stock exchange

We think conservative investors can hold up to 10% of their portfolios in foreign stocks. One way to do that is to buy carefully chosen exchange traded funds (ETFs) that have an overseas focus.

The best ETFs offer very low management fees and well-diversified, tax-efficient portfolios of highquality stocks....

The prices of several agricultural commodities continue to strengthen. For example, wheat prices are moving higher on continued dry weather in the U.S. Meanwhile, heavy rains are hurting wheat production in Germany.


Sugar prices are up on lower production in Brazil and higher imports from China....

Successful investing in international ETFs has a lot to do with understanding the economies of the countries you invest in.

Orange SA (ADR), $17.06, symbol ORAN on New York (ADRs outstanding: 2.6 billion; Market cap: $45.1 billion, www.orange.com), is a telecommunications company controlled by the French government. It was formerly called France Telecom SA. Now operating in 28 countries—including Poland—Orange has a total client base of over 263 million customers worldwide. This includes 200 million mobile customers and 18 million fixed broadband subscribers. In early April 2016, Orange dropped from $17.40 to as low as $16. The decline came after the company failed to conclude a merger with its smaller rival Bouygues Telecom. The deal would have reduced the number of major French telecom operators from four to three. Orange is number one in the market....

In the 1980s, the Vancouver Stock Exchange was a world centre for trading speculative stocks. I used to advise buying some Vancouver stocks that seemed like they had a chance of success, and recommend selling or avoiding others. I noted a recurring pattern: when I advised selling a stock, the company hardly ever responded in any way. Assuming they knew about the sell recommendation, it seemed they just wanted to avoid any unfavourable attention. The rare exceptions were companies that were particularly successful in promoting their stock, but seemed to have the least likelihood of success as a business. Rather than ignoring our sell advice, promoters of these successful-promotions/doomed business ventures would send incredibly long, detailed, indignant letters. They would insist that I explain how I came to such a ridiculous conclusion, and demand a retraction. Sometimes I would print an update or clarification about the company’s business. But I never did find reason to change any of these recommendations. So I’d add at the end of the piece, “We still think it’s a sell.”...

CANADIAN PACIFIC RAILWAY LTD., $189.30, Toronto symbol CP, ships freight over a 22,000-kilometre rail network between Montreal and Vancouver, with links to hubs in the U.S. Midwest and Northeast. The company reported 4.4% lower freight volumes in the latest quarter. That’s mainly due to weaker prices for oil, minerals and other commodities. They forced many producers in Canada and the U.S. to reduce their production and so their shipping. As more U.S. power utilities switch to natural gas, coal shipments have also suffered. In the three months ended March 31, 2016, CP’s revenue fell 4.4%, to $1.59 billion from $1.67 billion a year earlier. That missed the consensus forecast of $1.61 billion....

Fortis’s purchase of ITC Holdings Corp. should boost its revenue and help it achieve targets for dividend increases.

FORTIS INC. $40 (Toronto symbol FTS; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 283.1 million; Market cap: $11.3 billion; Price-to-sales ratio: 1.7; Dividend yield 3.8%; TSINetwork Rating: Above Average; www.fortisinc.com) owns electrical utilities across Canada and in the U.S. and Caribbean. It also distributes natural gas in British Columbia. In February 2016, Fortis agreed to buy ITC Holdings Corp. (New York symbol ITC), which owns 25,100 kilometres of high-voltage power lines in the U.S. Midwest. Fortis is paying $6.9 billion U.S. in cash and shares; ITC shareholders will own 27% of the combined company. Fortis will also list its shares on the New York Stock Exchange; its shares will continue to trade in Toronto....

In addition to TransCanada (see page 41), we like the outlook of these four utilities. Like TransCanada, Emera and Fortis are expanding in the U.S. These purchases cut their reliance on Canada, and should enhance their earnings and dividends for years to come. Canadian Utilities and ATCO have both suffered lately due to their high exposure to Alberta, where low oil prices have hurt the economy and power prices. However, their new projects should let them continue to raise their dividends....

ISHARES CHINA LARGE-CAP ETF $33.03 (New York symbol FXI; buy or sell through brokers) is an exchange traded fund that aims to track the Financial Times Stock Exchange (FTSE) China 50 Index, which is made up of the 50 largest, most-liquid Chinese stocks. Top holdings include Tencent Holdings, China Mobile, China Construction Bank, Bank of China and Ping An Insurance. The ETF has an MER of 0.74%. Chinese stocks are down sharply since last summer. National leader Xi Jinping seems focused on shoring up the Communist party and the Chinese stock market, rather than strengthening the Chinese economy. Meanwhile China still has strong long-term growth potential, but needs to get its economy back on track....