Buying opportunities could be close

Sun Oct 19, 2008 12:06pm EDT
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By Ka Yan Ng

TORONTO (Reuters) - Brace yourself, but there's more bad news coming for Toronto stocks.

When companies release their third-quarter results over the next few weeks, the accompanying earnings forecasts are likely to provide some pretty gloomy reading and may drive prices down further. Market focus will not be on the earnings themselves.

"(Forecasts) are what the market at the bigger level is looking at. Whether XYZ company beats or misses by a nickel is not the biggest focus over the next two or three weeks," said Francis Campeau, broker at MF Global Canada.

And any market drops made on those forecasts could mark the bottom of the current fall, and the much-talked-of buying opportunity may finally be here.

It may even be close now. It certainly wasn't a couple of weeks ago, during the general election campaign, when Canadian Prime Minister Stephen Harper said the big drop in markets represented a buying opportunity. The Toronto Stock Exchange's key index promptly dropped another 1,000 points.

On Friday, however, bargain-hunting came in force and the benchmark index posted a weekly gain of 5.5 percent, finishing at 9,562.49.

"An investor should not necessarily wait for the economy to get better or earnings to bounce back before climbing on to the equity bandwagon," said Clement Gignac, chief economist and strategist at National Bank Financial in a note on Friday.

Nevertheless, almost daily declines in the stock market in the past month have only reinforced the feeling that grim times are ahead and that recession looms.   Continued...

<p>A Bay Street sign is seen at the financial district in Toronto, October 10, 2008. The Toronto Stock Exchange's main index tumbled 700 points on Friday afternoon, as commodity stocks slid along with underlying prices on deepening fears the world economy will go into recession. REUTERS/Mark Blinch</p>