Canada tops investment list: Haber

There will be a rapid growth in oil demand (particularly from developing Asian countries). Energy price hikes will negatively impact the U.S. economy. Energy costs will push the cost of other products, such as travel, consumer products and petrochemical products, such as plastic, higher. Increased demand on ethanol will push soft commodity prices higher — […]

By Romana King | November 15, 2007 | Last updated on November 15, 2007
4 min read
  • There will be a rapid growth in oil demand (particularly from developing Asian countries).
  • Energy price hikes will negatively impact the U.S. economy.
  • Energy costs will push the cost of other products, such as travel, consumer products and petrochemical products, such as plastic, higher.
  • Increased demand on ethanol will push soft commodity prices higher — first by increasing the price of corn; then by pushing up the price of other feed and grain, thereby raising the price of meat, dairy and eggs.

All of this bodes well for a resource-rich country like Canada, says Haber. “If you look at the oil production in this world, only about a third of it is open to equity investors,” he explained. “And that oil is located in Canada.”

He believes the same is true for metals and agriculture — two additional hot resource areas that are abundant in Canada.

While there is fear about the impact of inflation and the slowing U.S. economy, Haber suggests that none of this will really matter to Canada’s resource-rich economy. While he admits certain sectors in Canada will feel the pinch of a strong loonie, he believes that the continued growth in developing countries and the increase in urbanization will continue to fuel the demand for resources, thereby increasing the demand of what Canada can supply.

“There is a lot going on around the world and while [Canada] is not the only place [for these resources] in the developed world, it is the place.”

Even if the U.S. goes into recession, explains Haber, China and other developing countries will continue to grow. “The Chinese government knows the importance of maintaining growth. If the U.S. decreases its imports — which decreases China’s exports — the government will accelerate infrastructure; this will keep jobs and continue to ensure the shift from rural to urban is a high priority.” He emphasizes that in the next 10 to 15 years, 2 billion people will move “into the cities.” He suggests that this migration has “enormous stock market ramifications for the infrastructure, for electricity, for wastewater treatment, for building roads, everything you can imagine, all of which falls on the industrialized worlds to supply materials, expertise and commodities.”

For Canadian investors, Haber and his colleagues suggest investing in funds that choose their companies from a bottom-up perspective. “Of course there will be some companies and areas to avoid [when investing],” he says. But if an investor chooses a product that is well researched and well managed, there should be strong, positive results over the next few years.

Filed by Romana King, Advisor.ca, romana.king@advisor.rogers.com

(11/15/07)

Romana King

  • There will be a rapid growth in oil demand (particularly from developing Asian countries).
  • Energy price hikes will negatively impact the U.S. economy.
  • Energy costs will push the cost of other products, such as travel, consumer products and petrochemical products, such as plastic, higher.
  • Increased demand on ethanol will push soft commodity prices higher — first by increasing the price of corn; then by pushing up the price of other feed and grain, thereby raising the price of meat, dairy and eggs.

All of this bodes well for a resource-rich country like Canada, says Haber. “If you look at the oil production in this world, only about a third of it is open to equity investors,” he explained. “And that oil is located in Canada.”

He believes the same is true for metals and agriculture — two additional hot resource areas that are abundant in Canada.

While there is fear about the impact of inflation and the slowing U.S. economy, Haber suggests that none of this will really matter to Canada’s resource-rich economy. While he admits certain sectors in Canada will feel the pinch of a strong loonie, he believes that the continued growth in developing countries and the increase in urbanization will continue to fuel the demand for resources, thereby increasing the demand of what Canada can supply.

“There is a lot going on around the world and while [Canada] is not the only place [for these resources] in the developed world, it is the place.”

Even if the U.S. goes into recession, explains Haber, China and other developing countries will continue to grow. “The Chinese government knows the importance of maintaining growth. If the U.S. decreases its imports — which decreases China’s exports — the government will accelerate infrastructure; this will keep jobs and continue to ensure the shift from rural to urban is a high priority.” He emphasizes that in the next 10 to 15 years, 2 billion people will move “into the cities.” He suggests that this migration has “enormous stock market ramifications for the infrastructure, for electricity, for wastewater treatment, for building roads, everything you can imagine, all of which falls on the industrialized worlds to supply materials, expertise and commodities.”

For Canadian investors, Haber and his colleagues suggest investing in funds that choose their companies from a bottom-up perspective. “Of course there will be some companies and areas to avoid [when investing],” he says. But if an investor chooses a product that is well researched and well managed, there should be strong, positive results over the next few years.

Filed by Romana King, Advisor.ca, romana.king@advisor.rogers.com

(11/15/07)