The Globe and Mail reports in its Saturday, April 6, edition that playing Canadian oligopolies can be profitable. The Globe's Tim Shufelt writes that with a relatively small population spread over a vast terrain, the Canadian economy seems to be a natural incubator for oligopolies. Canada's Big Six banks together generated $45.3-billion in earnings last year, amounting to more than $1,200 for each and every Canadian. Compared with United States counterparts, Canadian banks have been consistently more profitable, with an average total return on equity of 15.7 per cent over the past 20 years, compared with 11.6 per cent for banks in the S&P 500, according to a CIBC World Markets report. Over that same time, Canadian telecom and railway profitability also exceeded U.S. peers, which CIBC analyst Ian de Verteuil suggested was because of higher concentration. The Canadian grocery segment, however, was an exception in falling a bit short of U.S. grocer profits over the past two decades. The profile and record of investable oligopolies make a compelling case for a healthy weighting in Canadian stocks, Mr. de Verteuil said.
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