Briefly:

Previous Brieflies this week: | MON | TUE | WED | THURS |

(April 19, 2007) The Manulife Investor Sentiment Index dropped four points, after an 11-point gain the previous quarter. Last quarter’s results were the largest upswing since the surveys began in 1999, falling just one point shy of its all-time high of +35, reached in mid-2000.

“Support for investing in general remains very strong and our latest results likely reflect other economic signals,” said Paul Rooney, CEO of Manulife Canada. “The TSX continues near record highs, real estate markets remain active in Canada, and the economy remains very stable. However, uncertainty remains around interest rates and their impact on real estate and equities.”

The survey of 1,006 Canadians was conducted by Maritz Research. Among investment categories, investor interest in stocks gained one percentage point, while investment property gained three points, Manulife says.

Canadian interest in fixed income, homes and balanced funds showed declines, off 13, 6 and 3 points respectively. Cash investments were off five points from December, but still held at +16 overall.

Rooney points out that for the past seven quarters, the overall index has been consistently hovering around +20. “Through much of 2004 and into 2005, we were in softer territory, so we were optimistic about the overall economic picture given other recent measures of consumer confidence in Canada,” he says.

An investor confidence poll conducted by State Street, released earlier this week, of global institutional investors also saw a decline. State Street’s Global Investor Confidence Index fell by 7.6 points to 91.7 from March’s revised reading of 99.3. The most precipitous decline occurred in North America, where confidence decreased from 114.5 to 100.2.

• • •

IDA fines advisor $150,000

(April 19, 2007) An Investment Dealers Association hearing panel has found a former advisor of a Halifax-based branch of TD Waterhouse guilty of engaging in the trading of two clients’ assets without their consent.

Michael Joseph Puccini was found to have committed numerous unauthorized trades of the assets of a 60-year-old widow battling breast cancer.

In September 2005, which included a period where the client was hospitalized, Puccini sold $59,000 of the woman’s mutual funds without her knowledge and bought $68,200 of other funds, leaving her bank account with more than a $12,000 debit.

Puccini was also found guilty of forging the signatures of two other clients on various documents.

The IDA has fined Puccini $150,000 for his conduct. He has been permanently banned from approval with the IDA and must pay $17,371 in costs.

• • •

Grant Thornton identifies the next hot economies

(April 19, 2007) Mexico, Indonesia, Pakistan and Turkey have been identified as the next generation of emerging economies set to make waves in the world economy, according to the Grant Thornton International Business Report (IBR).

The IBR doesn’t expect these economies to match the ascension of China and India into global economic powerhouses, but it does project that they can match or even overtake the economic strength of economies such as Brazil and Russia.

“Indonesia and Pakistan, with their large populations, have the potential to grow their labour-intensive exports and could capitalize on the process of low-cost production that mainland China has so successfully exploited,” says Alex MacBeath, CEO of Grant Thornton Canada.

Meanwhile, MacBeath points out that Mexico, with the world’s 14th largest economy, is benefiting from its close trading ties with Canada and the U.S. through the North American Free Trade Agreement. Turkey is set to gain an even larger economic profile as a potential member of the European Union.

“Mexico is well-placed to play a more significant role in the Americas. Turkey is also expanding robustly and is on the path to making the transition to a modern industrial economy and is set to increase its influence in Western Europe and the Middle East,” he says.

• • •

Steady growth for pension funds: RBC Dexia

(April 19, 2007) Canadian pension funds maintained their positive momentum during the first quarter of 2007, RBC Dexia Investor Services reports.

Within the $340 billion pension fund market that RBC Dexia provides services for, pension funds earned 1.8% in the quarter ended March 31, 2007.

“Since hitting their low-point in March of 2003, pensions have benefited from impressive equity numbers and, consequently, have performed extremely well,” says Don McDougall, director of advisory services for RBC Dexia. “The median Canadian plan has realized a healthy 14.1% annualized return over the past four years.” RBC Dexia adds that in the past 12 months, performance averaged 10.8%.

Canadian equities were the dominant asset class over the four-year period, generating a 23.7% annualized gain and outpacing the S&P TSX Composite by 1.3%. These continued to fare well in the first quarter of 2007, climbing 3.4% and lifting their one-year performance to 14.1%, RBC Dexia reports.

Foreign stocks were also strong, helping push the four-year MSCI World Index to 14.2% in Canadian dollar terms. Canadian pension funds furthered this growth by limiting exposure to the underperforming U.S. market. This allowed them to outpace the industry benchmark by more than a full percentage point.

One moderate disappointment is domestic bonds, RBC Dexia highlights. The median pension fund earned only 0.9% on bonds for the quarter, which still matched the Scotia Capital Universe Bond Index.

• • •

C.D. Howe calls for rate stability

(April 19, 2007) The C.D. Howe Institute is calling on the Bank of Canada to leave interest rates where they are when it next meets, on April 24.

The think tank’s Monetary Policy Council was split however, with a bare majority of five of nine members calling for no change from the current 4.25% overnight rate. The remaining four members called for a 25 basis point increase, to 4.50%.

The Bank may be tempted to follow the minority opinion, after StatsCan’s latest CPI report showed inflation spiked in March, to 0.8% for the month. That boosted the annualized rate to 2.3%, from the Bank’s desired 2.0%.

• • •

(04/19/07)