Canadian Interest Rates

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WillyR

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Ok, so my CIO just but out a quarterly [to us the PMs not the field generally yet] saying that concerns around higher Cdn. interest rates will AID dividend paying Cdn. Large caps? Did I miss something? Wouldn't HIGHER rates on treasury products make dividend paying large caps comparatively LESS attractive?

Willy
 
Well there are 5 large cap stocks in Canada...and I could see how one could make the argument that higher rates would help them.



Edited 1 time(s). Last edit at Tuesday, May 29, 2007 at 07:39PM by Turkish.
 
what are the 5 large caps that are actually even left ( Royal, TD, BMO, CIBC and Scotia I would assume....maybe Encana)???
 
LOL..I didn't know we still had 5 large caps

but yes, willy - logic would dictate that if interest rates went up that would make dividend paying stocks less attractive but that being said there might be some firm-specific factors that make these dividend paying large-caps more attractive
 
Well I'm saying inflation in Canadian [might] be an issue. A rate hike here coupled with a decline in rates South of the Boarder could lead to further US dollar pressure or parity, or what technical finance publications refer to as "hell freezing over". Now Canada is cold enough but with a "Hell freezing over" scenario coming to fruition, Canadian companies [especially exporters and manufacturers] might come under pressure. So I'm thinking we are seeing a flight to quality as the comparative outperformance of small caps is starting to run out of steam.

Willy
 
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