk than the crisis in Greece.
"I don't think the Greece situation is a focus in the markets beyond the short term," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York. "This is really about China where the selloff continues unabated despite efforts by People's Bank of China to halt this."
Wall Street maintained its losses after the release of minutes of a June Federal Reserve policy meeting in which officials said they needed to see more signs of a strengthening U.S. economy before raising interest rates.
The Dow Jones industrial average fell 261.49 points, or 1.47 percent, to end at 17,515.42. The S&P 500 lost 34.65 points, or 1.66 percent, to 2,046.69 and the Nasdaq Composite dropped 87.70 points, or 1.75 percent, to 4,909.76.
So far in 2015, the S&P 500 is down 0.6, while the Dow has lost 1.7 percent and the Nasdaq is up 3.7 percent.
Even after Wednesday's selloff, stock prices appear relatively expensive: the S&P 500 is trading at about 16.6 times expected earnings, versus a 10-year historic average of 14.7 times.
-Reuters