Canadian Market Direction Message Board

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Strategies & Market Trends : Canadian Market Direction

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To: Jan Johnstone who wrote (26)	6/22/1997 11:05:00 PM
From: ddcox1	of 35

Hi Jan! My views on the Canadian market are slightly unconvential, but I do hope you find them interesting! First of all I don't think you can really compare the TSE to the Dow as so many of listings are resource oriented. There is a duality in the Canadian market where the resource sector has crashed and the industrial/financial sector has become greatly overextended. Any rise in interest rates should result in a severe correction in the industrial/financial sector. The crash in the resource sector exspecially the mining sector has brought some stocks down to incredibly unrealistic levels. The best time to buy stocks is when there has been a temporary loss of confidence. A conservative investor may best served by putting their money in a capable resource fund such as the Marathon Resource Fund managed by Wayne Deans. If anyone can take advantage of these terrific valuations, he can. The great political uncertainty and highly extended industrial/ financial markets have caused me to rethink my whole Canadian RRSP strategy. If Quebec should vote for seperation next year interest rates will rise substancially. This will cause a meltdown in the Canadian market exspecially to stocks given unrealistic valuations. I have therefore decided to use what I call the "small business strategy". Like a small business owner, I intend to rely on one business that I can feel confident will have long term positive growth no matter what happens within our country. For my 20% foriegn contribution limit and my funds outside my RRSP, I have divided them equally between Sceptre International Stock Fund and Templeton Inernational Stock Fund. I am very bullish on the world as a whole. You may also find the company I picked for my RRSP intersting. After the Bre-x meltdown I was conviced that there were many companies that were sold off without justification. I found this to be quite true. The one company that stood out above others was, Asia Pacific Resources. (APQ-T) Given the Bre-x scandal, even the name sounds scary, doesn't it? Before the scandal the stock was trading in the 8 dollar range. The stock fell like a rock after Bre-x and for the last month has been trading in the 3.70 to 3.90 range. Without hesitation I bought in at 3.80. While both Bre-x and APQ are asian mining stocks, thats where the simalarity ends. APQ holds the largest potash reserves in Asia. Unlike Bre-x APQ's have been proven by 4 independant labs. There has also been due diligence preformed by other major mining companies which confirmed this. The management had been trying to sell the company to the two chief competitors in the business for $15 dollars a share. (Potash Corp and IMC Global) The $15.00 represents the net asset value of the reserves. While these negotiations have broken down, the company has decided to develop the mines on their own. They have already received 2 unsolicited bids from global bankers to finance the project. The formal go ahead for the mine is to take place at the end of July. Finally, Scotia-Mcleod rates this company a strong buy with predictions of 9 dollars a share by this time next year and 14 dollars a share by 2001. If interested Asia Pacific's website makes interesting reading: crewgroup.com Silicon investor also has a thread on this company. Realize this was long, but hope you found it interesting! David

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