Monday, December 23, 2013

"Time to Short Canada?"

Leo first links to the FT and then takes a look at a couple more reasons Canada may not be the best bet in the casino.
From Pension Pulse and the Financial Times:
Camilla Hall of the Financial Times reports, Short-focused fund to launch in Canada:
Investors in Canada are to get the chance to bet against their own real estate market as one of the first short-focused funds is set to launch in the country, where concerns have grown that there is a housing bubble ready to burst.

The Spartan/Libertas Real Asset Opportunities Fund, set to launch in Toronto in the first quarter of next year, will allow Canadian brokers, developers or pension funds to mitigate their exposure towards a possible downturn in the real estate market, Michael Brown, manager of the fund told the Financial Times.

The new fund reflects broader investor interest in shorting or hedging risk to Canada after high-profile names from Steve Eisman, featured in Michael Lewis’s The Big Short, to Robert Shiller, the Nobel-prize winning economist, have raised questions over the challenges facing the Canadian real estate market.

Under the watch of Mark Carney, the former Bank of Canada governor who now holds the same job at the Bank of England, the country weathered the global financial crisis better than many industrialised peers. But low interest rates have encouraged soaring property prices and household debt levels which many economists say are unsustainable.

“The thesis behind the fund is that the Canadian housing market is one of the most overvalued in the world,” said Mr Brown. “A lot of things people observed in the US in the run-up to 2007-8 crisis are happening here.”...
I'm not much help here, other than trading the Loonie and trying to take some money off the Vancouver crowd (see image below) I've tended to prefer the long side of the sleeping giant.

Here's a list of the ETF's with exposure, I'm sure some of these will go down.