Stock
markets showed a greater volatility in April. The Nasdaq, a technology
index, registered a 26.6% drop. The S & P 500 and Dow Jones indices
dropped respectively by 6.1% and 2.4%. American stock markets have shown
negative results since the beginning of the year. The Canadian TSE 300,
with an important 10.9% drop, followed American stock markets movement.
On April 14, 2000, manufactured goods, public utilities and consumer goods
sectors were showed a monthly drop of 20.1%, 20.1% and 9.1%, respectively.
In contrast, gold shares increased by 10.6%.
Several factors explain this market
correction. Since the beginning of the year, North American indices performance
is largely due to gains of the titles related to the technology, media
and telecommunications sectors. The market value of stocks in these sectors
is caused by strong Internet growth potential. Meanwhile, the new economy
titles are becoming more and more expensive. The high elevation of the
technology titles has brought investors toward the old economy shares,
characterised by less volatility. Thus, investors decided to cash their
gain on their technology shares and then reinvesthem in old economy titles.
In addition to this downturn, inflationary
pressure is increasing. The most recent data on the consumer price index
(CPI) indicate that inflation is expanding in Canada and United States.
In the coming months, interest rate increases by the central banks are
expected. In United States, the CPI has increased to 0.7% during March
2000. Excluding goods and energy, the CPI progression would be 0.4%. These
results exceeded the analysts' forecasts and this ended up in increased
market volatility. The main reason for this progression is the 5% energy
increase.
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Did
you know ...
Investors' portfolios contain an increasing proportion of specialty
funds. A monthly study performed by Investor Economics shows that specialty
funds represented, as of February 29, 2000, 11% of all mutual funds held
in Canada. Compared to December 1992, this proportion is seven times more
important. Specialty funds were then representing only 1.6% of this asset
category.
On Friday March 31, 2000, The Toronto Stock Exchange received the governmental
approval required for its demutualization. In so doing, it became a business
corporation, and changed its name to Toronto Stock Exchange Inc.
News
Global Strategy Financial Inc. offers a new Canadian fund: Global Strategy
Canadian Growth & income. The management team will include Richard
Wernham, President and promoter of Global Strategy, Pat McHugh and Natasha
Cuddy. Under the direction of this team, the fixed-interest securities
investments will be managed by Five Continents Financial, a N. M. Rothschild
Group partner.
As of April 5, 2000, Mackenzie offers three new specialty funds: Universal
Financial Services, Universal Internet Technologies and Universal Communications.
These three funds are also available in a cloned version, allowing 100%
RRSP eligibility.
AGF Canadian Tactical Asset Allocation Fund has adopted a highly defensive
strategy for the classification of assets. As of March 31, 2000, it had
the following classification of assets: 29.2% in bonds, 17.9% in shares
and 51.0% in liquid assets.
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