Good news for Canadians
From the red star......
Canada will become a riskier place to invest because its stock market is losing a parade of big companies, some Bay Street players say.
When Teck Cominco Ltd. announced plans earlier this week to raise more than $5.5 billion overnight, investment bankers, analysts and mining industry veterans spoke of a new appetite on Bay Street for a "made in Canada solution."
Teck was the only Canadian company to enter the massive takeover battle for Toronto-based Inco Ltd., and many players in the investment crowd were sick of losing big names on the TSX.
It's as much practicality as patriotism, they said, talking about the shrinking stock-market index and its ramifications.
By morning it became clear that if that sentiment existed, it wasn't strong enough that Canadian investors would pony up more than $5 billion overnight.
But the issue once again shone a light on the often-hidden nationalism on Bay Street, and on an argument that the loss of big Canadian publicly traded companies is making Canada's stock market a riskier and less attractive place to be.
The disappearance of so many notable Canadian companies is "a problem for every Canadian money manager," David Cockfield, who helps manage investments at Toronto-based Leon Frazer & Associates Inc., told Bloomberg News. "I will have to start looking at second-tier guys. The smaller companies are a lot more trouble. It's the same amount of effort as goes into researching bigger companies, but your investment is just a fraction. It's easier to buy Inco."
Eric Bushell, chief investment officer at Toronto-based Signature Funds, said "there are only about 55 to 60 names in Canada that trade more than $10 million a day, and every year about 5 per cent of those disappear.
"It's an issue in an industry where increasingly larger funds need big-cap, liquid stocks to trade."
Big names to disappear from the Toronto Stock Exchange this year include the venerable Hudson's Bay Co., Fairmont Hotel & Resorts Inc., steel maker Dofasco Inc., and Canada's biggest winemaker, Vincor International Inc. |
