One investment strategist thinks Canadian investors needs to be more bullish on the materials sector, especially when it comes to softwood lumber, as President-elect Donald Trump prepares to take office later this month.
“I think the Canadian investing public is probably too bearish on the softwood impact and what it’s going to happen to the pulp stocks and some of the paper stocks,” Brian Belski Chief Investment Strategist at BMO Capital Markets told BNN in an interview Tuesday.
Softwood lumber negotiations have been ongoing between the U.S. and Canada as the 2006 softwood lumber agreement between the countries expired in 2015, and the one-year standstill period that allowed them to try to reach a new agreement ended in October.
The end of the standstill period meant the U.S. could begin the process of imposing tariffs on Canadian lumber imports — which could make it more expensive for Canadian producers to export to the U.S.
“At the end of the day, Trump needs Canada in terms of the wood coming back into America to build stuff,” Belski said. “I think the material sector in Canada is all about the growth in the region, meaning North America, and less about what’s going to happen in emerging markets — and I think that’s why we can, will and should be more bullish on materials overall.”