What’s behind the loonie’s rise?
Last week’s rosy economic outlook by the Bank of Canada
– it declared the recession over – helped boost the dollar (CAD/USD-I0.940.011.07%) . Currency markets shrugged off Bank of Canada Governor Mark Carney’s caution that a high dollar could hamper the recovery, focusing instead on his comment that Canada is emerging from the recession in much better shape than most other industrialized nations.
Currency traders are betting that a U.S. recovery will spark a global recovery “and Canada will be the beneficiary of that,” Bank of Nova Scotia currency strategist Camilla Sutton said this week.
Canada has the best competitive advantage for Investment
When a country has as much to offer as Canada , it’s impossible to pinpoint a single reason to invest in one of the most dynamic economies in the world. Canada boasts multiple advantages and unparalleled potential — a place where businesses can achieve excellence on a global scale.
- People Advantage: Canada is a nation of intelligent, educated workers, ranking #1 in the OECD in higher education achievement.
- Business Environment Advantage: The Economic Intelligence Unit has rated Canada the #1 place to do business in the G7 for the next five years.
- Economic Advantage: Canada is better placed than many countries to weather the global financial turbulence and worldwide recession.
- Tax Advantage: Canada offers businesses low tax rates, boasting the lowest payroll taxes among the G7 countries.
- NAFTA Advantage: Canada ’s NAFTA advantage gives investors access to more than 443 million consumers and a combined GDP of more than US$15.4 trillion.
- The Asia-Pacific Gateway and Corridor Initiative (APGCI): Take advantage of Canada’s strategic location as the crossroads between the North American marketplace and the booming economies of Asia
Canadian banks pass S&P stress tests
Canadian lenders have enough capital to withstand losses without needing to raise more cash, Standard & Poor’s said.
“Like all banks elsewhere in the world, Canadian financial institutions are likely to experience additional losses as the recession continues,” the New York-based rating company said Thursday in a statement. “On the positive side, stress tests reveal that these banks have sufficient capital to withstand losses in what we believe is the likeliest case.”
Lenders including Royal Bank of Canada, Toronto-Dominion Bank and Bank of Nova Scotia exceed the minimum capital thresholds that S&P identified as necessary to cover losses, the company said. The tests also included credit unions in British Columbia and Quebec, and HSBC Canada.
Invest in Canada sector profiles – Canada’s competitive advantages
Canada’s Industry Strengths
- Advanced Manufacturing: Canada’s global share of the aerospace industry has tripled in the last 20 years, and it is the third-largest exporter of automotive products in the world.
- Agri-food: Canada is the world’s fourth-largest exporter of agricultural products.
- Chemicals: 10 out of 10 G7 top locations for chemicals manufacturing.
- Enabling Technologies: The Canadian Government has established a range of institutions and initiatives to create a supportive business environment for transformative technologies.
- ICT: The strongest growth in exports occurred in wired (+20.4%) and wireless (+16.9%) communications equipment.
- Life Sciences: The Canadian Government plans to double research and development (R&D) investments by 2010 to make Canada one of the five most research-intensive countries in the world.
- Plastics: Canada is the world’s fourth largest exporter of moulds and eighth largest exporter of plastics processing machinery.
- Wood Processing: Canada is the world’s leading producer and exporter of newsprint, and the world’s largest exporter of wood pulp.
Investors more confident, poll suggests
Canadian investors are increasingly confident, with real estate leading the way, the Manulife Investor Sentiment Index released Thursday suggests.
The quarterly index gained nine points since March and now stands at 20, which is 15 points up from what it was in December, when it hit the lowest level in a decade.
Manulife calculates the index by subtracting the percentage of those who say they believe it is not a good or very good time to invest from those who feel the opposite.
Nine out of 10 investment categories were ahead in the poll taken in June, the company said.
Investment property had the largest jump, adding 18 points after a 23-point gain in March.
“Canadians seem more interested in real estate, equity and investment funds after a stretch of gloomy economic news since late last year,” Paul Rooney, president and CEO of Manulife Canada, said in a news release.
Equities gained 13 points to –8, the only category among the 10 still in negative territory.
Along with the confidence in investing, the respondents also said they expect they will be as well or better off six months from now.
About a third said they thought they would be better off, just over half said they would be the same and just one is seven said they would be worse off.
Alberta remains best place for real estate investors
When it comes to the housing market, E-town still rules.
That’s the word from Don Campbell, president of Canada’s Real Estate Investment Network.
The popular author, consultant and public speaker says Edmonton remains the best place on the continent to invest in residential real estate. It’s a claim he first made last August, shortly after oil prices peaked at$147 US a barrel, and Alberta was rolling in energy riches.
Despite a sharp drop-off in oil and gas prices since, and a big slowdown in new oilsands projects, Campbell hasn’t flinched. He insists Edmonton will emerge from the recession stronger than ever.
“According to our research, Edmonton is still the No. 1 place for long-term investing in real estate in North America, absolutely,” says Campbell.
“Edmonton has the potential, it has the job growth. We know that when the recovery comes–and it will come, we just don’t know when –Edmonton is going to be able to provide fuel and fertilizer, which is exactly what the world is looking for. So that’s a pretty good basis for job growth.”
When Campbell speaks, others tend to listen.
Consumers becoming more confident
Consumer confidence edged slightly higher in Canada in July, according to a survey by the Conference Board of Canada.
More importantly, confidence didn’t go down. The July increase, while small, was the fifth month in a row for a rise, from the worrisome depths reached last winter.
The Conference Board’s index climbed a marginal 0.8 points to 82.9 – a level that is 12.7 points higher than at the start of the year when the recession was at its worst in Canada. The index was set at 100 in 2002.
The increase this year “perhaps [indicates] that consumers do indeed see a light at the end of the tunnel,” the Conference Board said in a press release.
Still, confidence is much lower than the levels near 100 reached last summer. And respondents had mixed feelings about their prosperity.
The recession is over. Cue the painful recovery
The recession is over, but not the pain.
Canada’s central bank predicted Thursday that the economy would expand this quarter, suggesting the economic contraction lasted for about nine months, considerably shorter than the previous two recessions in the early 1990s and the early 1980s.
The Bank of Canada’s reassessment of the state of the economy is perhaps the clearest signal yet that the worst of the recession is over.
Buoyed by the prospect of better days ahead, investors rushed to buy Canadian stocks, adding new life to an near five-month rally that economists said has played a big role in reversing Canada’s fortunes.
The Standard & Poor’s/TSX Composite Index rose 243.33 points to 10,675.68, the highest in six weeks. Canada’s dollar jumped about 1 per cent to 92.04 U.S. cents, the strongest in almost two months.
Yet Bank of Canada Governor Mark Carney stopped short of celebration, saying it will take more than a year to replace the wealth destroyed by the financial crisis.
V-shaped recovery in the works, says economist
Canada’s economic recovery is likely to be far stronger than markets anticipate, a Bay Street economist forecast Wednesday, indicating that a “burst” of 10% growth is possible in the coming quarters.
The prediction from Sheryl King, chief economist and strategist at Merrill Lynch Canada, comes amid fierce debate over what shape the recovery will take following the deepest recession since the Second World War.
“Markets think we are going to get this gradual rise in growth, and then everything is going to be fine,” Ms. King said in an interview. “But business cycles never end like that. You usually get some pop in growth.”
Those who argue that a strong rebound, rather than a slow, weak recovery, is in the offing were handed a key piece of evidence Wednesday when major U.S. credit-card providers, led by American Express Co., reported defaults and delinquencies were less than expected in June. This may signal that U.S. consumers’ credit positions — up until now, the missing piece in the U.S. recovery puzzle — are not deteriorating as rapidly as feared, despite rising unemployment and the continuing housing slump.
Canada readies response to ‘buy American’
Canada expects to present the United States with a proposal shortly,
in reaction to “buy American” rules, which would open up public
procurement more broadly to both Canadian and U.S. firms, Trade
Minister Stockwell Day said on Wednesday.
Mr. Day told U.S. Trade Representative Ron Kirk that Ottawa’s talks with the provinces
are in their final stages. The idea is to let firms from both sides of
the border bid on provincial, state and city contracts, and not just
federal jobs.
Meeting at an Asia-Pacific session in Singapore, Mr. Day also told Kirk that Canada was assessing the impact
of U.S. country-of-origin meat labelling rules and could move to the next stage of challenging them at the World Trade Organization.
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