(September 18, 2006) If the latest data from Statistics Canada is any indication, Canadians are heeding calls to increase the share of foreign content in their portfolio.
After a brief pause in June, Canadians made significant investments in foreign securities in July, acquiring $6.3 billion worth of securities, StatsCan reported on Monday. Half went to foreign bonds and the remainder was divided between foreign shares and short-term securities.
Nearly all purchases of foreign bonds were made overseas, as purchases of U.S. bonds fell to $151 million from $2.7 billion in June. The main driving force behind purchases of foreign shares were pension funds. Most of these shares were in US companies
Meanwhile, foreign investors bought Canadian bonds. US investors alone purchased $8 billion worth of Canadian bonds, the second highest on record, while European investors sold $6 billion worth of Canadian bonds.
Despite concerns about a cooling Canadian market, non-residents bought $1.6 billion worth of Canadian stocks in July, focusing on manufacturing, mining and investment intermediaries. So far this year, foreign purchases of Canadian stocks have topped $18.5 billion.
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Sun Life comments on rumors of MFS sale
(September 18, 2006) Sun Life Financial issued a short statement on Monday following reports suggesting the insurance giant is considering selling its US subsidiary MFS Investment Management.
Sun Life said that while it values ​​the Boston-based company as an asset and remains committed to growing the company organically, it is also evaluating its options.
“The company has retained investment bankers to advise on strategic alternatives,” the statement said. “However, there is no certainty that the transaction will take place.”
“MFS management is working hard to grow MFS, including expanding distribution and research globally and improving performance and profit margins,” Sun Life added, noting that MFS is gaining institutional side flows both domestically and abroad and assured “a significant margin of improvement” over the past year.
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US economic slowdown will hurt Canada: TD
(September 18, 2006) The Canadian economy faces tough times ahead, according to TD Economics’ latest quarterly forecast, as a long-awaited slowdown in the U.S. weighs on growth north of the border.
However, neither country is expected to fall into recession, with economic growth in the US falling to 2% and in Canada slowing to 2-2.5%. The small difference in growth rates will mask the broader difference, as the U.S. growth potential could be as much as 3.3%, while Canada’s potential could be 2.8%, which is only slightly higher than the expected growth rate.
“While absolute economic growth numbers will be similar, the accumulation of economic slack in Canada will be much smaller, demonstrating the relative outperformance of the Canadian economy,” says Don Drummond, chief economist at TD Bank Financial Group.
Sectors of the Canadian economy that depend on exports will struggle to cope with weaker U.S. demand, but the domestic economy is expected to drive overall growth. Consumer spending is expected to remain strong as unemployment remains low, and Drummond also predicts increased business spending.
Slower growth rates will impact monetary policy on both sides of the border, with the US Federal Reserve expected to cut interest rates in early 2007; reductions are expected to total 100 basis points. The Bank of Canada is also expected to cut interest rates, but with less slack in the economy, Drummond says they should only be 50 basis points.
Smaller interest rate cuts in Canada should keep the value of the Canadian dollar relatively high, which is expected to be between 87 and 90 US cents by 2007.
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RBC Insurance enters the segment funds
(September 18, 2006) RBC Insurance introduced RBC Insurance Guaranteed Mutual Funds, a foray into the segregated funds market with immediate sales.
Seg fund versions are currently available for 12 RBC mutual funds, and four portfolios are also available.
RBC Insurance GIFs are available across all of the company’s non-proprietary insurance product channels, including Advisors and Financial Planning Firms, MGAs and National Accounts. RBC Insurance’s own sales arm will begin selling funds “in the next few weeks,” according to a press release.
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CANNEX Canada sells Australian shares
(September 18, 2006) CANNEX Financial Exchanges sold its Australian subsidiary to Chapwill Pty Ltd, a holding company controlled by the Australian company’s chairman, Andrew Willink.
Financial terms were not disclosed, but the company says the deal will result in significant additional investment in CANNEX Financial Exchanges’ U.S. business to enhance its annuity survey services with new retirement income data and information services.
CANNEX provides Advisor.ca with a range of data, including savings, loans and broker rates. Check our home page for details.
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