Briefly:

(April 3, 2008) The Canadian economy is expected to outpace that of the U.S. once again, according to RBC, although growth will slow to 1.6% in 2008, down from the already paltry 2.7% growth rate posted in 2007.

While commodity exports will remain healthy, the value of imports into Canada will rise much faster, trimming 3.6% from the 2008 annual GDP growth rate.

“The drag from the trade sector on near-term growth, combined with limited inflationary pressures, will keep the Bank of Canada on its current path of lowering interest rates,” said Craig Wright, senior vice-president and chief economist, RBC.

South of the border, annualized economic growth is predicted to come in at just 1.2%, as the collapsing housing market and ensuing credit crunch work their way through the system. What growth the U.S. will see is expected to be concentrated in the third quarter, as cheques from the government’s stimulus package finally land in American mailboxes.

RBC says the Federal Reserve will continue to cut its Fed funds rate to 1.5%, in an effort to loosen up the seized credit market.

Continued fears that the U.S. slowdown will spill across the border will likely force the Bank of Canada to cut its trend-setting interest rate to 2.75% by the middle of the year.

IPO market plummeted in Q1

(April 3, 2008) Stumbling stock markets and investor paranoia are not the best conditions for taking a company public, and that proved to be the case in the first quarter of 2008, according to PricewaterhouseCoopers.

The value of initial public offerings onto the Canadian market fell to just $148 million in the three months, half the value of IPOs in the same quarter of 2007, even though there was only one less company brought to market, at 20 IPOs.

Only three of those issues landed on the TSX, with a combined value of $113 million. That’s a far cry from Q1 of 2006, when 18 new issues were worth a combined $1.9 billion.

There were 14 new issues on the TSX Venture exchange, worth a total of $31 million, compared to 13 issues in 2007, worth $89 million.

“It is disappointing, but I can’t say these results are shocking,” says Ross Sinclair, national leader of PwC’s IPO and income trust services. “It will take the return of solid, established companies with premium issues to show the way out of this phase of the IPO market.”

(04/03/08)

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.