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(November 12, 2007) The Bank of Canada should ignore the demands of politicians and hold the line on interest rates, according to a leading economist.

“While the [Canadian dollar] rally may have gone too far too fast, the current trade balance, a surplus of $2.6 billion in September, would be the envy of some countries,” writes Avery Shenfeld, senior economist with CIBC World Markets. “If the Canadian dollar is so out of whack against the greenback, why is Canada still registering a bilateral surplus of $6.2 billion on trade with the U.S. in September?”

Short-term currency fluctuations should be allowed to play themselves out, he writes, and the Bank should not react to blips in the economic landscape. That lesson was probably learned in 1998, when the Bank boosted rates by a full percentage point in reaction to a falling dollar. While the loonie recovered, it was questionable whether the rate hike was needed.

“Cooler heads will prevail at the Bank of Canada, which is being asked to slash interest rates in an effort to cool the loonie,” Shenfeld adds. “Judging by the past week, sitting on the sidelines looks wise. The Canadian dollar seems tuckered out, while others that were further behind play catch-up in gains against the greenback.”

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Clarington reabsorbs ETF trustee

(November 12, 2007) Clarington Investments, which serves as trustee for two exchange-traded trusts — Clarington Diversified Income + Growth Fund and Focused 40 Income Fund — has announced it will consolidate operations with its corporate parent, IA Clarington Investments.

After the reorganization, effective November 30, 2007, IA Clarington will become the trustee of both funds. KBSH Capital Management Inc. will remain the portfolio advisor for both trusts.

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Manulife receives award in Asia

(November 12, 2007) A Canadian-based insurance firm has been named Life Insurance Company of the Year at the Asia Insurance Review Awards 2007 in Hong Kong.

Manulife was cited by judges for its “continued commitment to professionalism, excellent customer service and innovation with first-to-market products.”

“We are delighted to have been recognized with such a prestigious industry accolade,” said Robert Cook, Manulife’s senior executive vice-president and general manager for Asia. “Manulife has deepened its footprint in Asia with exciting developments that, we believe, will contribute significantly to the future shape of Asia’s life insurance industry.”

Pro-Financial offers emerging market fund

(November 12, 2007) Pro-Financial Asset Management has announced the launch of its fifth fund, the PRO FTSE RAFI Emerging Markets Fund, which will use fundamental indexing to allocate assets.

“When researching the most vibrant economies and markets around the world, the same regions kept hitting our analysts’ radar: the emerging markets,” said Stuart McKinnon, president and CEO of Pro-Financial Asset Management. “By simply diversifying 7% of an investment portfolio into emerging markets, one would be able to access the fast-growing 50% of the global economies based on the gross domestic product.”

McKinnon says fundamental indexing is particularly well-suited to emerging markets because of the high-growth nature of companies in these markets.

(11/12/07)