GLOBAL DEFLATIONARY RISKS
Investment returns continued to be rewarding for Canadians in 2014. The Canadian stock market rallied 10.6%, bonds returned 9% and foreign stocks, particularly in the United States, benefited from a significant further weakening in the Canadian dollar (returns of U.S. denominated investments by Canadians are improved when the U.S. dollar is strengthening versus the Canadian dollar).
However, while portfolio returns were favourable, they occurred against a deteriorating global economic backdrop and increased market volatility. Most prevalent was the sharp decline in energy prices, which manifested itself further via rising global deflationary risks, unprecedented additional…
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