MONTREAL, Feb. 21, 2013 /CNW Telbec/ - In order to help investors get a
better grasp of market evolution, Laurentian Bank is presenting the
forecasts for 2013 of its Vice-President and Strategist, Mr. Sylvain
Ratelle. Drawn from the document entitled, Investment Strategy, which was prepared jointly with Laurentian Bank Securities' Economic
Research Department, this information will be particularly valuable for
investors wishing to review the positions of the their RRSP portfolios.
Recommending a New Balance: More Stock… Fewer Bonds
The year 2013 should continue to put distance between us and the
financial collapse of 2008-2009, even if political uncertainty could
muddy the waters to some degree. The global economic environment is
gradually making way for more sustainable growth of real GDP. South of
the border, the modest upswing of economic conditions in the U.S. will
prove to be vital for other industrialized and emerging nations. The
improvement of public finances in Washington awaits completion, but the
American private sector has started to see some light. On the other
side of the Atlantic, we are anticipating a little less agitation in
Europe this year, despite the persistent recession in the euro zone.
We are also expecting the principal central banks to be more proactive
this year, which should serve to reinstate the appetite for risk a bit.
All of these elements will contribute to reinforcing still fragile
economic and financial stability. This reinforcement should not be
accompanied by high global inflation, which makes for an ideal scenario
for stock markets that will not need to be bothered by a pronounced
rise in interest rates.
"In view of the overall economic and financial picture, we are
recommending a rebalancing of portfolios," underlines Sylvain Ratelle.
"Thus, we are favouring overweighting of the stock portion and, in
parallel, underweighting of the bond component." This positioning will
avoid the adoption of an overly conservative investment strategy so as
to benefit from the positive momentum of stocks. "At the same time, we
believe it would be too hasty to consider the other extreme — that of
taking maximum risk, commonly known as the big turnaround in financial markets jargon."
What the Markets Have in Store for Us in Canada
With Canada being a net exporter of natural resources, the trend of the
Canadian dollar is to closely follow that of the raw material indices.
Furthermore, the dollar appears to be overweighted, recently starting
on a new, slightly downward trend. According to Sylvain Ratelle, "we
recommend taking advantage of the Loonie's current level in order to
diversify a majority portion of share assets — approximately two-thirds
— toward American and international markets, while respecting
individual profiles." The Canadian bond market is likely to lose some
of its lustre later in 2013 and 2014, as investors will be less and
less inclined to take risks in light of improving economic conditions,
particularly in Europe. Thus, we could well see a much less vigorous
influx of international capital. "Consequently," maintains Mr. Ratelle,
"we suggest reducing the weighting of the bond market in portfolios, as
well as the duration of the bond portfolio, so as to diminish the
impact of expected interest rate increases on the value of bonds."
Weak but Constant Recovery in the United States
The American stock market, represented by the S&P 100 index, is among
those that saw the highest returns in 2012. In fact, the S&P 100 index
has recovered almost all of the losses of 2007-2009. According to the
consensus among analysts, the anticipated growth of profits for the
next two years, combined with an evaluation below the historic average
and the appetite for risk among investors, are all now making for a
positive market trend. As Sylvain Ratelle pointed out earlier, the time
is right for overweighting in American and other foreign securities.
Elsewhere in the World
The euro zone continues to be fragile, although that fragility should
attenuate somewhat during 2013 if financial conditions continue to
improve and the economy gets back on track. In emerging countries, most
of 2012 was marked by a deceleration of growth. The year 2013 should be
the opposite. The improvement of economic conditions in the U.S. will
progressively benefit the external sector of emerging economies.
Moreover, an improvement in Chinese exports has already been observed
at the end of 2012. However, the relative performance of emerging
markets should not be as spectacular as during the last periods of
About Laurentian Bank
Laurentian Bank of Canada is a pan-Canadian banking institution that has
nearly $35 billion in balance sheet assets and $33 billion in assets
under administration. Founded in 1846, Laurentian Bank was selected in
2012 as one of the 10 winners of the Canada's Passion Capitalists
program in recognition of its sustained success through the promotion
of passion within its ranks. The Bank employs more than 4,200 people.
Recognized for its excellent service, proximity and simplicity,
Laurentian Bank serves more than one million clients in market segments
in which it holds an enviable position. In addition to occupying a
choice position among consumers in Québec, where it operates the third
largest branch network, the Bank has built a solid reputation across
Canada in the area of real estate and commercial financing thanks to
its teams working out of more than 35 offices in Ontario, Québec,
Alberta and British Columbia. Its subsidiary, B2B Bank, is a Canadian
leader in providing banking products as well as investment accounts and
services to financial advisors and brokers, while Laurentian Bank
Securities is an integrated broker, widely recognized for its expertise
and effectiveness nationwide.
SOURCE: Laurentian Bank of Canada
For further information:
Senior Manager, Medias and Public Relations
514 284-4500, extension 8232