The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Workers weld steel bars at a factory in Huaibei, Anhui province. Overproduction of iron ore and steel will send prices tumbling.
Workers weld steel bars at a factory in Huaibei, Anhui province. Overproduction of iron ore and steel will send prices tumbling.
(CHINA DAILY/REUTERS)

Will China and the TSX catch up to each other?

Chinese iron ore prices are an excellent gauge of the country’s economic activity and, for a long time, the resource-heavy S&P/TSX Composite index followed right along. Beginning in June of 2013, however, the domestic benchmark and iron ore prices began moving in entirely different directions.

The chart below shows that, over the last 11 months, the TSX climbed while the bottom fell out of the Chinese iron ore market. The obvious question for Canadian investors is, after five years where Canadian equities piggybacked off Chinese growth, how long can this divergence go on?