Briefing highlights
- OSC warns on pot investing
- A pot scene I’d love to see
- Oil sinks below $50 a barrel, recovers
- But ‘sigh of relief’ in energy patch
- TD, CIBC profits climb
- Markets, loonie at a glance
- Deutsche Bank searched in probe
Pot-com
The Ontario Securities Commission is fretting over naive investors who may be spending thousands on what have proven to be frothy cannabis stocks.
“Several factors give rise to concern about the risks retail investors are taking in this emerging sector,” the OSC warned in a study released this week.
Indeed, as The Globe and Mail’s Mike Hager reports, almost one in four marijuana investors have spent at least $10,000, the OSC said, and many are unsophisticated, buying with little knowledge.
“Canadian cannabis companies’ stock prices have skyrocketed in recent years as several jurisdictions have explored new laws around the sale and use of cannabis,” the securities regulator said.
“The legalization of cannabis in Canada in October, 2018, drew further attention and interest to the sector,” it added.
“In the past few months, however, industry insiders and analysts have expressed concern about whether cannabis companies’ stock prices have raced ahead their growth prospects.”
An OSC survey, done by Innovative Research Group in October among almost 2,300 Canadians, shed light on just who’s buying, and what they’re basing their investments on, leading to the regulator’s warning.
First, here’s a look at the money spent, with not all categories, such as “don’t know,” left out:
Source: Ontario Securities Commission
Among the troubling findings is that investing “didn’t vary” based on risk tolerance or market knowledge.
“Those with low financial knowledge or who reported having a low risk tolerance were as likely as individuals with higher knowledge or risk tolerance to own cannabis investments,” the OSC said.
“Our survey results indicate that many cannabis investors entered the sector recently, and that word of mouth was a key source of information.”
Indeed, 32 per cent got at least some of their advice from family members or friends, while 18 per cent listened to a financial rep or portfolio manager.
“Behavioural insights show that some investors may be predisposed to seek out and buy into the latest, most popular investments – and may do so even if these investments don’t fit their long-term financial goals,” the OSC said.
“These investors may overestimate their risk tolerance and might not diversify their investments enough.”
As for who’s buying, or at least thinking about it, here’s what the survey also showed:
Source: Ontario Securities Commission
And an interesting postscript to that: A mid-2018 study found men in that 18-34 age category were also “more likely to own cryptoassets than any other demographic group.”
Read more
- Follow our special cannabis coverage
- Mike Hager: Investors may be gambling too much on cannabis stocks without appreciating the risks: OSC
A scene I’d love to see
Wait, I thought the saying was ‘buy high’
Darren Michaels
Oil tumbles, but ...
The benchmark U.S. oil price temporarily slipped below US$50 a barrel today, but, notes CIBC World Markets, Canada and its energy patch can still “breathe a collective sigh of relief.”
Joan Pinto, associate, energy specialist at CIBC, was referring to Alberta Premier Rachel Notley’s announcement Wednesday that she plans to buy rail cars to boost shipments by 120,000 barrels a day.
This should help the price of the Western Canada Select benchmark that is significantly below West Texas intermediate and Brent crude.
“Implementation will, of course, take a few weeks, and at best one can expect price movement in the WCS January 2019 future after excess barrels start to clear the market,” Ms. Pinto said.
“With an acute case of stranded supply as we’ve faced, OPEC-style rhetoric won’t do the trick.”
WTI fell below US$50 as markets speculated over next week’s meeting of OPEC and its allies in a production-cap agreement, referred to as OPEC+, which is expected to cut supply again.
“Global benchmarks have sunk lower over what the market has perceived to be question marks with respect to OPEC+ cutting output next week,” Ms. Pinto said.
“Reading through the transcript from the Saudi energy minister, we believe his comments reflect the typical ongoing dialogue for collective action between members,” she added.
“We see this as no different than prior consensus-building in the run-up to past OPEC gatherings.”
Read more
- Oil prices reverse course as Russia leans toward output cut
- Shawn McCarthy: Alberta set to buy rail cars to boost crude shipments
TD, CIBC profits climb
Toronto-Dominion Bank and Canadian Imperial Bank of Commerce each posted stronger fourth-quarter results, capping what both said was a solid year.
TD profit climbed to $2.96-billion, or $1.58 a share, from $2.7-billion or $1.42 a year earlier.
Adjusted, profit was $3-billion, or $1.63 a share.
CIBC profit rose to $1.27-billion, or $2.80 a share, from $1.16-billion or $2.59 a year earlier.
On an adjusted basis, profit was $1.36-billion, or $3 a share.
Read more
- TD posts 20% rise in quarterly profit, reaffirms 2019 earnings targets
- CIBC profit rises on strength in retail banking, wealth management divisions
Michael Babad