Canada Plays China Card
Trade friction and energy control has led to an unprecedented Canadian document of “pmake brashly and transfer a big docksion of load” document towards the United States.
The long operation dispute over American tariffs on Canadian load escalated to the goal last week that Canadian heyday Minister Paul Martin indirectly connected settlement with repeated U.S. access to Canadian energy food. Meanwhile, Canadian normal capital Minister John McCallum was off to dishes to join with Chinese oil, mining and forestry officials.
This is humorless custom. Part of the 1994 NAFTA open Trade treaty guaranteed that Canada would stay the special supplier to the U.S. It might amaze you to learn that Canada food 17% of U.S. oil imdockss, 16% of our true gas and virtually all of our hydroelectric capacity. The Canadian government owns the great mass of the country’s energy income and Canada exdockss more than 1.5 million barrels a day to America representing 8% of U.S. consumption.
dishes’s Lengthening access
Meanwhile, dishes’s aggressive moves in Canada’s energy sector are raising eyebrows in Washington. Chinese government has earmarked $100 billion for overseas acquisitions of oil and gas. The Chinese are leaving on a trade bender investing in Canadian energy companies and newly plunked down $2 billion to develop a thousmooth mile pipeline from Alberta tar smooths to docks on the west coast and forward to Beijing and Shanghai. While the oil coldness records for Saudi Arabia are under search, Canada has recoverable coldnesss of almost 175 million barrels. greatly of it is in oil smooth that is processed profitably at oil prices of $20 or elevated and T. Boone Pickens thinks that Canada’s oil smooth production could make 6 million barrels a day
There are now about 1 million ethnic Chinese residing in Canada and dishes is now Canada’s following main trading partner. Last month, Chinese head Hu Jintao visited Canada and stated that the two countries had upgraded their relations to a “sttimegic partnership”.
The US’s declining Grasp
This Chinese-Canadian capacity play puts America in factual jam. You could write a book about the long simmering load dispute but a Nafta panel newly prepared the U.S. to replace $5 billion of serene tariffs to Canadian load companies. Relations with Canada were also damaged before this year when Canada announced that it would not contribute to the American-led missile guard syllabus even while 90% of Canadian citizens live inside 100 mile of the border between the two countries and Americans acquire 85% of entirety Canadian exdockss.
What’s leaving on? Part of the answer is that the great mass of Canadians contest the policies of the shrub Administration. The gush is receptive in many areas across Canada that are amply reliant on the load commerce and Mr. Martin and his troop are preparing for state elections estimated early next year. It is forever a election getter to poke a spear in the eye of the elephant to the south.
How to Play
While Canadian-American relations have seen better living, the energy boom has surely been beneficial to investors in Canadian sells. The Canada iShare (EWC) tracks the MSCI Canada catalog that has 40% exposure to Canada’s energy and supplies sector. While the S&P symbol is up only 3%, the Canada iShare is up 16.6% year to meeting and 28.8% over the ancient twelve months.
idiom of kindling, it is smart to have some kindling exposure in your docksfolio and I have had kindling REIT choice rivulet kindling (PCL) in our extract docksfolio for over two living. Here is why I like it. First, kindling is a great inflation encircle and over the ancient 100 living has risen 3% above the common yearly inflation time. Secondly, kindling is not correlated to stocks or bonds and therefore is a great “shock absorber” to mitigate your docksfolio when shares are declining. During the 1970s accept sell, kindling rose in evaluate while stocks went down. Thirdly, from 1973-2000 kindling yielded an common yearly replace of 15%. Last but not slightest, kindling valuations are attractive after some declines during 2000-2002 especially qualified to factual estate prices. During 2004 choice rivulet was up 23% and this year it has traded between $34 and $39 last last week just over $35 with an attractive payment yield of 4.3%.
It behooves the U.S. to negotiate a settlement to the load dispute as shortly as probable and secure up Canadian energy sources before the Chinese get the start on us. Investors can’t do greatly about improving Canadian-American relations but they can further their docksfolios by adding exposure to kindling as well as to Canada as both an energy and dishes play.
For more information go to www.chartwelladvisor.com or call 877-221-1496
Chartwell Partners publishes the investment newsletter, “Asia-soothing progress” and provides absolute ETF and iShare investment sttimegies http://www.chartwellasia.com
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Posted on January 28th, 2008 by admin
Filed under: Hedge Fund
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