Canada Stocks Rise as Insurers Gain; Oil Companies Decline

Canada Stocks Rise as Insurers Gain; Oil Companies Decline

Bloomberg News speaks with Marcus Xu, manager of Equity Operations at Genus.

By Matt Walcoff

Feb. 10 (Bloomberg) -- Canadian stocks rose as financial companies gained before quarterly earnings reports from the country’s three largest insurers and after U.S. President Barack Obama said he doesn’t “begrudge” some bank bonuses.

Manulife Financial Corp., North America’s biggest insurance company by market value, increased 0.9 percent on speculation it turned a profit in the fourth quarter. Suncor Energy Inc. decreased 1.6 percent after a Royal Bank of Canada analyst cut his rating on the stock. Clothing maker Gildan Activewear Inc. rallied 7.2 percent after reporting quarterly earnings that surpassed analyst estimates.

“There’s been a lot of positive news on earnings lately,” said Marcus Xu, manager of equities at Genus Capital Management in Vancouver, which oversees about C$1.6 billion ($1.51 billion). “The lifecos are coming out pretty soon; maybe the market is betting their earnings are better, too.”

The Standard & Poor’s/TSX Composite Index advanced 5.58 points, or less than 0.1 percent, to 11,179.82 at 3:03 p.m. in Toronto.

The benchmark index has fallen 4 percent this year as concerns over budget deficits in European countries including Greece has overshadowed stronger-than-expected corporate earnings. Since the current earnings-reporting season began on Jan. 11, 78 percent of S&P 500 and 62 percent of S&P/TSX companies that have released earnings have beaten the average analyst estimate.

Manulife, Great-West Lifeco Inc. and Sun Life Financial Inc. are each scheduled to announce fourth-quarter profit tomorrow. The companies have a combined market share of about 75 percent in Canada based on net premiums, according to Manulife.

Insurers’ Shares

Manulife rose 0.9 percent to C$19.41. Great-West, its largest domestic competitor, gained 1.6 percent to C$26.61. Sun Life, which recently bought the naming rights to the Miami Dolphins’ stadium, advanced 1 percent to C$31.12.

All eight Canadian publicly traded banks increased, following the lead of their American peers, after Obama praised the chief executive officers of JPMorgan Chase & Co. and Goldman Sachs Group Inc., who have been awarded a combined $26 million in bonuses.

“I, like most of the American people, don’t begrudge people success or wealth,” Obama said in an interview with Bloomberg BusinessWeek. Obama had earlier criticized bank executives, calling them “fat cat bankers” in a December “60 Minutes” interview.

Less ‘Severe’

“The language wasn’t as severe as the mood that was in the market against the banks,” said Mathieu Roy, investment manager at Louisbourg Investments Inc. in Moncton, New Brunswick, which manages C$1.2 billion. “That would be my gut feeling why the banks are doing a little better.”

RBC, Canada’s largest bank, climbed 1.7 percent to C$54.72. Toronto-Dominion Bank, the second-largest bank in the country, rose 1.1 percent to C$64.29. Bank of Nova Scotia, the number- three bank, gained 1.3 percent to C$46.32.

Energy companies declined after oil futures dropped as much as 1.6 percent on a stronger U.S. dollar before recovering. The greenback advanced against the euro as a German government official, speaking on condition of anonymity, said an EU meeting tomorrow is unlikely to result in an aid package for Greece. The Mediterranean country faces a budget deficit more than four times the EU’s limit.

Suncor slumped 1.6 percent to C$31.33 after RBC analyst Greg M. Pardyreduced its rating to “sector perform” from “outperform.” Pardy told clients he has “become increasingly concerned about its execution performance” after two fires at its oil-sands projects in two months.

Surprise Loss

Talisman Energy Inc., which operates in North America, the North Sea and Indonesia, sank 3.3 percent to C$17.40 after reporting a loss of 10 cents a share, excluding certain items, for the fourth quarter. All 11 analysts surveyed by Bloomberg had estimated the company would turn a profit, with the average estimate 15 cents a share. Earlier, the stock reached a five- month intraday low of C$17.27.

EnCana Corp., Canada’s largest natural gas producer, fell 1.1 percent to C$32.50 as gas futures dropped for a third day.

Montreal-based Gildan Activewear jumped 7.2 percent to C$25.63 after announcing first-quarter results that beat analyst estimates by 2 cents a share, or 7.6 percent. The company cited stronger sales and growing international market share as well as a shift toward sales of higher-margin items as contributors to its sixfold increase from a year earlier in net income.

-- With assistance from Brian Parkin and Tony Czuczka in Berlin and Julianna Goldman and Ian Katz in Washington. Editor: Stephen Kleege, Michael Regan

To contact the reporter on this story: Matt Walcoff in Toronto at mwalcoff1@bloomberg.net

Last Updated: February 10, 2010 15:15 EST