Several weeks ago Goldman Sachs was warning their clients not to invest in Canada.
A Goldman Sachs strategist has told investors that it is time to dump their Canadian stocks, so they can avoid suffering losses in the short term as oil prices decline.The story was buried in election news, but John Peters, professor of political science at Laurentian University, also raised the alarm in the Toronto Star: Harper and the illusion of economic management
Noah Weisberger told investors Tuesday that Canadian stocks "made new highs last week, even as growth jitters and higher energy prices were constraining equity markets elsewhere." But he advised Goldman Sachs clients to drop their Canadian holdings as "risks to the forward view of economic growth are more balanced as are the risks to oil prices."
The Conservatives cannot claim much credit for Canada’s economic success of the past decade. The surge in our natural exports has been due largely to the spike in commodity prices driven by rising natural resource demand and dwindling supplies.And it would appear that Goldman Sachs may have been right on the money, when they warned that Canada was a high risk investment, as commodities are taking a tumble.
Even before the latest round of corporate tax cuts, Canada’s oil, gas and natural resource exports nearly had doubled in value in recent years, and now more than 25 per cent of Canada’s economy is directly or indirectly tied to the mining and oil and gas industries, even more so in Alberta and Newfoundland and Labrador, where oil and gas account for nearly 40 per cent of provincial GDP.
A record plunge in oil prices led the sharpest sell-off in commodities in two years on Thursday as investors fled the market amid mounting concern over the strength of the global recovery.Metals are also on the decline.
Brent crude, the oil benchmark, tumbled more than $12 a barrel – its biggest fall in absolute terms – as investors bet that recent sharp gains in raw material prices would sap demand and compel emerging countries’ central banks to raise interest rates to head off runaway inflation.