(Reuters) - The Greek crisis is likely to have a limited impact on Canadian equities and the pullback could throw up opportunities to buy stocks of companies such as Bank of Nova Scotia (BNS.TO), Canaccord Genuity said.
Greece on Tuesday looked set to default on a crucial repayment to the International Monetary Fund. The head of the European Commission has made a last-minute offer to try to persuade Athens to accept a bailout deal that it had rejected before.
“Although we believe direct exposure to Europe is a manageable risk for Canadian banks, we expect some names more than others to come under pressure while the situation with Greece persists,” Canaccord wrote in a note dated June 29.
Scotiabank was the only Canadian bank with Greek exposure, totaling $330 million of loans in the second quarter ended April 30, and has a 3 percent lending exposure to Europe, Canaccord said.
The brokerage has a “buy” rating and a C$72 price target on the bank.
Apart from Scotiabank, financial companies such as Royal Bank of Canada (RY.TO) and Great-West Lifeco Inc (GWO.TO), which have relatively more exposure to Europe, could come under pressure, the brokerage said.
“To be clear, we are highlighting these simply because their exposures to broader Europe may receive some undue attention from the market. We do not have major concerns at this stage,” Canaccord said.
RBC said on Monday that Canadian property and casualty insurer Fairfax Financial Holdings (FFH.TO), which had bet on a successful turnaround in Greece in 2014, stands to take a hit from a Greek default, but one-time gains and other factors were likely to soften the blow.
Transportation and industrials stocks including Bombardier Inc (BBDb.TO), CAE Inc (CAE.TO), Magna International Inc (MG.TO) MGA.N and Transat AT Inc TRZb.TO could be hit by a decline in the euro, Canaccord said.
Reporting by Fareha Khan and Tenzin Pema in Bengaluru; Editing by Sayantani Ghosh