Canadian stocks fell for a fourth day, extending a weekly decline, as Sino-Forest Corp. tumbled after a short seller accused the company of falsifying its financial data.
Sino-Forest, a forestry company with operations in China, sank 64 percent after Carson C. Block of Muddy Waters LLC said the company overstated timberland holdings and production, an allegation it denied. BlackBerry maker Research In Motion Ltd. (BB) fell 3.4 percent after analysts at UBS AG cut their share-price estimate. Caterpillar dealer Toromont Industries Ltd. (TIH) rose 7.1 percent after spinning off its Enerflex Ltd. (EFX) unit.
The Standard & Poor’s/TSX Composite Index (SPTSX) slipped 1.59 points, or less than 0.1 percent, to 13,517.91.
“Where there’s smoke, there’s fire,” Murray Leith, who helps oversee about C$7.5 billion ($7.7 billion) at Odlum Brown Ltd. in Vancouver, said of Sino-Forest’s slide. Leith said he has no first-hand knowledge of the company’s finances. “The market is telling you there’s some substance to the accusations, and people are heading for the hills.”
For the week, the index fell 2 percent as reports indicated slowing U.S. employment and manufacturing growth. The S&P/TSX Financials Index dropped 2 percent, the most since November. Canadian Prime Minister Stephen Harper outlined a program today for his freshly seated parliamentary majority to rein in spending, diversify trade and attract more foreign capital to protect the country from a faltering U.S. recovery.
“Because 75 percent of our trade goes to the U.S., if the U.S. consumer is not buying stuff, we’re toast,” said Paul Ma, who manages about C$500 million as a money manager at McLean & Partners in Calgary.
Sino Forest tumbled a record 64 percent to C$5.23 after falling 21 percent yesterday. In a statement today, the company called Block’s allegations “inaccurate and unfounded” and said it will establish a committee of independent directors to examine them.
Other companies with links to China also dropped. Precious-metals producer China Gold International Resources Corp. declined 4.5 percent to C$4.27, the lowest since September. Neo Material Technologies Inc., which makes rare-earths and zirconium products in China, Thailand and North America, plunged 9.4 percent to C$8.60.
RIM lost 3.4 percent to a four-year low of C$38.15 after Amitabh Passi and Phillip Huang, analysts at UBS, cut their price estimate on its U.S.-traded shares to $45 from $60.
In a note to clients, the analysts cited a lack of clarity about when new phones would debut, inroads made by Apple Inc.’s iPhone and devices based on Google Inc.’s Android software in corporations, and an overconcentration of responsibility with co-chief executive officers Mike Lazaridis and Jim Balsillie.
Also today, ComScore Inc. said RIM fell to third place in share of the U.S. smartphone market behind Apple. Android devices are the most-used in the U.S., the market-research firm said.
Energy and financial stocks rose after the Institute for Supply Management’s index of U.S. non-manufacturing businesses increased more than most economists in a Bloomberg survey had forecast.
Toronto-Dominion Bank, Canada’s second-largest lender by assets, gained 1.2 percent to C$81.69. Suncor Energy Inc. (SU), the country’s biggest oil and gas producer, advanced 1.2 percent to C$39.60. Cenovus Energy Inc. (CVE), Canada’s fifth-largest energy company, increased 2.4 percent to C$34.96.
Laurentian Bank of Canada (LB), the country’s seventh-largest lender by assets, slumped 5.4 percent, the most in two years, to C$46.88 after retreating 4.1 percent yesterday. The bank reported second-quarter earnings that missed the average analyst estimate by 4.8 percent, excluding certain items, yesterday.
Sumit Malhotra, an analyst at Macquarie Group Inc., and Kevin R. Choquette, an analyst at Bank of Nova Scotia, cut their ratings on the shares today.
Toromont Industries Ltd. jumped 7.1 percent, the most since 2008, to C$20.21 after spinning off Enerflex, which makes products for energy producers. Enerflex climbed 5.4 percent from its opening price today to C$12.65.
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