The forecast for the fourth quarter 2008 sees an increasingly bullish outlook for Canadian financials, up 17% from the previous quarter, according to a survey of advisors released by BetaPro Management Inc.

This bullish movement in sentiment is reflected by over 47% of the 566 advisors polled, managing more than $40 billion in assets and representing a significant crosssection of the industry.

Despite current market conditions, advisors have shown confidence in Canadian equity markets, with a 65% bullish outlook on Canada’s leading companies. Advisors also believed in the strength of the Canadian dollar, with only 15% expressing a bearish outlook.

“Despite the significantly poor performance of the S&P/TSX 60 index, down 17.6% in the third quarter, and only a small rise in the S&P/TSX financials Index we continue to see a growing positive outlook on Canadian financials and equities,” says Howard Atkinson, president, BetaPro Management Inc.

“This sentiment seems to indicate the strength in the Canadian financials. Due to strong fundamentals and attractive valuations especially in light of the continued crisis in the U.S. financial sector. Canadian financials are continuing to standout among the global financial stocks.”

The bullish trend in Canadian financials and Canadian equities is coupled with a continued positive forecast on the S&P/TSX global gold index (67% bulls) and gold bullion (68% bulls).

Advisors continued the bullish trend in the energy sector in Q3 with 51% seeing higher crude oil prices (+14%), and 65% of advisors remaining bullish on natural gas (+7%) even though both experienced losses in Q3 of 28.49% and 47.36%, respectively.

“Clearly optimism for commodities prices is driving the bullish outlook for the Canadian equity markets. The categories with the highest bullish responses were gold bullion, the S&P/TSX global gold index, natural gas, and the S&P/TSX energy index,” Atkinson says.

Advisor concerns over the current economic and housing crisis in the U.S. is reflected in the bearish view on the U.S. 30 year bond. This bearish sentiment is shared by almost half of the advisors polled.

Additionally, resources saw downward forecasts for agricultural grains (-18%) and global mining (-3%) in Q4, showing a negative outlook of 20% and 18%, respectively. Almost half of the advisors polled
continue to have a bullish outlook in global mining, despite the S&P/TSX global mining index loss of 39.47% in Q3.

“There is still nervousness in the market, but it is interesting to note that the only category to where bearish responses surpassed bullish responses was the U.S. 30-year bond. Perhaps the economy will rebound and we will not be able to keep interest rates at these levels,” Atkinson says.

Along with the many others in the market, the exceptional challenges faced in Q3 halted the advisors winning streak of seven consecutive quarters of accurate forecasting with advisors accurately predicting the direction of only two out of 14 benchmarks or 14%.