May 3, 2011 / 4:42 AM / in 7 years

Instant View: Conservatives romp to big Canadian election win

TORONTO (Reuters) - Canada’s ruling Conservatives were heading for a crushing victory in Monday’s federal election, as the left-wing vote split between two parties and the separatist Bloc Quebecois faded to almost nothing.

COMMENTARY:

MITUL KOTECHA, HEAD OF GLOBAL FX STRATEGY, CREDIT AGRICOLE, HONG KONG

“On the margin, it’s obviously positive for the loonie. There has been a bit of a relief that firstly there is a continuance of government and secondly the ruling party seems to be more business friendly. Sometimes change in itself can lead to more uncertainty and that probably would have been more negative.”

YOUSSEF ZOHNY, PORTFOLIO MANAGER AT VAN ARBOR ASSET MANAGEMENT IN VANCOUVER

“The way everything played out, I think it’s a good news story.”

“In terms of investing, it’s going to reinforce quite a bit of stability and confidence and Canada is going to continue to be very attractive for foreign investors. We saw the TSX underperform a lot of markets last month and I think it had a lot to do with uncertainty and the cloud of potential instability with this election. But with a Conservative majority I think that cloud is going to dissipate a bit and you may see some investment flows back into Canada.”

“This is probably the most bullish scenario for Canadian equities and I think Canadian investments in general. With a Conservative majority, you’re essentially assured a fairly business-friendly platform, low taxes, continued investment in energy and potential future energy projects. In terms of investment it’s definitely got a bullish bias.”

DAVID COLLYER, PRESIDENT OF THE CANADIAN ASSOCIATION OF PETROLEUM PRODUCERS

“There’s benefit in the stability that comes with a majority government. I think that’s going to be good for our industry and for investors. It’s been a difficult policy environment, obviously, with a minority government over the past few years. And continuity is positive.”

“Our policy has been consistent. We need balance. We need policies to encourage economic growth and we need responsible environmental performance and the policies that go with that. I certainly acknowledge that the NDP has different view than us on some of the key policy issues and we’ll have to work with them to see if we can find some common ground. Certainly with them being the official opposition that will change the dynamic in parliament a bit.”

CARLOS LEITAO, CHIEF ECONOMIST AT LAURENTIAN BANK OF CANADA

“A majority Conservative government is obviously good news for financial markets and for the Canadian economy. Furthermore, it also points to a sharper right/left divide in Canadian politics.”

“The huge surprise has to be the NDP sweep in Quebec. I am not quite sure how solid that support really is but it is there for at least 4 years ... The NDP taking Westmount, for example, is just unbelievable.”

TOM O‘GORMAN, DIRECTOR OF FIXED INCOME AT BISSETT INVESTMENT MANAGEMENT IN CALGARY

“I don’t think that was necessarily expected and should be a little bit of a relief given the changes in the polls we saw over the last week, probably a little bit of a relief to the currency. The bond market, what it actually does I think is it’s going to depend a little bit more on the fundamentals as we move forward, whether it’s the rate of growth, the trend of inflation and what that all means for the Bank of Canada.”

“Some people would make the case there could have been some selling because of the moves that the NDP had made, but I think this gets us back more to looking just purely at the fundamentals.”

“I think it’s a relief and gets you back to focusing on fundamentals versus had the NDP become the opposition in a minority government. I think that itself would have been viewed as a negative both for the currency and bonds. In the short term it could have been, longer term there are a lot of other bigger headwinds and issues that the markets are going to focus on.”

FIRAS ASKARI, HEAD OF FOREIGN EXCHANGE TRADING AT BMO CAPITAL MARKETS

“Obviously a better-than-expected result for the Conservatives and the NDP, quite the shocker. I think generally this is probably very good for the Canadian dollar. We haven’t had a majority government is some years and I think this provides a measure of stability that the market was looking for.”

“Canada is going to do well here, I think Canada is probably going to do a little catch-up on the crosses primarily. I think the uncertainty of exactly how this was going to play out is now out of the way and the best news out of this is we now have some stability for a couple of years at least. How much will the opposition being NDP, how much they can actually influence policy is limited.”

“I think the Quebec question might rear itself here. I think it’s generally perceived as positive that a federalist party, even though it’s the NDP, has taken Quebec and basically the Bloc Quebecois to non-party status.”

“People are going to be more comfortable buying Canadian dollars again. Having said that we are at very high levels of Canadian dollars historically but I think any U.S. dollar rally is going to be met with some serious Canadian dollar buyers.”

SACHA TIHANYI, SENIOR CURRENCY STRATEGIST, SCOTIA CAPITAL IN HONG KONG

“That’s beneficial from the point of the view of the market probably not liking a government that is a coalition that has a significant New Democratic Party presence.”

ELVIS PICARDO, ANALYST AND STRATEGIST AT GLOBAL SECURITIES IN VANCOUVER ON STOCK MARKET IMPACT

“There was some nervousness about prospects for the NDP ... because some of their policies are perceived as being populist. What’s good for the Canadian consumer may not necessarily be the best thing for Canadian business.”

“On balance it’s going to be neutral. You’ve got the Conservatives who are going to be the majority which is a good thing. But rather than having the Liberals as the opposition party -- and the Liberals are also seen as being pro-business -- you now have the NDP who have a reputation as being a little business-unfriendly. So the net effect will be it’s going to be a wash, it’s going to balance out each other.”

“You might see a decent rally in the markets tomorrow because today there’s really little doubt that a lot of investors were on the sidelines.”

“The Conservatives are widely perceived as pro-business so that will certainly go to help business as a whole.”

“Despite the uncertainty, we didn’t see any dramatic selloffs so possibly there’s going to be a relief rally of sorts but it’s going to muted by the fact that we didn’t have a steep selloff to begin with.”

RAHIM MADHAVJI, PRESIDENT OF KNIGHTSBRIDGE FOREIGN EXCHANGE

“It’s a bit of a relief for Canadian dollar bulls ... with the Conservatives, fiscal spending is intact, oil production is intact.”

“Those that have kind of waited on the sidelines will get back in because the Canadian dollar had underperformed over the last week ... it will focus back on the broader themes that are driving the market, which is essentially the weak U.S. dollar and following the yield play. I think investors in the Middle East and Asia will be able to jump back into the market.”

JACK SPITZ, MANAGING DIRECTOR OF FOREIGN EXCHANGE AT NATIONAL BANK FINANCIAL

“Judging by the price action that we’ve seen tonight in dollar/Canada, the market is comfortable with the results as they’re being reported and ultimately with a Conservative majority victory. The likelihood is that the Canadian dollar will continue to gain.”

“At the end of the day with the Conservatives winning a majority, it’s not going to be unsettling to the currency and that’s really what the market has been waiting for. There has been some scaling back of long Canada positions ahead of the election results. They’re likely to be put back on again.”

“Ultimately the reaction to a majority Conservative government is likely to be favorable to the Canadian dollar. Of course it’s very interesting to see what else is taking place with the NDP now clearly the official opposition ... it’s a remarkable shift of power within the legislature itself.”

“It would appear that the Conservatives are headed to a majority government and that is likely to be seen as a positive in the world’s financial markets for the Canadian dollar.”

MARKET REACTION

- The currency firmed as high as C$0.9469 to the U.S. dollar, or $1.0561. The currency had ended the North American session at C$0.9508 to the U.S. dollar, or $1.0517.

Reporting by Claire Sibonney in Toronto, Jeffrey Jones in Calgary, Masayuki Kitano in Singapore and Ian Chua in Sydney; editing by Jeffrey Hodgson

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