Bloomberg Reports Pipeline Stocks Dominate Canada’s Energy Index

Bloomberg Reports Pipeline Stocks Dominate Canada’s Energy Index

  • Midstream companies make up six of the 10 best performers in the 40-company S&P/TSX energy index so far this year.
  • 3 have Canadian midstream companies’ existing conduits running at full capacity.

Regulatory delays to new pipelines like TC Energy Corp.’s Keystone XL and Enbridge Inc.’s Line 3 have Canadian midstream companies’ existing conduits running at full capacity, boosting earnings and pushing their shares to the top of the charts among Canadian energy stocks.

Midstream companies make up six of the 10 best performers in the 40-company S&P/TSX energy index so far this year. TC Energy, formerly known as TransCanada, is leading the charge, posting a 34% increase that’s more than triple the index’s 10% gain. See the full numbers here.

Pipeline stocks also have benefited from a decline in bond yields driven by global economic uncertainty, Ben Pham, an analyst at Bank of Montreal, says in a note last month. The sector is the most highly correlated to bond yields, and companies with limited commodity exposure tend to perform best in the current environment, Pham adds.

“If interest rates remain low or move lower, we believe there is potential for further valuation expansion,” Pham mentions in the note.

To keep up on pipeline related news, check the Submar blog regularly, where we’ll keep you up to date.