Q: Could you tell me aside from the fact that the Canadian market is/has been dominated by resource companies, why the volume of CNQ and SU for example is characteristically the highest on the TSX? While I have a fair bit of CNQ, I wonder what the high steady volume should be saying to investors now? Is it about good dividends, future price increases of crude, anticipation of the federal government major projects ...? Would you be loading up today on oil companies?
Many thanks.
Many thanks.
5i Research Answer:
We are comfortable with some exposure to the energy sector, but we would not 'load up'. We think a 5% to 10% weighting is appropriate. The TSX is at 15.9%.
SU/CNQ are very liquid stocks, listed on the US market as well, and have a lot of shares outstanding. For large investors looking for exposure in energy, they are typically the 'go to' stocks where investors can establish or trade large positions very easily with little market price influence. SU has 1.2 billion shares outstanding, CNQ has 2.1 billion.