By Jennifer Kwan
TORONTO, Oct 10 (Reuters) - (Reuters) - Bay Street, riveted
by the sight of plunging markets and economies teetering on the
edge of recession, has been paying precious little attention to
the campaign leading to Canada's general election on Tuesday.
"I don't think investors are really at all focused on the
fact there is a Canadian election and what any potential policy
change that may bring," said George Vasic, equity strategist at
UBS Securities Canada. "Concerns are far greater than that in
terms of the global financial crisis."
Even the U.S. election, which Vasic describes as the "most
intriguing" in memory, supersedes the Canadian financial
world's concern over what might happen in Canada, he said.
Polls show the election is likely to result in the
reelection of the Conservative Party under Prime Minister
Stephen Harper.
As of Friday most pollsters were saying that what remains
in doubt is whether it will be another minority Conservative
government, as was the case after the last election in 2006, or
whether Harper will be able to get a majority.
The Conservatives are the most right wing of Canada's
parties and are considered the most market-friendly. But Bay
Street also has little fear of their main opposition, the
centrist Liberals, under whom Bay Street prospered for more
than a decade until the 2006 election.
The other national contenders in the election, the
left-of-center New Democrats and the Green Party, are given no
chance of being elected although there is talk of an
anything-but-Harper coalition in the case of a minority
government.
In a report titled "Canada: Remember the election?", Vasic
and strategist Garry Cooper said while minority governments
look potentially chaotic to foreign investors, the Toronto
Stock Exchange's key index has, in fact, outperformed the
Standard & Poor's 500 Index .SPX during six of the eight
minority governments that Canada has had in the last half
century.
Right now the index isn't performing very well. In the most
erratic dealings in decades, the S&P/TSX composite index
.GSPTSE fell briefly below the 9,000 level for the first time
since January 2005 on Friday in yet another market rout.
That came after two days of near 7-percent tumbles last
week as government action around the world to unclog frozen
credit markets failed to soothe frazzled nerves.
Levente Mady, broker at MF Global Canada in Vancouver,
British Columbia, said the market is looking for stability and
that would be most secured by a majority Conservative
government.
Still, any impact seen from the election would be "very
short-term lived, and going forward it's going to be business
as usual," he said.
The reality is that the election result will not be a main
stock market driver, said Eric Kirzner, professor at the Joseph
L. Rotman School of Management.
"It's going to be driven by events in the States, driven by
energy and commodity prices," he said. "Energy and commodity
prices, at present, are very highly correlated with market
conditions around the world."
Toronto's heavily-weighted energy sector has fallen about
50 percent from its May peak along with a tumble in oil prices,
which have dropped on concerns that the slowing global economy
will cut demand.
Resource and fertilizer stocks, another major pillar of the
Toronto market, have plummeted by about 40 percent from their
June peak.
"There's a relatively high degree of apathy when it comes
to politics when you have an issue like what's going on in the
economy that affects more people, their savings, their personal
circumstances," said Peter Chandler, senior vice-president at
Canaccord Capital in Waterloo, Ontario.
Toronto's composite index closed down 534.98 points, or 5.6
percent, at 9,065.20 on Friday, down 16.1 percent for the
week.
Since Aug. 31, the benchmark index has shed roughly C$440
billion in value.
($1=$1.18 Canadian)
(Reporting by Jennifer Kwan; Editing by Peter Galloway)
