Briefly:

(September 26, 2003) Canada’s net worth moved higher in the second quarter, according to Statistics Canada, posting a gain of 1.3% to hit $3.9 trillion, or $129,000 per capita.

National wealth grew at a slower rate, from 1.7% in the first quarter to 1.5% in the second, due to a sluggish economy, the agency said. Household net worth advanced more quickly than in the previous two quarters, as real estate values remained strong, although consumer debt to disposable income set a new all-time high of 100.1%.

National net worth is the sum of the net worth of persons, corporations and governments.

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Venture capitalists turn optimistic

(September 25, 2003) The Canadian Venture Capital Association (CVCA) is reporting an upturn in venture capital (VC) optimism, saying the second quarter of 2003 marked a seven-year low in venture spending. A survey conducted by the CVCA and Deloitte & Touche showed 58% of respondents expect a better economic climate in the coming months.

“Diseases outbreaks, unstable global economic and political conditions were only a few of the factors which derailed investment levels to a seven-year low,” said Michael Badham of Deloitte & Touche. “With these obstacles out of the way, Canadian VCs are looking to a brighter future which unfolds greater investment opportunities and higher valuations.”

The survey also showed that 56% of VCs planned to spend between 25% and 50% of their capital on new ventures, with software being seen as the leader. Manufacturing and biotech are expected to lag.

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Bond trading picks up in Q2

(September 25, 2003) Trading in the fixed income market grew substantially in the second quarter of the year, driven by new corporate bond offerings, according to figures released today by the IDA.

Issuance of corporate bonds jumped 80% from last year, while corporate bond trading was up 28%. TD Bank and GE Capital were the most significant corporate issuers in Q2, offering more than $2 billion in bonds.

“Increased corporate profitability, a narrowing of spreads and the removal of uncertainties from the market all helped to support the Canadian corporate bond market,” the IDA said its quarterly review of debt trading.

Real return bond trading reached $5 billion, doubling in value from the same period last year. However, that’s a drop of 15% from the first quarter of the year, a result of lower inflation expectations, the IDA says.

Government of Canada bond trading reached $1.1 billion in the three-month period, up 24% from last year. Trading in provincial bonds rose 9% from 2002.

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Guardian introduces new income fund

(September 25, 2003) Guardian Group of Funds (GGOF) has announced the new GGOF Diversified Monthly Income Fund, which will offer returns based on four different asset classes: preferred shares, high yield bonds, income trusts and dividend-paying common shares.

“The four asset classes we chose for the fund are not highly correlated, which ensures investors receive real diversification,” said Gavin Graham, director of investments for GGOF.

Each asset class will be managed by specialists in that field, including John Priestman, Kevin Hall and Steve Kearns from Guardian Capital Inc. and Michael Stanley from Jones Heward Investment Counsel Inc.

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AGF reports stronger Q3 profits

(September 24, 2003) AGF Management says cost-cutting helped to boost both quarterly revenue and net income at the mutual fund firm. For fiscal Q3, AGF had revenues of $147 million, up 5% from the previous quarter, and net income of $22 million, an 11% improvement from Q2.

“We’ve turned the corner and are positioned for steady growth,” said AGF president Blake Goldring. “With the launch of our Canadian value platform and a strong upswing in fund performance, we are regaining momentum for the upcoming RSP season.”

AGF also says it paid down $47 million in debt during Q3 and raised the quarterly dividend to eight cents a share.

Despite the quarterly increase, AGF revenues are down 10% and net income is off 29% compared to the same period last year.

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Dollar value has mixed effects on small biz: CIBC

(September 24, 2003) The high value of the dollar is having a mixed effect on the small business community, according to a report from CIBC. While 25% of small businesses will suffer due to their exposure to the export market, 20% will benefit from the rising loonie.

“One in four small firms in Canada are in sectors that are directly impacted by a stronger dollar,” said Benjamin Tal, senior economist with CIBC World Markets. “However, small businesses indirectly benefit from the higher dollar because it helps keep interest rates low.”

The report points out that small businesses in Ontario and British Columbia rely more heavily on the U.S. market and are therefore more likely to suffer, while those in the Maritimes will see more benefit from the high dollar.

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RBC predicts Canada will lag U.S. in 2004

(September 23, 2003) Canada’s economy should recover from the numerous economic shocks it took this year and strengthen in 2004, according to a report from RBC Economics. But while one-off events recede, one key concern remains the value of the dollar.

“While the Canadian dollar has recently given up some ground against the U.S. dollar, it still remains stronger than at any point in the past five years,” says Craig Wright, vice-president and chief economist of RBC Financial Group.

The report predicts 2003 economic growth to hit 2.1%, with 2004 coming in with a stronger rate of 3.5%. Forecasts for U.S. growth are 2.7% in 2003 and 3.9% in 2004.

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Conference Board sees Toronto economy suffering

(September 23, 2003) A construction boom in several Ontario cities will propel them to the top of the table for economic performance this year, but not Toronto, according to the Conference Board of Canada. The country’s biggest city has had its economic growth rate slashed in half.

“Toronto has taken some serious hits this year,” said Mario Lefebvre, director of the Conference Board’s Metropolitan Outlook Services. “The outbreak of severe acute respiratory syndrome dealt a crippling blow to travel and tourism, while a soft U.S. economy and a strong Canadian dollar have combined to knock the wind out of manufacturing.”

The Conference Board says the top performing municipality in the country will be Oshawa, just east of Toronto, which should post a growth rate of 7.4%, based largely on growth in its service industry and strong auto exports.

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RBC offers travel insurance in the U.S.

(September 22, 2003) RBC Insurance has stepped into the U.S. travel insurance market, offering policies through travel agents under the name of RBC Travel Protection. The new venture will start in 34 states, with plans to be nationwide by the end of this year.

“With this launch, we will expand the distribution of our trip cancellation and interruption, emergency assistance and other travel-related products and services to provide U.S. travellers with comprehensive insurance coverage,” said Stan Seggie, president and CEO of the travel insurance division of RBC Insurance.

RBC Travel Protection policies will be underwritten by American Bankers Insurance Company of Florida and American Security Insurance Company.

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Fraser Institute criticizes Ontario PCs, Liberals

(September 22, 2003) The Fraser Institute has waded into the Ontario provincial election, slamming the election promises of both the Liberals and the Progressive Conservatives. Both parties have immediately embraced the parts of the report that attack their foes, while spinning the comments about themselves.

The report says the promises of both parties will cause a massive deficit in Ontario, with the Liberals raising taxes and spending, and the Conservatives cutting taxes too deeply.

The attack on the PC party stands out particularly because the author of the report, Mark Mullins, is one of the chief architects of the common-sense revolution, the platform which brought Premier Ernie Eves’ predecessor Mike Harris to power.

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Canada Life offers Dual Solution

(September 22, 2003) Clients looking for critical illness and disability insurance have a new option from Canada Life. The company’s Dual Solution Program offers a discounted premium when both types of coverage are purchased.

When a customer buys a LifeAdvance Critical Illness policy and a personal disability policy at the same time, Canada Life offers a permanent 5% discount on the premiums of both policies.

“Now clients can help protect their finances against a covered condition or disability and take advantage of all the benefits offered through LifeAdvance and our disability product at a reduced rate,” says Joe Wellman, assistant vice-president of living benefits.

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(09/22/03)