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Canada ETFs Rally As Republicans Plan Keystone Legislation


A Republican victory in Congress has increased the likelihood of passing the Keystone XL crude oil pipeline project, bolstering Canadian energy stocks and country-specific exchange traded funds.

The Guggenheim Canadian Energy Income Fund (ENY) jumped 3.2% Wednesday.

Broad Canada stock ETFs also strengthened Wednesday, with the iShares MSCI Canada ETF (EWC) rising 1.6% and First Trust Canada AlphaDEX Fund (FCAN) increase 2.5%. EWC includes a 23.3% tilt toward energy stocks and FCAN’s portfolio holds 37.5% in energy.

Additionally, the IndexIQ Canada Small Cap ETF (CNDA) was up 0.8% Wednesday while iShares MSCI Canada Small Cap Index Fund (EWCS) was 0.6% higher. CNDA has a 36.3% position in the energy sector and EWCS holds 25.4% in energy stocks.

Republican Senator John Hoeven believes the Republican majority will likely introduce a stand-alone legislation in the first quarter of 2015 to approve the Keystone XL pipeline from Canada, Reuters reports.

“I think Keystone will be one of the first bills we’ll be able to put up in the new Congress,” Hoeven said in the article. “I’ve got a bill right now that’s got about 56 cosponsors. And with the election results, we’ll have over 60 who clearly support the legislation.”

Polls show that as many as two-thirds of Americans support the pipeline, and the entire Republican caucus, along with a dozen Senate Democrats, support the Keystone project, Fox reports.

However, the President still has veto power unless 67 senators support the bill. Currently, about 61 senators support the project.

Canadian stocks rallied off a two-week low on the Republican win, with TransCanada (TRP) leading the charge. TransCanada has been waiting since 2008 for a U.S. decision on the pipeline that would transport crude from Alberta’s oil sands to Gulf Coast refineries. However, legislation has been held up by environmental groups.

Additionally, Linamar Corp. surged 12% after announcing better-than-expected earnings.

FCAN includes a 4.3% position in Linamar. EWC has a 2.6% position in TransCanada. ENY includes 5.7% in TransCanada.

Guggenheim Canadian Energy Income Fund


For more information on Canada, visit our Canada category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.