Briefly:

Scotiabank’s Commodity Price Index, which measures price trends in 32 of Canada’s major exports, fell in March to 32.7% below what it was a year earlier. The index is expected to fall further in the next few months.

The All Items Index will decline in coming months, as a number of key commodity prices are adjusted down, following annual contract negotiations with buyers. However, “green shoots are starting to appear, recently lifting prices for base metals and oil,” says Patricia Mohr, vice-president, economics and commodity market specialist at Scotiabank.

“While tentative, improving expectations that the worst of the U.S. banking and credit crisis might be over, suggesting that the U.S. recession may end by late 2009, have helped lift both equity markets and exchange-traded industrial commodity prices, ” says Mohr. “After bottoming at US$32.40 per barrel in mid-December, WTI oil prices have climbed back into a broad US$45 to $54 trading range since mid-March alongside a double-digit rally in the S&P 500 Index.”

Additionally, the Oil & Gas Index lost further ground in March (-2.6% month over month). While crude oil prices have had a noticeable increase, Canadian natural gas export prices to the U.S. have dropped to the lowest level since December 2002.

Also, according to Mohr, gold prices are expected to stay high in 2009 and investor interest is likely to slowly shift to equities and then to industrial commodities in the next several years.

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Investors Group launches two new portfolio families

Investors Group has created two new portfolio families and an international equity fund mandate that are expected to be ready for investment this summer (subject to regulatory approval).

“The Investors Cornerstone Portfolios aim to provide high levels of capital stability and a launching pad for dollar cost average investment strategies during these uncertain markets,” says John Wiltshire, Investors Group senior vice-president, product and financial planning.

He adds, “Our new Allegro Corporate Class Portfolios are a one-stop solution for investors who aim to accumulate wealth and then have a need for ongoing tax-deferred cash-flow in retirement. The portfolios’ new T-series will enable investors to obtain this tax-deferred cash-flow to help them through their retirement years.”

The new Investors International Equity mandate is an excellent option for clients looking for diversification outside of North America along with long-term capital growth.

The Investors International Equity Fund is expected to be held by at least one of the Allegro Corporate Class Portfolios when they are launched.

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Saskatchewan led 2008 GDP growth

Real gross domestic product (GDP) grew in five provinces and two territories in 2008, with Saskatchewan leading that growth with a 4.4% increase. Strong resource prices and increased investment were major contributors.

On a national scale, economic growth was sluggish during the first half of 2008 and contracted during the last five months as foreign demand and commodity prices faltered as a result of the financial market turmoil. Goods production fell 2.8% in 2008, the first decline since 2001, while services production increased 2.1%.

GDP outcome across the country for 2008 was as follows:

• In Prince Edward Island, GDP grew by a meagre 0.9%. A lower potato crop contributed to a decline in exports but transportation equipment manufacturing partially offset the export decline.

• In Newfoundland and Labrador, the GDP fell 0.1% after leading all provinces in 2007 with a 9.1% increase. The decline was due mostly to a sharp drop in oil extraction, which led to a drop in exports.

• GDP in New Brunswick remained unchanged from 2007.

• In Nova Scotia, GDP increased 2.0%. Natural gas extraction rose while forestry production fell.

• Quebec’s GDP rose 1.0%. The province felt the pinch of weakened export demand for forestry, furniture and textile products. But, its economy benefited from strength in the public and financial sectors.

• GDP in Ontario fell 0.4% in 2008. Ontario’s growth has been below the national growth rate since 2003.

• In Manitoba, the economy grew by 2.4%. Construction investment advanced sharply as work continued on major engineering projects throughout the province. A good wheat and canola crop led to increases in farm income.

• Alberta saw a 0.2% decline in real GDP. Business investment, particularly on residential structures, dropped. Corporate profits remained strong, rising 28% with help from high oil prices in the first part of year.

• GDP in British Columbia fell 0.3% — the province’s first decline since 1982.

• Nunavut’s economy grew 5.5%. Construction continued at the Meadowbank mine site, although the closure of the Jericho diamond mine contributed to a sharp drop in exports.

• In Yukon, GDP grew by 5.2%. Increased mining activity led to a 23% increase in exports, while corporate profits grew by 84%.

• In the Northwest Territories, GDP fell by 6.5% following an 11.5% increase in 2007. World demand waned and exports fell 11% as output from diamond mining fell sharply.

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Colin Simpson appointed president and CEO of Kingsway

Kingsway Financial Services Inc. has appointed Colin Simpson as president and CEO, effective immediately.

Simpson was previously the chief operating officer and executive in charge of the company’s transformation program.

Also, Bill Andrus, Robert Cassels, Peter Copestake, Walter E. Farnam, Terry Kavanagh, J. Brian Reeve, Spencer L. Schneider, Jack Sullivan and Joseph Stilwell were elected as directors at the annual general meeting. The board today has also elected a new chair, Spencer L. Schneider.

(04/27/09)