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CANADA STOCKS-TSX falls as bank shares spooked by Home Capital woes
April 27, 2017 / 8:04 PM / 5 months ago

CANADA STOCKS-TSX falls as bank shares spooked by Home Capital woes

* TSX down 132.74 points, or 0.85 percent, to 15,516.80

* Seven of the TSX’s 10 main groups move lower

* Financials off 1.7 pct, energy group down 1.6 pct (Updates share moves and adds more details on Home Capital)

TORONTO, April 27 (Reuters) - Canada’s main stock index fell nearly 1 percent on Thursday, dragged down by heavyweight banking stocks after an alternative lender’s funding troubles raised concerns about the health of the housing market.

Home Capital Group Inc, which has been hit by a series of adverse news last month, said it had hired bankers to help it secure additional funding and size up its strategic options, as the subprime lender reported a further sharp decline in its assets amid a security regulator’s probe into its disclosures.

“It’s a crisis affecting a company which happens to be operating in the mortgage market,” said Fred Demers, chief macro strategist at TD Securities, who did not think there was a risk of contagion like the one experienced during the 2008 financial crisis.

Home Capital shares popped 25.0 percent to C$7.49, offsetting some of Wednesday’s 60 percent plunge, but the broader financial group - which accounts for a third of the index’s weight - fell 1.7 percent and touched four-month lows.

Royal Bank of Canada, the country’s biggest bank, fell 2.0 percent to C$93.60, while Toronto-Dominion Bank lost 2.4 percent to C$64.20 and Bank of Nova Scotia shed 2.7 percent to C$75.35.

Home Capital’s funding woes come at a time when federal and provincial governments are trying to cool Toronto’s red-hot property market through a series of measures. The runaway prices have attracted comments from banks CEOs that the market could correct, which in-turn could hurt lender’s earnings growth.

Canada’s federal housing agency said on Wednesday that Toronto still faces price acceleration, overvaluation and overheating.

At 3:35 p.m. ET (1935 GMT), the Toronto Stock Exchange’s S&P/TSX composite index fell 132.74 points, or 0.85 percent, to 15,516.80.

The energy group - which account for another 20 percent of the index’s weight - retreated 1.6 percent as oil prices fell on news that two key oilfields in Libya had restarted, pumping crude for export into an already bloated market.

Canadian Natural Resources Ltd fell 3.7 percent to C$43.41 and Encana Corp also shed 1.8 percent to C$14.47.

Canada’s largest oil and gas company, Suncor Energy Inc advanced 0.3 percent to C$41.75 after reporting better-than-expected profit.

Fertilizer company Potash Corp of Saskatchewan gained 2.4 percent to C$23.21 after beating profit expectations and upping its outlook.

Its rival and planned merger partner Agrium advanced 2.3 percent to C$129.39. (Reporting by Alastair Sharp and Solarina Ho; Editing by Chizu Nomiyama and Lisa Shumaker)

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