Canada exports a lot of commodities to China and so basic materials companies in Canada are exposed to China's economic slowdown. With this downtrend in mind, investors should only invest in Canadian basic materials stocks that trade at significant discounts.
Basic Materials Demand Sliding
Declining demand for commodities from China and Europe has hit Canada, a major commodity exporter. Craig Fehr, Canadian market strategist said, "The big three sectors: energy, materials and financials, are all having tough quarters driving earnings growth." This trend is also expected to affect banks and other financial institutions as they wait to produce their quarterly financial statements.
With the increase in the cost of labor, Barrick Gold (ABX), the largest Canadian gold producer, reported reduced earnings. Profitability of Canadian Natural Resources (CNQ) declined 3.6% this month. This was their highest decline over the past four months. Canada's biggest natural gas producer, Encana (ECA)
Complete Story »