Canada has experienced tremendous success selling labor on opportunity. It’s not having nearly as much luck convincing investors of the same. That was the take from BMO Capital Markets, warning the TSX saw a record sell off from foreign investors. The institution warns this is just part of a larger issue of domestic and global capital seeing fewer opportunities in the country, and sending their money to work elsewhere.
Canada’s Stock Markets Underperform, Failing To Attract Investors
Canada’s largest stock market has noticeably lagged—especially when compared to the US. BMO’s research shows the TSX climbed just 8.1% in 2023 compared to the S&P 500’s 24.2% over the same period. Some of this can be attributed to retracing the lost ground from 2022, but not all of it. Significant selling was observed and it wasn’t exactly clear why.
Source: BMO Capital Markets; Statistics Canada.
“… the TSX also lagged many of its peers and even the Dow. And that underperformance has dragged into the opening weeks of 2024,” explains Douglas Porter, Chief Economist at BMO.
Adding, “And now we have a big clue as to who is doing the selling.”
Canada Has Never Seen Such A Large Foreign Investor Sell Off
Canada is typically seen as a safe haven for investors but some of that sheen has begun to tarnish. Foreign investors sold a net of $48.7 billion worth of Canadian equities in 2023. That number doesn’t just sound astronomical, it would have been unimaginable in 2019. It’s the largest annual outflow on record ever for Canada.
“Over the past three decades, a “normal” year would see net buying of about $12 billion—an inflow of about $1 billion a month, not the net outflow of $4 billion per month seen in 2023,” says Porter, emphasizing how unusual this trend is.
Weak Foreign Investment Has Been Weakening The Loonie
The heavy selling by foreign investors explains the issue but it’s hardly surprising. This is part of a larger trend of investors abroad pulling back on capital invested in the country. Foreign Direct Investment (FDI) being another glaring red flag.
“Combined with a steady net outflow in FDI, this helps explain why the Canadian dollar has struggled over the past year. Indeed, the surprise is that it didn’t suffer an even bigger setback,” he says.
Annual data isn’t available for Canadian FDI yet, but the past year wasn’t pretty. Canadians sent nearly $9 billion more abroad than foreign investors sent to Canada in Q3 alone. It’s generally not a great sign when domestic investors see more opportunities abroad than foreign investors see in a country.
Can anyone blame foreign investors? Outside of real estate investment, it doesn’t appear the country is interested in anything else. Housing has been swallowing the country’s investment, diverting capital from industry and directing it to housing. Even the country’s largest bank has warned the concentration will have a destabilizing effect on the economy.
“Outside of real estate investment, it doesn’t appear the country is interested in anything else. Housing has been swallowing the country’s investment, diverting capital from industry and directing it to housing.”
Nothing new here, folks. Real Estate has been a prominent investment for decades. Now, Canada must absorb Trudeau’s immigration plan. Starbucks and Tim Hortons can’t provide all the jobs for the unemployed. Maybe Trudeau thinks we need another coffee franchise to help create intellectual property. Do you want cream and sugar or black coffee?
Says a lot about this once great country. I keep telling all of my friends – Canada is an empty country, there is NOTHING here but RE. Innovation and R&D are dead, small businesses are dead – we can expect a brain drain and nobody left to service those of us who stay when we retire. Perhaps AI and robots can take care of us, wipe our behinds as we wither away in an LTC home. Just as long as the RE Ponzi scheme can keep on going. Can anyone please state what other country in the world is dhumb enough to base its GDP and wealth on housing, like Canada?
If it’s so dumb then shut up & leave. If you can’t wipe your own ass you should be dead anyway.
No surprise. I nailed this trend in 2014 when I called housing the Canary in the coal mine: https://fsim.ca/docs/ces.pdf
You are definitely right. There is nothing interesting in Canada anymore now so of course foreigners are going to more business friendly countries.
Very interesting article. I’m curious what you think needs to happen to restore housing affordability?
What do you make of the number of Institutions and Corporations buying single family residential real estate?
Thank you.
Institutions and corps. like Tricon/Blackstone (thee two scumbags recently merged to become even stronger…) should be banned from buying up homes that they claim we could not otherwise afford to live in, unless they rent them back to us. We could afford them, if the likes of these stopped buying them up and pushing prices north. Approx. 2 years ago, the CEO of Tricon was interviewed on 60 minutes claiming his company is doing a service to us and making the “American Dream” possible. The interviewer was in clear disagreement and kept pushing how renting a house could be the “American Dream”? The CEO kept dodging the question. The interviewer cornered him on many accounts but what stuck in my mind was that the CEO said they plan to expand NORTH to Canada. And indeed they did. A few months after the interview, there was a tiny article in the paper about Tricon coming to the rescue as a landlord – LOL – yeah right. Tricon officially expanded to Ontario and BC, I believe it might already be in Alberta too.
That’s just one side of the whole thing… but who should be banned from supporting this nonsense is our very own Canadian Pension Plan. Our CPP money is heavily invested in REITs, which support this housing scam. Taxpayers deserve to have a say in whether they are in favor of having their money invested in a grand Ponzi scheme that is robbing future generations of the chance to ever become homeowners.
What’s awful about the whole thing is that the properties bought up by these corps. will never ever again be back on the market for sale, only for lease, and ONLY IF they ever go bankrupt. We can only wish the whole Ponzi scheme crashes and burns. I can’t imagine and fear where this country is heading….
0 immigration and make available crown land to citizens.
How much is the capital flow reflecting the downslope of fossil fuels investments? No more money is going into O&G, but that is not a bad thing at all, either for the country or our environment.
What is sad to see is how little focus there is in transitioning the economy away from fossil fuels, headlined but the province with the most to lose: Alberta.
As our Deputy PM has repeatedly stated, we are trying to develop Canada as a service economy…this is what happens when one of the most resource rich nations on the planet hands WEF globalist the reins…
What can you expect? Of course, that is a rhetorical question. Who in their right mind would want to invest in a country whose leadership has a long list of skullduggery and scandals and disincentivises its own citizens by imposing a rediculous carbon tax that has driven the cost of living through the roof (if you are lucky enough to have a roof). Investors hate insecurity; isn’t that the adage? The Liberal government has the whole country awash with insecurity, so why would anyone even consider investing in Canada?
Good article, I would like to see the statistics on how many jobs have been created from 2015 to 2023 in the private sector versus the public sector. The costs to maintain this Federal Government (taxes, increased hiring and spending) is driving away investment.
Don’t worry, be happy! Our wonderful prime minister has assured us that going the complete mile on shutting down our carbon based industry, allowing “fake money” Chinese investors to buy up our real estate, and swallowing a full glass of that sweet green technology pill will improve our lives, our society, and make us happy.
I don’t see a problem!
-taxes n carbon taxes n taxes
-permitting any natural resource
Is almost impossible
-native rights are killing mining, fishing and forest harvest, same old storey, this area is culturely sensitive, or it’s our historic rights. By the way there is no definition of what %% is a native
100% or .01% through marriage
-we are all Canadian equally or this country is doomed
With our Federal government actively working to discourage anything that might have a negative environmental impact, I would be looking elsewhere to invest my money too. Canada is being led by fools and we will all suffer for it.
The oecd says our standard of living has been falling over the past seven or eight years. We were in the top five oecd countries until 2015-16 when we started falling and are now in the bottom five. The oecd and IMF say that Canada’s economy and standard of living will continue to erode unless we make some significant changes. So next time vote for anyone you want except liberal or NDP.
DEVELOPMENT INDUSTRY IN CANADA WILL BE DEAD FOR 20 YEARS. ALL THE INVESTORS HAVE LEFT TO SEEK OUT DEALS IN THE USA
They’re all buying shares of NVDA.
I wonder if this is the intended result of the Trudeau regime’s plan to force Canadians to invest their savings domestically. Dry up all foreign investment and assume Canadians will jump in their cash.
Why in the world would foreigners invest in Canada given that the Canadian government bans foreigners from buying real estate in Canada ? Foreigners go where they are treated the best and that’s definitely NOT in Canada and of course, they take their money with them. So that’s Canada loss not foreigners’…
try invest in china RE see if you can…looool
…Foreign investment fallout has nothing to do with foreigners being cut out of buying real estate. You are probably a real estate agent.
Very interesting article. I’m curious what you think needs to happen to restore housing affordability?
What do you make of the number of Institutions and Corporations buying single family residential real estate?
Thank you.
Cheaper real estate would come from building transport infrastructure of trains rather than cars and roads just like in japan and europe. Changing the government rules of what can and can’t be built for homes as well as shelters …in other words listen to architects rather than beaurocrats. Invest our tax money in areas that bring growth to sectors that have growth potential rather than what feels nice …some things cant afford unless we get our fiscal house in order…It would help if a better class of party leaders stepped forward than the sad choice we have to vote for.
Also capsule hotels are far cheaper to build in existing empty office space and other existing structures and provides a better option as shelter, low cost accommodation for workers who live outside the city… for eg. a bike food courier can live in Brampton but have cheap accommodation in the city with his or her bike during the week….get rid of the beaurocratic red tape that prevents architectural solutions to social problems. People just need a cheap solution to stay in the city so they can get work …capsule hotels can also work for long and short term accommodation, they work for shelters, cheap to build in existing structures and spaces.
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Canada Just Saw The Largest Foreign Investor Sell Off Ever
February 21, 2024
Canada has experienced tremendous success selling labor on opportunity. It’s not having nearly as much luck convincing investors of the same. That was the take from BMO Capital Markets, warning the TSX saw a record sell off from foreign investors. The institution warns this is just part of a larger issue of domestic and global capital seeing fewer opportunities in the country, and sending their money to work elsewhere.
Canada’s Stock Markets Underperform, Failing To Attract Investors
Canada’s largest stock market has noticeably lagged—especially when compared to the US. BMO’s research shows the TSX climbed just 8.1% in 2023 compared to the S&P 500’s 24.2% over the same period. Some of this can be attributed to retracing the lost ground from 2022, but not all of it. Significant selling was observed and it wasn’t exactly clear why.
Source: BMO Capital Markets; Statistics Canada.
“… the TSX also lagged many of its peers and even the Dow. And that underperformance has dragged into the opening weeks of 2024,” explains Douglas Porter, Chief Economist at BMO.
Adding, “And now we have a big clue as to who is doing the selling.”
Canada Has Never Seen Such A Large Foreign Investor Sell Off
Canada is typically seen as a safe haven for investors but some of that sheen has begun to tarnish. Foreign investors sold a net of $48.7 billion worth of Canadian equities in 2023. That number doesn’t just sound astronomical, it would have been unimaginable in 2019. It’s the largest annual outflow on record ever for Canada.
“Over the past three decades, a “normal” year would see net buying of about $12 billion—an inflow of about $1 billion a month, not the net outflow of $4 billion per month seen in 2023,” says Porter, emphasizing how unusual this trend is.
Weak Foreign Investment Has Been Weakening The Loonie
The heavy selling by foreign investors explains the issue but it’s hardly surprising. This is part of a larger trend of investors abroad pulling back on capital invested in the country. Foreign Direct Investment (FDI) being another glaring red flag.
“Combined with a steady net outflow in FDI, this helps explain why the Canadian dollar has struggled over the past year. Indeed, the surprise is that it didn’t suffer an even bigger setback,” he says.
Annual data isn’t available for Canadian FDI yet, but the past year wasn’t pretty. Canadians sent nearly $9 billion more abroad than foreign investors sent to Canada in Q3 alone. It’s generally not a great sign when domestic investors see more opportunities abroad than foreign investors see in a country.
Can anyone blame foreign investors? Outside of real estate investment, it doesn’t appear the country is interested in anything else. Housing has been swallowing the country’s investment, diverting capital from industry and directing it to housing. Even the country’s largest bank has warned the concentration will have a destabilizing effect on the economy.
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Bank of Canada
Canadian FDI
Canadian Interest Rates
Canadian Real Estate Prices
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Daniel Wong
Contributing editor, stats guy.
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Duddly-Do-Right 2 days ago
Says a lot about this once great country. I keep telling all of my friends – Canada is an empty country, there is NOTHING here but RE. Innovation and R&D are dead, small businesses are dead – we can expect a brain drain and nobody left to service those of us who stay when we retire. Perhaps AI and robots can take care of us, wipe our behinds as we wither away in an LTC home. Just as long as the RE Ponzi scheme can keep on going. Can anyone please state what other country in the world is dhumb enough to base its GDP and wealth on housing, like Canada?
Reply
Mark Sibthorpe 2 days ago
No surprise. I nailed this trend in 2014 when I called housing the Canary in the coal mine: https://fsim.ca/docs/ces.pdf
Reply
Patiently Waiting 19 hours ago
Very interesting article. I’m curious what you think needs to happen to restore housing affordability?
What do you make of the number of Institutions and Corporations buying single family residential real estate?
Thank you.
Reply
Duddly-Do-Right 1 second ago
Institutions and corps. like Tricon/Blackstone (thee two scumbags recently merged to become even stronger…) should be banned from buying up homes that they claim we could not otherwise afford to live in, unless they rent them back to us. We could afford them, if the likes of these stopped buying them up and pushing prices north. Approx. 2 years ago, the CEO of Tricon was interviewed on 60 minutes claiming his company is doing a service to us and making the “American Dream” possible. The interviewer was in clear disagreement and kept pushing how renting a house could be the “American Dream”? The CEO kept dodging the question. The interviewer cornered him on many accounts but what stuck in my mind was that the CEO said they plan to expand NORTH to Canada. And indeed they did. A few months after the interview, there was a tiny article in the paper about Tricon coming to the rescue as a landlord – LOL – yeah right. Tricon officially expanded to Ontario and BC, I believe it might already be in Alberta too.
That’s just one side of the whole thing… but who should be banned from supporting this nonsense is our very own Canadian Pension Plan. Our CPP money is heavily invested in REITs, which support this housing scam. Taxpayers deserve to have a say in whether they are in favor of having their money invested in a grand Ponzi scheme that is robbing future generations of the chance to ever become homeowners.
What’s awful about the whole thing is that the properties bought up by these corps. will never ever again be back on the market for sale, only for lease, and ONLY IF they ever go bankrupt. We can only wish the whole Ponzi scheme crashes and burns. I can’t imagine and fear where this country is heading….
Isn’t one of the main problems foreigners buying up real estate by means of loopholes???? No, they need to be banned and properly so. All of the dirty Chinese money that is destroying RE in BC and ON needs to stop flowing into the country.
Julia. Right on
GOOD We do not need this ivestment from foreign actors such as chiner ect.
The unfriendly policies of the liberal governments that are forcing investment Delay from Canada due to their radical approach to all aspects of business with any Canadian borders we need to change
Being Canadian has meant you wear a paperbag over your head – two if your are in B.C.
Nobody in right mind will invest in Canada. The government is unreliable and more worried about WEF agendas than its own citizens. Stupid high taxes, overbloathed very expensive inefficient public service. Now, with the new carbontax more business will leave and close. The immigrants they bring in have no skills and work culture. Bottom line, everybody is sick and tired of the Trudeau regime.
Canada is one of if not the richest country in terms of Natural Resources. But with this delapitated goverment and leader, they choose to hold housing at the top but yet ban foreign investors. The country has a lot of potential to be strong with resources and only innovation to utilize the not so suitable lands we have live in is the key.
Was bound to happen.
No Chinese investors should be allowed to invest in homes, businesses or land.
And our housing is a mess because of foreign students and the new immigraton flow
Lets ask JT what he can do to solve this. What? Oh yeah, he doesn’t pay attention to the economic issues. What about C Freeland? Right, she’s too busy hanginging out with the lofty people from the WTF, woops, I meant WEF planning how to subdjucate the world. What about,” We don’t invest in roads” Gilbault? Yes, too busy saving the planet. When will the population wake up to what is happening and be fed up enough to effect a change.? Maybe there is a chance that will happen next year. If not, Mr last investor leaving the country, don’t worry about turning off the lights, they will be going out on their own!
It happens all over again .. encourage investors to come to the country and when prices get hight say .. get this dirty money outside .. few years later … welcome to investors
Justin Trudeau shamefully bent over and handed Canada to China on a silver platter, showing weakness against the Chinese government’s bullying tactics and turning a blind eye to the laundering of dirty Chinese money.