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Canadian investors looking at US more than domestic market

Published by Steve Coleman on February 28, 2012

After years of bad tidings, even a slight glimpse of silver lining has investors sinking their money into perceived good news, says a new CIBC World Markets Inc. report.

Despite the amount of bad news about the world's financial markets in the last three months, the Canadian market has still managed to grow nine per cent. Canadian investors seem to be paying less attention on what's happening in their own country and looking more at how the US is performing.

"These are not normal times," says Benjamin Tal, Deputy Chief Economist at CIBC, in a news release. "In normal times investors overreact to bad news more than they react to good news. In today's environment, good news has the upper hand. Investors are highly responsive to positive data surprises, while negative news is often ignored or creatively interpreted as good news."

CIBC says Canadian manufacturing now contributes just slightly more than 12 per cent of Canada's Real GDP. At the turn of the millennium, the number was closer to 19 per cent.

While Canadian factory output has risen since the 2008 recession, a lot of the recovery has been "a one-time recovery from cyclically depressed demand," Tal says.

The movement west of economic, monetary and political power may also produce a sea change in regional prosperity. Provinces like Ontario can expect to lose even more ground to the western Canada, he said.

The complete CIBC World Markets report is available at:
http://research.cibcwm.com/economic_public/download/eifeb12.pdf.

 

 

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