Goldman Sachs recommends dropping Canadian stocks
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.
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 comment from Goldman Sachs came on the same day that the Bank of Canada predicted the Canadian economy will "return to capacity" by mid-2012, with continued growth this year and next.
BNN's Michael Kane said the Goldman Sachs conclusion about Canadian stocks was "largely due to the fact that the market has done so well, but also because we are so closely tied to the price of oil."
Kane said the Canadian markets have faced a tough week of trading in which oil prices have fallen on back-to-back days, while the loonie has also receded.
Energy experts predict that supply will exceed demand for oil this year, despite decreased exports from Libya and increased demand from Japan.
Saudi Arabia, Kuwait and the United Arab Emriates have boosted production in the wake of the conflict in Libya, to prevent an oil supply crisis.
With files from The Associated Press and The Canadian Press