Canada Just Saw The Largest Foreign Investor Sell Off Ever

[CdnFox]

 

https://betterdwelling.com/canada-just-saw-the-largest-foreign-investor-sell-off-ever/

Foreign investors sold a net of $48.7 billion worth of Canadian equities in 2023.

“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. 

 

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. 

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.  

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.

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. 

Edited February 23 by CdnFox

[CdnFox]

We are so screwed. I don't think most people get how bad this is.

Without business investment - we can't stay competitive, we can't diversify or expand our economy, we can't upgrade our factories or farms or even keep up with education requirements.

This is a disaster which will impact us for generations. We simply cannot afford to lose billions of dollars of investment in our economy, the impact is staggering