Managers bullish on Canadian, emerging markets equities

A majority of investment managers continue to express bullishness on Canadian equities, and emerging markets according to the latest Russell Canada Investment Manager Outlook.

“This quarter, 69% of investment managers surveyed say they are bullish toward Canadian equities,” says Sadiq Adatia, chief investment officer with Russell Canada. “But what’s striking is the slow-but-steady decline in the number of bearish managers since the bottom of the financial crisis one year ago. Less than 9% of managers are bearish about Canadian equities.”

A majority (57%) of managers say the market is fairly valued, while 21% believe it is undervalued and another 21% feel it is overvalued.

The sentiment toward emerging markets equities is also strong, with 72% of investment managers expressing bullishness and only 9% saying they are bearish.

“We see a couple of factors at play here,” says Adatia. “Emerging markets are seen as benefactors of the recent strength in commodity prices. Two, emerging markets were largely spared the structural fiscal challenges facing other economies such as the U.S. and EAFE [Europe, Australasia, Far East] nations—witness the recent troubles in Greece. As the world waits for broad economic stability, emerging markets and Canadian equities may well be seen as offering the least downside risks.”

Bonds have not fared well in managers’ eyes. Only 3% of investment managers are now bullish on Canadian bonds while 71% say they are bearish.

(03/30/10)