Lower energy prices largest risk factor facing Canadian markets
TORONTO, March 28 /CNW/ - Bullishness for broad market Canadian stocks
continued its steady march upward as Canadian investment manager bullishness
crept up across all equity asset classes this quarter, according to the latest
Russell Investment Manager Outlook, a quarterly poll of investment managers
conducted by Russell Investments. Across the board, the Canadian equity market
saw pronounced increases in positive manager sentiment, as bullishness for the
broad market increased 13 percentage points to 48 percent and bullishness for
Canadian small caps increased 22 percentage points to 45 percent.
"Many investment managers that had been neutral to Canadian equities have
moved firmly into the positive camp, while the bears have largely held their
ground," says Tim Hicks, Chief Investment Officer, Russell Investments. "More
managers are asserting their status as bulls, at the very same time that the
market has become more volatile and turbulent."
Amidst this bullishness, 52 percent of managers named decreasing energy
prices as the largest risk factor threatening the performance of Canadian
equity markets over the next twelve months. This concern fits with a result
from last quarter's Investment Manager Outlook, where nearly one half (47
percent) of investment managers indicated their belief that the price of oil
would be lower at the end of 2007 than it was then, compared to the one
quarter of managers expecting a rise in oil prices. The managers also
highlighted the valuation of the Canadian market relative to the rest of the
world (19 percent) and geopolitical instability (14 percent) as risks.
Canadian Investment Manager Outlook is intended to generate a meaningful
snapshot of investment manager sentiment each quarter. Russell collected the
opinions of a representative sample of senior-level investment decision-makers
at Canadian equity and fixed income managers.
Additional key findings include:
Sector Highlights: Telecommunications Replace Financial Services As
Telecommunications replaced financial services as the sector finding the
most manager enthusiasm this quarter. While manager bullishness for financial
services fell to 52 percent from 68 percent, managers having a positive
sentiment towards the telecom sector rose to 66 percent from 52 percent.
Healthcare, utilities and energy continue to languish with less than one-third
of managers expressing a bullish outlook (29 percent, 27 percent and 24
"Earnings for financial services companies have been hot for some time,
and managers may believe that this sector has peaked," said Hicks. "Canadian
telecoms continue to enjoy strong earnings power in the wireless sector,
bolstered by a lack of competition."
Managers Still Bullish on Non-Canadian Equity Markets
Manager bullishness for EAFE, U.S. and emerging markets equities were all
quite strong this quarter. Sixty-four percent of managers were bullish on EAFE
stocks, while bearishness dwindled to 12 percent. Fifty-eight percent of
managers were also bullish for U.S. equities, while bears dropped to 14
percent. Canadian investment manager bullishness towards emerging markets
surged 14 percent in the first quarter to 49 percent.
"Bullishness for non-Canadian markets continues to be greater than for
Canadian equities, as managers appear to favour the risk/reward
characteristics of international markets," said Hicks. "Although emerging
markets generally demonstrate more volatility than mature economies, many
companies in emerging markets participate in staple industries, and tend to be
About Russell Investment Manager Outlook
Prior to the end of each quarter, Russell polls a sample of investment
managers to collect their top-line opinions about the direction of the
markets, sectors and asset classes to watch, and trends on the horizon that
could impact investment strategy. In addition to the quantitative results, the
Investment Manager Outlook provides qualitative analysis and commentary from
one of Russell's senior investment strategists. Detailed results and analysis
from the Russell Investment Manager Outlook are available on Russell.com/ca.
Russell conducted the current Russell Investment Manager Outlook between
February 26 and March 5, 2007. The manager research that Russell conducts for
investment purposes is done entirely independent of Russell Investment Manager
Outlook, and responses to the survey are on a purely voluntary basis.
Fifty-two (52) managers responded.
Russell Investment Group is a global leader in multi-manager investing
and one of the world leaders in investment consulting. Russell advises
institutional clients with total assets of over C$2.0 trillion and manages
more than C$230 billion in its investment management business, which employs
Russell's MULTI ASSET MULTI STYLE MULTI MANAGER(TM) investment process.
Russell supports its global operations by monitoring more than 4,000
manager firms and their 8,600 products. The company serves institutional and
individual investors with a full range of investment services, including
investment consulting, investment funds which include private equity and hedge
funds, transition management, commission recapture and stock indexes. Founded
in 1936, Russell has its headquarters in Tacoma, Washington, USA and has
principal offices in Toronto, New York, London, Paris, Sydney, Singapore,
Auckland, and Tokyo. Russell Investments Canada Limited is a wholly-owned
subsidiary of Frank Russell Company. For more information, please go to
Russell Investment Group is a registered trade name of Frank Russell
Company, a Washington, USA corporation. It operates in Canada through its
subsidiary Frank Russell Canada Limited. Frank Russell Company is a subsidiary
of The Northwestern Mutual Life Insurance Company.
For further information:
For further information: Matt Burkhard - The Neibart Group - (718)
875-2122, Catherine Clift-Winchell - Russell Investments - (416) 640-6899