Retail Savings and Investments in Canada - Coronavirus (COVID-19) Sector Impact
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Retail Savings and Investments in Canada - Coronavirus (COVID-19) Sector Impact
The coronavirus (SARS-CoV-2) outbreak, dubbed COVID-19, is first and foremost a human tragedy, affecting millions of people globally. The contagious coronavirus, which broke out at the close of 2019, has led to a medical emergency across the world, with the World Health Organization officially declaring the novel coronavirus a pandemic on March 11, 2020.
This report focuses on the impact of the coronavirus outbreak on the Canadian economy and the countrys retail savings and investment market. It also highlights the measures adopted by the government to combat COVID-19. Based on our proprietary datasets, the snap shot contrasts pre-COVID-19 forecasts and revised forecasts of total retail bond, deposits, equities and mutual funds holdings in terms of value and growth rates. It also analyses the effects on HNW wealth, examining the importance of different industries as a contributor to HNW wealth.
Fears surrounding the impact of COVID-19 have already significantly impacted the global economy, with most of the countries across the world registering declines in their economic growth for the year to date. Many economists and institutions have cut their forecasts as a number of countries officially slipped into recession in Q1 2020.
A similar trend was seen in Canada, with economic growth declining in the first quarter of 2020. With the government now easing lockdown restrictions, and several provinces allowing the reopening of businesses, a rise in consumer and commercial spending is expected. This in turn will support the retail savings and investments market.
Scope
- COVID-19 is expected to cause a 6.4 percentage point swing for Canadian retail investments as the large role of mutual funds takes a bite out of the countrys collective savings.
- Both bonds and deposits are forecast to have strong years, as a flight to safety during the crisis and recession will see Canadians devote more of their savings to these assets. According to the Bank of Canada, the household savings rate increased from 3.6% in Q4 2019 to 6.1% in Q1 2020. In addition, deposit balances in personal bank accounts observed an exceptional increase in April 2020. Additionally, households will be aided by direct support from the government, which should prevent Canadians from having to dip into long-term savings to support short-term consumption.
- Equity holdings remain in uncertain territory as a number of headwinds such as the poor performance of the countrys major trading partners and a second wave of virus infections pose a threat to the countrys performance.
- The large energy sector centered in Alberta will be an acute source of weakness in the Canadian market, with the sector previously the top generator of high net worth (HNW) investors in Canada. A strong and early recovery of the oil price is the greatest predictor of whether this will remain the leading source of new HNW customers in Canada.
- However, sectors such as healthcare and technology are expected to hold up more robustly thanks to the increased investment by the government in these sectors in order to combat the crisis.
Reasons to Buy
- Make strategic decisions using top-level revised forecast data on the Canadian retail savings and investments industry.
- Understand the key market trends, challenges, and opportunities in the Canadian retail savings and investments industry.
- Receive a comprehensive insight into the retail liquid asset holdings in Canada, including deposits, mutual funds, equities, and bonds.
The coronavirus (SARS-CoV-2) outbreak, dubbed COVID-19, is first and foremost a human tragedy, affecting millions of people globally. The contagious coronavirus, which broke out at the close of 2019, has led to a medical emergency across the world, with the World Health Organization officially declaring the novel coronavirus a pandemic on March 11, 2020.
This report focuses on the impact of the coronavirus outbreak on the Canadian economy and the countrys retail savings and investment market. It also highlights the measures adopted by the government to combat COVID-19. Based on our proprietary datasets, the snap shot contrasts pre-COVID-19 forecasts and revised forecasts of total retail bond, deposits, equities and mutual funds holdings in terms of value and growth rates. It also analyses the effects on HNW wealth, examining the importance of different industries as a contributor to HNW wealth.
Fears surrounding the impact of COVID-19 have already significantly impacted the global economy, with most of the countries across the world registering declines in their economic growth for the year to date. Many economists and institutions have cut their forecasts as a number of countries officially slipped into recession in Q1 2020.
A similar trend was seen in Canada, with economic growth declining in the first quarter of 2020. With the government now easing lockdown restrictions, and several provinces allowing the reopening of businesses, a rise in consumer and commercial spending is expected. This in turn will support the retail savings and investments market.
Scope
- COVID-19 is expected to cause a 6.4 percentage point swing for Canadian retail investments as the large role of mutual funds takes a bite out of the countrys collective savings.
- Both bonds and deposits are forecast to have strong years, as a flight to safety during the crisis and recession will see Canadians devote more of their savings to these assets. According to the Bank of Canada, the household savings rate increased from 3.6% in Q4 2019 to 6.1% in Q1 2020. In addition, deposit balances in personal bank accounts observed an exceptional increase in April 2020. Additionally, households will be aided by direct support from the government, which should prevent Canadians from having to dip into long-term savings to support short-term consumption.
- Equity holdings remain in uncertain territory as a number of headwinds such as the poor performance of the countrys major trading partners and a second wave of virus infections pose a threat to the countrys performance.
- The large energy sector centered in Alberta will be an acute source of weakness in the Canadian market, with the sector previously the top generator of high net worth (HNW) investors in Canada. A strong and early recovery of the oil price is the greatest predictor of whether this will remain the leading source of new HNW customers in Canada.
- However, sectors such as healthcare and technology are expected to hold up more robustly thanks to the increased investment by the government in these sectors in order to combat the crisis.
Reasons to Buy
- Make strategic decisions using top-level revised forecast data on the Canadian retail savings and investments industry.
- Understand the key market trends, challenges, and opportunities in the Canadian retail savings and investments industry.
- Receive a comprehensive insight into the retail liquid asset holdings in Canada, including deposits, mutual funds, equities, and bonds.
TABLE OF CONTENTS
COVID-19 Update
Impact Assessment
Retail Deposits
Total Consumer Loans
Mortgage Loans
Credit Card Loans
Other Consumer Loans
Appendix
Supplementary Data
Definitions
Methodology
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