Good, bad factors in global market investment

International markets offer Canadian investors a myriad of opportunities. However, political and economic factors can have a big impact on investor sentiment and how those markets perform, and investors should consider investment options best suited to specific markets.

International markets offer Canadian investors a myriad of opportunities.

However, political and economic factors can have a big impact on investor sentiment and how those markets perform, and investors should consider investment options best suited to specific markets.

“Investing in global markets is an excellent way to provide return opportunities over the long term and complement Canadian investments,” said Rajiv Silgardo, co-CEO of BMO Global Asset Management.

“Additionally, given the wide spectrum of economic, social and political factors that affect global markets, and how those markets react to changing conditions, investors should consider both active and passive investments through mutual funds and ETFs depending on their views on specific markets.”

During a recent panel discussion on global investments, BMO investment specialists shared their thoughts on the prospects for some of the world’s foreign markets.

The outlook for North America for the rest of the year is reasonably good. North America is driven by the U.S. economy, which is expected to pick up in the second half of the year due to stronger business, consumer and government spending, and job creation.

This will result in modest growth or flat returns in bonds, as the Federal Reserve modestly increases interest rates and modest growth in equities.

“It’s a pretty decent backdrop for the economy and capital markets but it certainly will be a struggle on the equity front to deliver better than single-digit returns,” said Paul Taylor, BMO chief investment officer in Toronto.

The outlook for Europe is anything but rosy.

“There’s very little to get excited about, particularly in continental Europe,” said Tony Cousins, CEO of Pyrford International in London. “The good news is that the recessions, in terms of negative growth, have more or less come to an end. But we haven’t seen positive growth return to continental European economies and there’s not a lot of ground to expect a strong rebound in growth.

There’s very little in the way of new fiscal or monetary stimulus.”

The Euro has gone up 12 per cent against the U.S. dollar over the last two years, making exporting more challenging.

Many European nations are experiencing high unemployment and are saddled with high debt, the worst being Greece, which is approaching debt of 190 per cent of gross domestic product, but also Italy, Portugal, Ireland and Spain.

Tension between Russia and Ukraine is a major concern for investors that is affecting markets.

“It’s a pretty downbeat assessment of the prospect for equities,” Cousins said. “Europe is in no way finished, however.

It’s still possible to find very high quality, well-managed companies that are world leaders in intellectual property-based industries. Some good stock picking can still find some excellent opportunities.”

On a more positive note, Serge Pepin of LGM Investments in London is relatively optimistic about emerging markets, such as India, Brazil, Thailand and Turkey.

There are numerous vulnerabilities in these regions in terms of social tension and slowdowns in economic growth, as well as economic concerns in China, but investors seem to be putting these behind them and actively investing in these regions.

Recent data out of the U.S. shows that investment flows in mutual funds and exchange traded funds (ETFs) of emerging market securities, both stocks and bonds, have been net positive for the past couple of months.

“Two months don’t necessarily make a trend, but after 10 straight months of net selling it definitely is encouraging to see,” Pepin said.

Investors currently are seeing bargains in emerging markets, which have underperformed developed markets over the past 18 months, creating great value.

“We see tremendous opportunities in sectors such as consumer, health care, telecommunications and information technology,” Pepin said. “Since individual emerging markets have different factors at play; it’s more difficult to consider them as one big homogenous block, and investors may want to consider actively-managed market funds rather than a passive option.”

The big winner in Asia has been India, where a new centre-right government recently won a majority for the first time in more than 30 years.

“Market players have clearly been quite enthusiastic about this,” said Amit Prakash, manager of BMO Asset Management in Asia. “The Indian equity markets are one of the best performing in the region, going up 15 per cent this year, and the Indian rupee, which was one of the weakest last year, is up over five per cent, providing a very attractive return to international investors.”

Investors serious about global markets should seek the advice of a global investing specialist.

“A global asset manager who offers a comprehensive range of solutions powered by global insights and expertise can help identify opportunities in various types of market cycles,” Silgardo said.

Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.

Just Posted

SUV smashes through fences and deck in Anders

Driver taken to hospital after SUV veered off 30th Avenue into Anders

Red Deer’s new ‘equity co-ordinator’ will promote tolerance

Andrea Lacoursiere was hired by city with Alberta Human Rights funding

More bridge work this summer in Red Deer’s Coronation Park

The park’s north bridge is being rebuilt to ensure safety

Man badly injured in off-road vehicle collision on Saturday

Incident happened in Mountain View County about 10:50 p.m.

Heat warning in effect for Central Alberta

Environment Canada has issued a heat warning for Central Alberta. Residents in… Continue reading

CFIA inspects after video shows pigs crammed into B.C. transport truck

The video shows pigs piled on top of one another in a transport truck on a “sweltering” hot day last week

‘City of icebergs:’ Study says 100s of Arctic glaciers shrinking, disappearing

The statistics in her recently published paper say it all: hundreds of… Continue reading

U.S. hits back with WTO challenge against Canada’s retaliatory tariffs

OTTAWA — The United States fired back Monday at the Canadian government’s… Continue reading

Croatia gears up to give heroes’ welcome to World Cup team

ZAGREB, Croatia — Fans are pouring in from throughout the country as… Continue reading

Statelessness a hurdle for some rescued Thai boy

MAE SAI, Thailand — The 12 boys and coach of the Wild… Continue reading

Lobbying commissioner rejects complaints against firearms panel member

OTTAWA — A federal watchdog has dismissed complaints that a mass-shooting survivor… Continue reading

CREA reports June home sales down 10.7% from year ago, but up from May

OTTAWA — The Canadian Real Estate Association says the number of homes… Continue reading

Red Deer Royals place second at Calgary Stampede parade

Royals depicted life in forest and portrayed destruction by human beings

Muslim candidates running in record numbers face backlash

SPRINGFIELD, Mass. — A liberal woman of colour with zero name recognition… Continue reading

Most Read

Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month