Canada Stocks Little Changed as Silver Drops; TransGlobe RisesEric Lam and Gerrit De Vynck
Canadian stocks were little changed as precious metal producers slipped after Crimea voted to leave Ukraine for Russia and energy stocks rose amid takeovers in the industry.
TransGlobe Energy Corp. added 1.8 percent after agreeing to sell itself to Caracal Energy Inc. in a C$696.2 million ($626.9 million) deal. Whitecap Resources Inc. climbed 7 percent after agreeing to buy western Canada conventional oil and natural gas assets from Imperial Oil Ltd. and raising its dividend. Bombardier Inc. jumped 4.9 percent after winning a contract in South Africa. Ensign Energy Services Inc. dropped 3 percent after reporting lower-than-estimated profit on weaker demand for drilling services.
The Standard & Poor’s/TSX Composite Index rose 4.23 points, or less than 0.1 percent, to 14,231.89 at the close in Toronto. The index has risen 4.5 percent this year.
“What investors were anticipating last week was worse than what’s actually happening this morning, so as a result of that people are more comfortable in the market,” said Anish Chopra, fund manager at TD Asset Management Inc. in Toronto. He helps manage C$218.3 billion with the firm. “Investors were concerned about what was going to happen with the vote in Crimea and what the repercussions would be in terms of sanctions.”
U.S. President Barack Obama imposed sanctions on seven top Russian government officials and added four others from the Ukraine, including the former president Viktor Yanukovych.
Global equity markets rose after Ukraine’s Crimea voted to return to Russia in a referendum deemed illegal by the U.S. and the European Union. The MSCI World Index rose 0.8 percent for the first increase in seven days. Global stocks lost $1.4 trillion in value last week on investor concern over the conflict between Russia and Ukraine and China’s slowing economy.
With the Parti Quebecois, which advocates for Quebec to leave Canada, in a position to win its first majority government in 15 years next month, the market may start pricing in concern of a possible separation referendum, David Doyle, a Toronto-based analyst at Macquarie Capital Markets, wrote in a note to clients. The last separation vote, in 1995, hurt financial and industrial companies in the S&P/TSX, he said.
Investors wary of political risk should decrease their investments in Quebec-based companies that make most of their revenue in Canada, Doyle said. These include the country’s third-largest wireless operator BCE Inc. and National Bank of Canada, the country’s sixth-biggest lender, he said.
Bombardier rallied 4.9 percent to C$4.11, the highest in a month, as industrial stocks added 0.9 percent, the most in the S&P/TSX.
Bombardier won a contract to supply electric engines to Transnet SOC Ltd., South Africa’s state-owned ports and rail operator, part of a larger $4.7 billion investment from the company. Bombardier’s contract is worth about 10 billion rand ($930 million), Transnet Chief Financial Officer Anoj Singh told reporters.
Foreign investors bought Canadian stocks and sold government debt in January, Statistics Canada data show. Purchases totaled a net C$1.09 billion, including C$2.84 billion in stock purchases. Non-Canadians also sold a net C$1.42 billion of money-market paper in January and C$330 million of the country’s bonds.
TransGlobe Energy added 1.8 percent to C$8.56. after agreeing to be acquired in an all-stock deal with Caracal Energy. Caracal will pay 1.23 shares for each share of Calgary-based TransGlobe.
The two companies, which have operations in countries including Chad, Egypt and Yemen, said they will have combined oil production of 25,100 barrels a day with a target average of 31,000 to 34,000 barrels this year.
Whitecap Resources rose 7 percent to C$12.34, the biggest gain in almost two and a half years. Imperial Oil, the Canadian energy company majority owned by Exxon Mobil Corp., agreed to sell some assets to Whitecap Resources Inc. for about C$855 million ($774 million) as it focuses on larger oil-sands projects.
Whitecap also increased its monthly dividend by 10 percent to 6.25 Canadian cents a share. Imperial Oil added 0.2 percent to C$51.17.
Ensign Energy Services sank 3 percent to C$16.36. The oil drilling services company said adjusted earnings was 18 Canadian cents a share in the fourth quarter, short of analysts’ estimates of 28 cents.