October 12, 2008 / 2:42 PM / 9 years ago

Election? What election?

TORONTO (Reuters) - (Reuters) - Bay Street, riveted by the sight of plunging markets and economies teetering on the edge of recession, has been paying precious little attention to the campaign leading to Canada’s general election on Tuesday.

<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>

“I don’t think investors are really at all focused on the fact there is a Canadian election and what any potential policy change that may bring,” said George Vasic, equity strategist at UBS Securities Canada. “Concerns are far greater than that in terms of the global financial crisis.”

Even the U.S. election, which Vasic describes as the “most intriguing” in memory, supersedes the Canadian financial world’s concern over what might happen in Canada, he said.

Polls show the election is likely to result in the reelection of the Conservative Party under Prime Minister Stephen Harper.

As of Friday most pollsters were saying that what remains in doubt is whether it will be another minority Conservative government, as was the case after the last election in 2006, or whether Harper will be able to get a majority.

The Conservatives are the most right wing of Canada’s parties and are considered the most market-friendly. But Bay Street also has little fear of their main opposition, the centrist Liberals, under whom Bay Street prospered for more than a decade until the 2006 election.

The other national contenders in the election, the left-of-center New Democrats and the Green Party, are given no chance of being elected although there is talk of an anything-but-Harper coalition in the case of a minority government.

In a report titled “Canada: Remember the election?”, Vasic and strategist Garry Cooper said while minority governments look potentially chaotic to foreign investors, the Toronto Stock Exchange’s key index has, in fact, outperformed the Standard & Poor’s 500 Index during six of the eight minority governments that Canada has had in the last half century.

Right now the index isn’t performing very well. In the most erratic dealings in decades, the S&P/TSX composite index fell briefly below the 9,000 level for the first time since January 2005 on Friday in yet another market rout.

That came after two days of near 7-percent tumbles last week as government action around the world to unclog frozen credit markets failed to soothe frazzled nerves.

Levente Mady, broker at MF Global Canada in Vancouver, British Columbia, said the market is looking for stability and that would be most secured by a majority Conservative government.

Still, any impact seen from the election would be “very short-term lived, and going forward it’s going to be business as usual,” he said.

The reality is that the election result will not be a main stock market driver, said Eric Kirzner, professor at the Joseph L. Rotman School of Management.

“It’s going to be driven by events in the States, driven by energy and commodity prices,” he said. “Energy and commodity prices, at present, are very highly correlated with market conditions around the world.”

Toronto’s heavily-weighted energy sector has fallen about 50 percent from its May peak along with a tumble in oil prices, which have dropped on concerns that the slowing global economy will cut demand.

Resource and fertilizer stocks, another major pillar of the Toronto market, have plummeted by about 40 percent from their June peak.

“There’s a relatively high degree of apathy when it comes to politics when you have an issue like what’s going on in the economy that affects more people, their savings, their personal circumstances,” said Peter Chandler, senior vice-president at Canaccord Capital in Waterloo, Ontario.

Toronto’s composite index closed down 534.98 points, or 5.6 percent, at 9,065.20 on Friday, down 16.1 percent for the week.

Since August 31, the benchmark index has shed roughly C$440 billion in value.

($1=$1.18 Canadian)

Reporting by Jennifer Kwan; Editing by Peter Galloway

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