Don’t Short the Canadian Banks – Scotiabank

Summary

  • BNS recently reported strong FY2017 results which coincided with a recommendation by PAA Research that investors short the Canadian banks.
  • BNS generates 50+% of its revenue from Canada but its international operations are in 4 key countries where the GDP growth outlook is superior to that for Canada and the US.
  • BNS continues to diversify internationally with the announcement of an offer to acquire the 7th largest bank in Chile for $2.9B. BNS currently owns the 6th largest bank in that country.
  • A retracement in BNS’s stock price is likely to occur within the year but shorting BNS is a tough way to make money. I recommend a buy, hold, and reinvest the dividends strategy.

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