Skip to main content

Foreign capital inflows growing

Canada has always been an inconsequential portion of the world economy – the “boring American cousins”. Early in 2009 the American TIC data started showing a trend: Americans investing in Canadian securities was growing.  This American trend is expanding with global investors investing “heavily” in Canada.  

Statistics Canada released data showing the growing inflow of money into Canada, equivalent to 7.6% of our GDP.  Net foreign purchases of long-term securities (bonds and equities) rose to $23.7 billion in May 2010. Over the past 12 months total foreign direct investment into Canada totaled $121 billion. 

 
(Statcan data via global Insight)

Continuing a global trend ¾ of all these inflows have been into bonds:  first and foremost, Federal government followed by corporate bonds and then provincial bonds.
 
(Statcan data via global Insight)

What makes Canada such an attractive investment destination?

Canada got the deficit religion early; in the mid 90s, the Federal government undertook massive cost control programs, slashing budgets and expenditures.  At the time global economic growth was around 6% per annum.  Now that “Deficits matter”, Canada’s early action is admired and as the only G8 country that will see a reduction of sovereign debt from 86% in 2008 to 76% in 2014 is looking like a heaven of fortitude.

The Bank of Canada recognized that a stronger economy can sustain higher interest rates – and today (20th July) increased (for the second time this year) base interest rates by another 0.25%.  Inflation pressures appear to be under control, the Canadian dollar appears to be trading around its far value of 0.92 to the U.S. dollar.  Some economists see Canadian interest rate rising by another 1.25% by the end of 2011, and near 2.5% by the end of 2015.  Although, the Bank of Canada’s GDP growth forecast of 2.9% and 2.1% in 2011 and 2012 may temper that trend.

Popular posts from this blog

The end of Tesla?

 it takes a special kind of idiot, to think that he can antagonize his entire customer base, and think that it will not impact his business. When Elon Musk went to work for Donald Trump, and created the doge department, he antagonized every liberal, and these people represent 90% of his client base.That’s not a brilliant move. Now Elon Musk is worth hundreds of billions of dollar, so he shouldn’t care a great deal, however, he needs to care because of several other issues. The cyber truck has been a disaster, most have had to be recalled because of defective glue, it’s not a truck, it’s not a car, it’s noisy, relatively uncomfortable, but great as a development platform. What Tesla has learned in making car manufacturing more seamless is truly amazing. The problem was that Elon Musk was so pissed with the Democrats, and with Joe Biden, in particular because of some slight, which were just plain stupid too. By the way, that he decided to support with hundreds of millions of dollar, ...
Post a Comment
Read more

Donald Trump‘s bad bargain

 The entire of 2023 and 2024 when Donald Trump was running for the White House, his mantra was no war, that the Ukraine conflict would be resolved in a day, and that he would do everything not to involve America and war. How the world has changed! He finds himself facing three conflicts; Ukraine, still going on almost 5 months after he became president. Gaza, an unspeakable crime against humanity, is obviously going to go all the way to its bitter end. And finally, Israel’s attack against Iran. It’s important to note, that Benjamin Netanyahu first indicated at the United nation that the Iranian were 3 to 5 years away from having the nuclear bomb. He made that statement in 1995. Therefore, no one is surprised that he uses the same two lines every so often. It’s entirely possible, that 30 years after he first announced it, that Iran has finally developed the bomb. It’s also remarkable that Iran, local power has been destroyed, from Yemen, to Syria, via Lebanon and Gaza to small exten...
Post a Comment
Read more

TACO again, but worst!

 Donald Trump got the rare earth metals that he had thrown away on April 2, liberation day as he called it. What did the Chinese get in exchange? The whole deal, is on the wrap right now. But let’s be clear. It’s the Chinese that have the upper hand.Some of the materials made by the Chinese, are simply unavailable anywhere else. suspicions are that the Chinese got the high-end chips that they lost under Biden. Tariffs will probably return to the level of April 1, and in the end Donald and his friends got nothing for it. It gets worse, Chinese exports to United States are down 40%. The Chinese have found new markets, I probably never gonna buy American grain again. Once again, Donald Trump proved he’s a great negotiator. He got absolutely nothing for his Showmanship. He told the world, that everyone would come and kiss his ass, instead they’re laughing At him. There’s no joke about Donald Trump, a 25 and inherited a huge fortune and proceeded to make it a small one. Bottom line, the...
Post a Comment
Read more