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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Schedule I Canadian Banks – (part 5 of 6): The Bank of Nova Scotia Stock Analysis

Summary

  • This The Bank of Nova Scotia Stock Analysis is the fifth of a 6 part series covering the Big 6 Canadian Banks.
  • BNS reported Q2 2017 results May 30th and its Liquidity Ratios continue to be strong thus providing investors with assurances that an investment in the bank is relatively safe.
  • BNS is Canada’s most international bank and its geographical diversification provides it with a superior ability than some of its peers to weather a financial storm.
  • Pockets of the Canadian real estate market are wildly overheated but BNS is an extremely prudent lender and it actually started dialing back its new mortgage business in 2016.
  • BNS is an attractive long-term investment with a solid dividend payment history.
  • I suspect we will experience a major market correction within the next 12 months and urge caution.

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