Stocks: hot or not?

• Author: Louiseize, Kelly
• Position: Issue of the Month

Despite the lagging first and second quarter of this year, market and statistics gurus believe the numbers may show signs of recovery in the third quarter with investments in life sciences, software and clean tech companies.

Although venture capital markets have in most sectors taken a tumble over the last two years, Mary Macdonald of Macdonald & Associates Ltd. explains the Canadian market has been affected more due to a lack of "mega deals" in the IT sector.

"It has been exacerbated by the fact that the telecommunications sector has been hit hard and that is a big part of where the Ontario money has gone," Macdonald adds.

According to her Web site, seven financings for mega deals that amounted to $10-million plus were completed in the past quarter, almost half the amount that was documented a year ago.

When SARS hit, "it impacted people's ability and willingness to do business."

However, Macdonald is hearing anecdotally that people are starting to do more transactions and evidence of that should be found in the third and fourth quarter.

"My guess is that the recovery will be more moderate in its pace than the last pick up and the downturn has been."

One of the main factors that may be different in this quarter is the absence of large telecommunication deals.

"I am not convinced that we will see the $750-million transactions in the foreseeable future."

What she does expect to see is a sustained interest in the life sciences, like biotechnology and medical equipment and health services. In the...