To all of our clients with friends or family in Japan, we hope that all are safe. We have spoken with clients today who are concerned about the financial impact of the disaster to global and Canadian markets. We would like to direct you to some articles that outline the responses of similar economies to disaster as well as what the immediate response has been today in the markets.
Firstly, in “Advanced economies at advantage in disaster”, from the Financial Post, they propose,
researchers who have studied similar disasters in rich countries reach a reassuring conclusion: human resilience and resourcefulness, allied to an ability to draw down accumulated wealth, enable economies to rebound quickly from what seem at first to be unbearable inflictions — be it the Sept. 11, 2001, attacks on New York or Friday’s 8.9-magnitude earthquake, the worst in Japan’s history.
Please read the full article here.
And secondly, as the North American markets near close, the S&P/TSX Composite Index is down less than .50%. Markets around the world have responded in different ways. While the Japanese markets saw losses today, indices from other parts of the world mimicked the Canadian response. For further details on today’s response please read “Japanese stocks crushed but other exchanges hold steady” from the Globe and Mail here.
For further details on global markets and your portfolios please contact us at any time.
We’d like to use the post this week to outline some of the effects that Libyan civil unrest may have on your portfolio. We have all seen price increases at the gas pumps over the last week but how a crisis in the Middle East affects oil prices and how commodities prices affect the Canadian economy is not so clear. I have attached some excerpts from a couple of articles to highlight some points. It is important to note that unrest in Libya affects oil prices both directly and by the threat of unrest spreading through the Middle East. Specifically, however, rising oil prices affect Canada’s economy in many ways and the net results are difficult to predict.
Today from the Globe & Mail (full article here)
Brent crude rose to $118 a barrel and U.S. oil hit the highest price since September, 2008 on Monday as fighting in Libya disrupted its supplies and renewed concern of wider disruptions in the Middle East.
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We would like to welcome our TAXplan clients to the mailing list. With the RRSP deadline looming (March 1) and the tax deadline following not long after we would like to address some FAQ’s for clients organizing their finances and financial documents.
Q. How much can I contribute to my RRSP?
A. The maximum you can contribute to your RRSP can be found on your Notice of Assessment or by calling CRA TIPS line at 1-800-267-6999. Note that a maximum contribution may not be your best strategy. Give us a call and we can run some quick calculations to help determine your optimal contribution.
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Happy Valentine’s Day!
The Business Section headlines last week were dominated by the proposed merger of the TMX Group which controls the Canadian exchanges and the London Stock Exchange Group. The deal now awaits deliberations from government and regulators that will likely last for months. Countries around the world have faced the same issues that Canadian decision makers now face. The Australian and Singaporean exchanges have proposed a merger that currently is waiting for a decision from their governments and the New York Stock Exchange is in talks with the German Exchange for a merger of their own. The Paris Bourse, the Brussels Exchange and the Amsterdam Exchange combined in 2000 to create the Euronext and Italy’s main exchange is owned by LSE.
The proponents of the merger suggest that in a world of larger and larger exchange groups, Canada’s only hope for attracting companies to list on a TMX exchange or attract capital from overseas is to join with one of the growing exchange companies. It has been proposed that while the LSE/TMX exchange will not be the largest in the world it will have many of the listings and associated analysts to make it a leader in the resource sector. The companies have also cited operational efficiencies in the merger that would increase revenues to shareholders.
Opponents such as the Ontario Finance Minister worry that the merger would be the loss of a “strategic asset”. They fear that foreign ownership in the asset would weaken the Canadian market and dampen Canada’s financial sector. For example the network of lawyers, bankers, analysts and market makers in Toronto could be weakened if some of the groups were moved to London.
We would love to hear our client’s feedback on this issue.
Should the exchange business be a protected industry like banks, broadcasters and newspapers?
Beyond strict regulation of markets and reducing barriers to entry to competing exchanges, should the government have control over who owns the exchanges?
Does domestic control ensure that an asset is protected at all?
Please let us hear your comments.
Our first February post will be short and sweet. Firstly, if you are having difficulty determining either your contribution room or your optimal contribution amount please contact us. We can quickly guide you as to where you can find your contribution limits or help you calculate your 2010 room from your income. For many, “maxing” your RRSP is either not affordable or not the best strategy based on their age and income projections. Let us crunch some numbers to help you determine your best allocation of your savings.
A reminder of some important dates over the next few months
RRSP 2010 contribution deadline – March 1, 2011
Tax instalment payment due – March 15, 2011
Tax filing deadline – April 30, 2011
