2011 Looks Promising For Investment According To Laurentian Bank Forecast

According to a new forecast released by the Laurentian Bank, 2011 provides great promise for investors and investments in Canada.

Laurentian’s chief economist, Mr. Carlos Leitao, believes that the recent economic improvements in the US will set the tone for the rest of the world. Similarly, he believes that the circumstances are being created for an excellent environment for investment. Low prices that are set to rise- in equities and real estate- will set the tone."Two significant events occurred at the end of 2010 that generated significant momentum for the American economy," explains Mr. Leitao. "The first was a new wave of quantitative easing, known under the acronym of QE2, which was announced in November.

The second was the prolongation in December of the Bush era's tax relief. These two interventions will serve to accelerate economic growth."

Leitao predicts that economic growth in the US will reach 3-3.5% in 2011, taking into account the flood of cash into the system with tax relief and quantitative easing programs- and the eventual impact on the country’s deficit.

“The stock market, which posted a strong finish in 2010, should be a major beneficiary of these measures in 2011," predicts Mr. Leitao. "In the wake of the sluggishness that prevailed during the months of July and August due primarily to the concern over sovereign debts in Europe, the tone has changed over the past few months and confidence has begun to reappear. As such, we anticipate that the economic environment in 2011 will be quite favourable for investment."

Considering also that the recession is over and the continued decline of the bond market- and the lows that many US stocks reached last year- there is no where to go but up in 2011. With this in mind, Leitao encourages Canadians to consider the US as a spot for investment- for securities – and in blue chip companies in particular.

"With the increased value of the dollar," emphasizes Mr. Leitao, "Canadian investors can now take advantage of a greater lever effect to purchase foreign assets." Blue chip securities are the most promising," he underlines, "particularly those of companies that offer products and services related to industrial and computer equipment. What should be avoided are the consumer staples and discretionary consumption sectors. The priority should be to consider companies that are leaders in their markets and that pay dividends.”