Top Canadian investing stories of 2011

Find out which stories made big news in the investment landscape

Photo credit: langleyo / Flickr (CC)

Canada may not always be considered a big financial player, but it has a whole lot going for it. At a time when markets in the United States and across Europe are struggling, Canada’s markets bring news of strength, rather than disaster. Better still, this past year’s top investing stories show that Canada is on the map. Check out what made news in the Canadian markets in 2011.

1. Research in (downward) motion

Canadian tech company Research in Motion (TSX:RIM) made big news this past year – and in a bad way. The company’s Blackberry device, once the go-to gadget for white-collar workers everywhere, has increasingly lost its cachet in favour of sleeker gadgets produced by Apple and other manufacturers. Product delays and disappointments – not to mention a major worldwide service outage in October - only contributed to RIM’s troubles, pushing the company’s shares down by more than 70 percent this year (ouch). Analysts are no longer asking whether the Blackberry can regain its lost glory, but whether the company can survive at all.

2. Growing profits in Saskatchewan

This western prairie province has always been known for its crops, but now it’s growing profits – and food – all over the world. Boasting the world’s largest supply of potash, a mineral resource used to produce fertilizer, Saskatchewan has increasingly attracted attention from foreign mining companies. The province really struck gold in November when it got a C$3.25 billion offer from a German fertilizer company to create a major potash mining operation in a remote southern area of the province. Agrium (TSX:AGU) also announced an expansion of its mine, while BHP Billiton hinted at future developments, creating a welcome boom in a province that previously relied mostly on farming. As you might expect, Canada’s potash miners are digging the profits.

3. The pipeline to profits

TransCanada Corporation’s (TSX:TRP) plan to build a pipeline – dubbed the Keystone Oil Pipeline - to transport crude oil from Alberta’s oil sands to refineries in the Southern United States made big news on both sides of the border this year. Environmental activists’ vehement objections to the pipeline, arguments over which route it should take, and concern from critics that the crude should be refined in Canada contributed to a firestorm debate that lead U.S. President Barack Obama to push a final decision about the pipeline’s construction to 2013. TransCanada also made some major public relations blunders by attempting to use “eminent domain” laws to force landowners out of the way of the pipeline’s route – before its construction had even been approved. Still, Keystone supporters praise this development’s economic potential. If the U.S. government agrees to turn on the tap, profits will undoubtedly flow into the country. Exactly what else the pipeline brings in remains to be seen.

4. Good old Canadian banks

In 2011, Canada’s banking system was ranked the world’s most stable by the World Economic Forum, as it has for the past four years. What was previously seen as Canada’s common-sense style of financial regulation proved much more audacious than our Canadian sense of modesty had allowed us to assume, as other banks around the world literally came apart at the seams. This recent financial crisis isn’t the first time Canada’s banking system showed its strength. In the 1930s, not a single bank in Canada failed, while 9,000 U.S banks bit the dust. And when almost 3,000 American banks failed during the Savings and Loan (S&L) Crisis of the 1980s and ‘90s, only two Canadian banks followed suit. That’s why many analysts on both sides of the border continue to recommend Canada’s banks as an investment this year. Even if you don’t buy in, it’s nice to know you still have a safe place to park your funds.

5. Gold shines again

Gold shares hit record highs of more than $1,900 per ounce in September, boosting profit among Canada’s gold mining companies. But in October, gold bugs really hit on a gilded investment when many Canadian gold miners boosted dividends. Gold dividends are still relatively low, but the increases are rare, and represent an effort by mining companies to win over investors, many of whom have been flocking to gold ETFs in recent years. Barrick Gold Corp. and Newmont Mining both announced dividend hikes in October, followed by Yamana Gold Inc. and Alamos Gold Inc.. Not to be outdone, Goldcorp Inc. rounded out the group, bumping its dividend by 32 percent in December. Most of the profit from these stocks will still come from appreciation, but for investors who already favour this precious metal, a little income is golden.

6. Things go bananas in the oil sands

When the Chiquita Brands company announced it would boycott fuel from Alberta’s oil sands in December, it was just another of a growing list of similar threats by other companies, including Walgreens, Whole Foods, Trader Joe's, Quiksilver, Gap Inc., Levi Strauss & Co., Timberland, Bed Bath & Beyond, FedEx, Avon, American Eagle Outfitters, LUSH Cosmetics and Liz Claiborne Inc. (whew!). Some of these companies have since backed down on their stance against what oil sands critics call “dirty oil,” but they do represent a growing chorus of protest against increasing development in Alberta’s oil and gas industry. Whether you think Canada’s oil sands are a blessing or a curse, every celebrity’s Prius now has the oil sands in its GPS. Count this as one Canadian industry that’s definitely on the map.

Predictions for 2012

Canadian analysts are predicting weakness in global markets in 2012, but are optimistic that the strength seen this year in the Canadian markets will persist. It’s too early to say what 2012 will bring for Canadian investors, but it looks like disaster isn’t in the cards. And that’s probably the best story of all.

 

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