More and more US stock market giants are becoming available to Canadians in a low cost version. Additionally, why some investors may underestimate the bullish case for stocks


A new investment innovation called the Canadian Certificate of Deposit is working well enough to double the size of the franchise.

CDRs, offered by the Canadian Imperial Bank of Commerce, represent a fraction of an underlying US stock. The latest set of CDRs, listed in the NEO Exchange, is Microsoft Corp. (MSFT-NE), Walt Disney Co. (DIS-NE), Visa Inc. (VISA-NE), Facebook Inc. (FACE-NE) and PayPal Holdings Inc. (PYPL-NE).

These five CDRs are based on an initial line from Alphabet Inc. (GOOG-NE), Amazon.com Inc. (AMZN-NE), Apple Inc. (APPL-NE), Netflix Inc. (NFLX-NE) and Tesla Inc. (TSLA-NE). All 10 are designed as a cheap, hedged way for small Canadian investors to buy some of the biggest heavyweights in the US market. The initial price of these shares was around $ 20, while the US-listed versions can trade in the thousands of US dollars.

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CIBC says it saw a strong reaction to its deposit receipts, especially among independent investors, and CDR’s total assets stood at $ 70 million as of midweek. A total of around 4.5 million shares have been traded since launch and the average number of trades per day has risen from an average of 310 per day in August to over 670 in September. Bid-ask spreads – the difference between what investors are willing to pay as buyers and willing to accept as sellers – are a bit larger than with US stocks. For example, AMZN-NEO had a bid-ask price of four to five cents at one point this week, while US stocks had a predictable tight spread of one cent.

The real test of CDRs is how well they track the performance of the underlying US stocks, and early indications are positive in this regard. In 63 trading days, AMZN-NEO fell 8.68% and AMZN-N fell 8.63%. CDR’s currency hedging feature ensures you get virtually the same returns as the underlying stocks, without distortions caused by the volatility of the Canada-US exchange rate.

There is another CDR feature worth noting for small investors who want to keep it simple. Usually, when you buy US stocks, your broker will convert your Canadian dollars to US currency. CDRs do the exchange using institutional rates, which are a better deal.

– Rob Carrick, Personal Finance Columnist

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The summary

Don’t lose sight of the good news about stocks

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In recent weeks, stock prices have faltered as investors worry about rising bond yields, persisting inflation and slowing growth. Soaring energy costs brought up memories of stagflation in the 1970s. Add to that the mess of Washington’s debt ceiling, problems with metastasis in China’s real estate industry and the looming decline in its massive purchases of energy. bonds by the US Federal Reserve, and skeptics had a lot of material to fashion their own dystopian sagas. But investors might want to wait before assuming all of this drama is heading for a depressing 1970s-style finale. Yes, there are real reasons to be concerned, but what might surprise most people. is the amount of good news that has quietly accumulated in recent months. Ian McGugan explains.

Also see: Buy the dip? Not so fast, say some Wall Street banks

If you’re feeling good about your renewable energy stocks, avoid the coal rally

Funds that comply with environmental, social and governance (ESG) principles are seeing a massive influx of dollars from investors. Still, companies involved in fossil fuel extraction are rewarded with dramatic gains this year as demand for traditional energy grows amid a supply shortage that could last for months. Welcome to one of the great puzzles of the current market. David Berman shares his point of view.

Copper analysts reset outlook on double swings in demand in China

As our Scott Barlow pointed out earlier this week, copper has been the key to determining the direction of the Canadian dollar in recent months. She also wields considerable influence over the TSX materials sector. Now, copper analysts are revising their price forecasts for the red metal after simultaneous disruptions in two key sectors in China that together account for more than half of the country’s copper demand. Here is what they predict.

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Why Wall Street is encouraging China, despite growing corporate unease

This year has been unsettling for Chinese companies. The ruling Communist Party has attacked the private sector industry by industry. The stock markets have taken a huge hit. The country’s largest real estate developer is on the brink of collapse. But for some of the biggest names on Wall Street, including investment giant BlackRock, China’s economic outlook looks brighter than ever. Li Yuan of the New York Times explains.

Others (for subscribers)

An accountant: Amid volatile markets, these U.S.-listed dividend stocks have bullish momentum

Number Cruncher: Bond fund research includes checking sensitivity to changes in interest rates

The highest yielding stocks on the TSX, plus risk data

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Friday Analyst Improvements and Downgrades

Friday Insider Report: Trustee Completes Position in Resilient Trust With 7.3% Return

Thursday Analyst Improvements and Downgrades

Thursday insider report: CEO and top executives each receive $ 1 million in salary

Europe’s record IPO year has a sting in the tail

Globe advisor

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How to play the new energy bull market

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What’s new in the coming days

Watch for a number of actionable investing ideas next week in exchange-traded funds, including ETFs to bet on for a continued natural gas boom.

US banks to report mixed results in Q3, lending outlook uncertain

Inflation, energy, earnings and other global market themes for the coming week

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Click here to view Globe Investor’s results calendar and economic news.

More Globe Investor coverage

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Compiled by Globe Investor Staff


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