Canadian Stocks Retreat for Second Day as CI Financial Tumbles

Canadian stocks fell the most in a week as commodity prices declined and CI Financial Corp. (CIX) plunged after Bank of Nova Scotia said it will scale back its stake in the money manager.

CI Financial sank 3.2 percent, the most in two years, on concern Scotiabank may sell its $3.5 billion investment. Sherritt International Corp. tumbled 3.5 percent as nickel prices fell the most since 2011. Just Energy Group Inc. lost 9.8 percent after reporting lower earnings for the fourth quarter. Peyto Exploration & Development Corp. and Crew Energy Inc. paced losses in energy shares as natural gas prices slumped.

The Standard & Poor’s/TSX Composite Index (SPTSX) fell 84.84 points, or 0.6 percent, to 14,588.89 at 4 p.m. in Toronto. The gauge has risen 7.1 percent this year.

“Of the big three sectors in Canada, it’s energy leading the downside with significant weakness,” said Tim Caulfield, a fund manager at Franklin Bissett Investment Management, on the phone from Calgary. He helps manage C$20 billion ($18.4 billion) with the firm. “One of the issues there is certainly the weaker natural gas quotes in May.”

Peyto Exploration retreated 3.8 percent to C$37.93 and Crew Energy lost 2 percent to C$10, the lowest level in a month, as energy shares tumbled 0.6 percent as a group. Nine of 10 industries in the S&P/TSX fell on trading volume 34 percent higher compared with the 30-day average.

Natural Gas

Natural gas prices have plunged 28 percent since February, as Canada and the U.S. emerged from a severe winter. Crude in New York sank 0.9 percent today, retreating from a three-week high, after U.S. supplies rose to near record levels last week while output rose, the Energy Information Administration reported yesterday. Bellatrix Exploration Ltd. slumped 2.4 percent to C$10.15 and BlackPearl Resources Inc. sank 5.2 percent to C$2.37.

Just Energy, which sells natural gas and electricity to residential and commercial customers in Canada and the U.S., slumped 9.8 percent, the most since February 2013, to C$7.85. The company reported fourth-quarter profit from continuing operations of C$152.3 million, compared with C$199.8 million a year ago.

CI Financial tumbled 3.2 percent to C$34.98, the biggest decline since May 2012, after Scotiabank said yesterday it will reduce its holdings of the Toronto-based money manager. It first acquired a stake in CI Financial in 2008 and currently holds 37 percent of the company’s shares, according to the statement.

“This is very negative for CI,” Stephen Boland, analyst at GMP Securities LP, said in a note today. “This announcement will also create an overhang on the stock since no timing was given on the potential transaction.”

Nickel Price

Sherritt International declined 3.5 percent to C$4.47 for a third day of losses and Teck Resources Ltd., Canada’s largest diversified miner, lost 1.5 percent to C$24.91. Nickel slumped as much as 9.7 percent in London, the most since 2011, extending a 4.6 percent decline yesterday amid speculation that a rally that lifted prices as much as 56 percent this year was exaggerated. Copper slipped 0.5 percent in New York.

The S&P/TSX Materials Index sank 1.6 percent, the biggest decline since March, as 48 of 52 members of the industry retreated.

Bombardier Inc. (BBD/B) dropped 7.1 percent to C$3.90, the biggest loss since February, after Air Canada said it decided to keep its older jets instead of replacing them with the manufacturer’s CSeries models.

Air Canada dropped 3.8 percent to C$7.91, the lowest close in a week.

To contact the reporter on this story: Eric Lam in Toronto at elam87@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net Jacqueline Thorpe, Jeff Sutherland

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