In
spite of an increase for most stock markets, March has been characterized
by a spectacular volatility. Bill Clinton's speech on human genome triggered
a biotechnological title transfer. Thereby, the Nasdaq has temporarily
fallen back by nearly 5%. Investors have then chosen "old economy" titles,
which allowed the Dow to recover almost all the drop-off incurred since
the beginning of the year. The announcement of Cisco's stock split and
of the discussion intensification between Microsoft and the Department
of Justice has allowed theNasdaq to end the month with a 8.13% gain.
In Canada, the TSE 300 has recorded
an increase of almost 10%, therefore breaking the 10 000 mark. The public
services and industrial products sector, more specifically Nortel Networks
and BCE, has extended the index progression.
In United States, analysts largely
anticipated the interest rate increase, announced by the Fed. Indeed, on
March 21, 2000, the Fed's Board of Governors had increased the interest
rate by 25 points. The discount rate is now 5.5% and the daily financing
rate is 6.0%. This interest rate increase is part of a long-term objective
of sustained economic growth and stable prices. The strong economic growth
due to the domestic demand may push production above its sustainable long-term
level and create a perturbed economy. Thus, this rate increase seeks economy
slowdown and inflation prevention.
The day after the Fed's decision,
the Bank of Canada raised its discount rate by 25 basis points up to 5.5%.
The daily finance rate has been increased to 5.25%. As in United States,
this measure is justified by the strong economic growth and by inflationary
pressures. Dynamism in the american economy has brought an increase in
Canadian exports, which consequently created a faster economic expansion
in Canada than anticipated. Inflation wise, the recent energy price increase
has brought about a 2.7% increase of the consumer price index.
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Did
you know ...
Warren Buffett, the stock market guru, presented excuses to Berkshire
Hathaway shareholders. Nevertheless, he warned them that a severe correction
was threatening some markets. His decision to stay away from the technology
market has been highly criticised.
February has been beneficial to the Canadian mutual fund industry.
During this month, the total amount of new sales for funds reached 6.5
billion, which corresponds to the most important money entry for one month,
since March 1998. According to the Investment Funds Institute of Canada,
for the RRSP season that just ended (January and February), the money entry
amounted 7.8 billion, compared to 6.92 billion in 1999.
News
La Caisse de dépôt et placement du Québec (CDPQ)
increased its participation in the mutual fund industry through its financial
services branch. Indeed, the Nova Bancorp Group of Montreal - CDPQ Financial
Services owns shares - has just acquired Strategic Value Financial Society.
This move allows Nova Bancorp to add 30 public funds and 1 private fund
for total assets of approximately 3.5 billion.
The C.I fund family launches seven new funds: C.I. Global Business-to-Business
Sector, C.I. Global Managers Sector, BPI American Equity Value Sector Shares,
BPI Global Equity Value Sector Shares, BPI International Value Equity Sector,
BPI Global Small Caps, and BPI American Small Caps.
The Sector category offers an advantage to the investor: when he moves
funds within the funds that are part of this category, there are no tax
consequences.
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