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Business in Vancouver January 22-28, 2008; issue 952 Entrepreneurs see opportunities in sub-prime mortgage crisis But BIV-Ipsos Reid poll also finds credit crunch generating concern for local businesses Andrew Petrozzi BC business leaders are keenly aware of the U.S. sub-prime mortgage crisis and are looking to cash in on the investment opportunities it provides, according to the latest BIV-Ipsos Reid poll. Ninety-three percent of survey respondents were aware of the sub-prime mortgage crisis, with 54% following it somewhat or very closely. Only 18% were not following it at all. “This is a very boring financial topic [that] usually wouldn’t garner the kind of interest that it has,” said Steve Mossop, president, western region, North America, for Ipsos. “The fact that 82% of business leaders have been reading about it, hearing about it and following it is quite interesting.” Mossop said it was surprising that while the underlying attitude of many survey respondents shows they believe the sub-prime crisis is having an impact on the U.S. economy, is bad for U.S. consumers and business, and could affect Canadian business, it doesn’t have an impact on them personally. “It is almost like a deferral of blame: ‘It’s a U.S. problem. The banks and the substandard lending practices have everything to do with it. But I’m not worried about.’ ” Other survey findings: •37% of respondents said the sub-prime mortgage crisis has affected them negatively; •55% said they had either not been affected or had been affected positively; •only 34% believe Canadian consumers are adversely affected, while 86% said it would have a negative impact on American consumers. Canadian businesses fared much worse in the minds of respondents: 70% said the crisis has a negative impact on business; 85% believe American business is adversely affected. As to investment opportunities arising from the sub-prime crisis: •35% of respondents said they were more likely to buy U.S. property; •15% were more likely to buy U.S. stocks; •14% were more likely to buy Canadian property; and •25% were more likely to buy Canadian stocks. Survey respondents’ knowledge of the macro-economic factors involved illustrate a more than casual interest in the topic: •70% of respondents felt poor lending practices were at the heart of the sub-prime mortgage crisis; •9% blamed high consumer debt. High government spending and debt, historically high rates of home ownership, interest rates and declining property values also factored in. But personal debt levels and the availability of low-interest credit are not just American problems, according to survey respondents: •79% were concerned with personal debt levels in Canada; •55% were concerned with low-interest credit; •37% said the fallout from any negative impacts on them personally may be yet to come. In addition, 22% foresee a recession in the U.S. within the next quarter, 36% see it occurring a year from now. Only 20% predict a recession in Canada in a year’s time. On the interest and property front: •62% predict a drop in U.S. interest rates within the next quarter, while just 14% see it happening a year from now; •42% see Canadian interest rates dropping in the next three months; 24% see it happening in 12 months; •79% see U.S. property values decreasing within the next three months; 11% think it will happen a year from now; •9% of respondents see Canadian property values dropping within the next three months; 34% see it happening a year from now. “Business leaders seem to be unconcerned overall with the impact it may have [in Canada], when the reality is quite significant and quite immediate,” said Mossop. “This could have a much more serious impact than what we initially gave it credit for.” • apetrozzi@biv.com |
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