Canadian Oil and Gas Producers Rise Over 50% Buffeting Toronto Losses to 8.7% in 2022

Canada’s benchmark stock market the S&P/TSX Composite fell 8.7% in 2022 in the worst year since 2018, closing 0.5% lower at 19,385 on Friday. Canadian bond yields rose sharply as the BoC’s tighter monetary policy matched the US Fed and US Treasuries reaction. In 2022 Toronto’s banking sector fell over 12% on average, pressured by lower credit demand. The tech sector lost over 30%. Canadian oil and gas producers soared over 50% on average, as natural gas crude oil prices rose, though paring yearly gains in the final quarter of the year.

TSX Bounced off the 38.2% and MM 6/8 Confluence

Canada’s communications stocks got a boost on the last day from Canada’s Competition Tribunal clearing the path for Rogers Communications’ C$20 billion bid for rival Shaw Communications, ending months of uncertainty over the merger. The tribunal said the proposed acquisition of Shaw wasn’t likely to harm competition in the country. Bucking the wider trend, shares of Rogers Communications Inc jumped 3.9% and Shaw’s shares gained 9%. Shares of Quebecor Inc. also rose by 4.8% to C$30.31.

Top Performing Canadian Stocks in 2022

  • Teck Resources (TECK.B)
  • Fairfax Financial Holdings (FFH)
  • Pembina Pipeline Corp (PPL)

The top-performing Canadian stock in 2022 was Teck Resources (TECK.B). China buys it’s coal used for steel and copper. The risk is if the Chinese economy slows down. A similar performance was seen in the ASX with Australian miners BHP and Rio Tinto.

Insurance company Fairfax Financial Holdings (FFH) was the second-best performer. The company is known for its CEO, Prem Watsa’s bets and multi-billion-dollar windfall during the 2007-2008 financial crisis.

Pembina Pipeline Corp (PPL) came in third. The pipeline company has fully integrated its customers and their energy transport needs, allowing Pembina to control the midstream value chain. Analysts note Pembina’s management prioritizes growth via acquisitions over organic development and optimization of the existing portfolio of assets. The risk is cash flow growth of 7%-plus annually hurting returns.

How Global Indices Fared in 2022

Source: TC, Reuters

From The TradersCommunity Research Desk