Montreal investment management firm C.F.G. Heward believes that the economy is showing signs of emerging from the deepest recession since World War II.

However, the provider of global investment management and advisory services says the financial crisis of 2008-2009 has created long-term effects, with reduced U.S. consumer spending, being the most significant.

In Canada, economic conditions are comparatively favourable, thanks in part to the robustness of the nation’s banking system, the firm notes in its recently published quarterly report.

Federal and provincial stimulus packages, combined with low interest rates, are allowing some Canadian businesses to resume hiring. However, the Canadian economy continues to face the twin challenges of a strong currency and weak exports of manufactured goods,

“Canadians have good reason to be optimistic about our economy heading into 2010 and it looks like we will do quite well compared to other leading industrialized nations,” says Willem Hanskamp, senior vice president, C.F.G. Heward.

“However, we also need to remain cautious. For starters, we would like to see international demand for our exports rise. And domestically, while low interest rates stimulate consumer spending, they also add risk to high household debt levels. Additionally, we expect increased merger and acquisition activity as companies will tend to buy growth rather than grow organically.”

The firm has identified five core investment themes for its clients in 2010:

• favouring dividend growth companies;
• opportunities in the energy sector;
• opportunities in infrastructure and technology;
• global consumer stocks that benefit from ongoing growth in emerging markets; and
• investment opportunities in basic materials, particularly gold.

“These themes complement C.F.G. Heward’s long-standing investment style of favouring growth at a reasonable price with a value bias,” Hanskamp concludes.

IE