Potential of U.S. recession number one concern among Canadian investors

Many Canadians are anxious about how the rest of the world’s financial challenges could affect their investment portfolios as they approach the second half of 2012, according to a study from BMO Harris Private Banking.

According to the study, almost three-quarters of Canadians (72%) are worried that global economic troubles might affect Canada’s relative prosperity.

Forty-one percent of Canadians polled believe that the possibility of the U.S. slipping into another recession represents the number one threat to Canada’s economy.

Close to one-quarter of respondents (23%) feel uneasy about the sovereign debt crisis in the eurozone.

Eight percent of Canadians are concerned about slowing growth in China and India, with 7% worried about how tensions in the Middle East may affect Canada’s financial markets.

Paul Taylor, chief investment officer, fundamental equities, BMO Asset Management Inc. and investment strategist for BMO Harris Private Banking, said, “Though the most recent recession is a few years behind us, the tentative economic recovery in the United States still troubles Canadian investors.

“Those concerns are warranted, because Canada is the United States’ largest trading partner and it’s only natural that we will be affected by what happens south of the border.”

Taylor noted that the annual value of Canada’s bilateral goods and services trade with the U.S. is approximately $600 billion. He added that the U.S. is the largest foreign investor in Canada and the most popular destination for Canadian investment abroad.

Other key findings from the study include:

• the majority of Canadians (83%) are proud of Canada’s overall economic performance relative to the economies of the U.S., Europe and other parts of the world;
• three-quarters (74%) are optimistic about Canadian financial markets; and
• half of Canadians anticipate that their current investments will grow in value over the next year.

“Canada’s economy remains strong compared to those of our global peers,” said Taylor.

“But while American equity markets have performed fairly well recently, there have been some mixed economic signals coming out of the U.S. over the last year. When combined with the ongoing sovereign debt crisis in the eurozone and other trouble spots around the world, the time is right for Canadian investors to ensure they balance risk in their portfolios and avoid being overweighed in one specific geography.”

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@JHarrisonBIV