Canada Buying the World more than the World Buying Canada
Toro @ Fri Oct 27, 2006 9:54 am
There has been a lot of consternation in Canada about foreign buyers snapping up Canadian companies. However, most Canadians may be surprised that Canadians are actually buying more of the world than the world is buying of them.
From the excellent Worthwhile Canadian Initiative blog
$1:
Canada's shrinking stock market
The Financial Times reports on a series of high-profile foreign takeovers of Canadian companies:
This is getting serious: on current trends Céline Dion might be the only Canadian icon left. Many others are being picked off by foreigners. This year’s disappeared include Canada’s oldest corporation, the Hudson’s Bay Company; its two biggest nickel miners, Inco and Falconbridge; its steelmaker Dofasco; and ATI, its second biggest technology company.
Is Canada’s stock market really vanishing? There is some numerical evidence. Foreign takeovers have reached US$78bn in 2006 to date, equivalent to 6 per cent of average 2006 market capitalisation, according to Dealogic. On a net basis, things are more balanced. Thanks to the efforts of, for example, the biggest remaining miner, Barrick Gold , which bought US-based Placer Dome a year ago, the net attrition to foreign takeovers has been 2-3 per cent of market cap since 2004.
The reason for this is pretty simple: Canadian investors are selling their shares in Canadian companies and buying stocks in other countries. Since 2000, Canadian net purchases of foreign stocks were about $C 60b more than foreigners' purchases of Canadian stocks. Quite sensible behaviour. As the FT notes,
Canada’s equity market [has] two problems... The first is skewed composition: energy and mining have a weight of 44 per cent. Financials comprise another 31 per cent, concentrated in the “big five” banks. It is just as well restrictions on local pension funds investing overseas have been abandoned: the market is a bizarre benchmark.
The Financial Times reports on a series of high-profile foreign takeovers of Canadian companies:
This is getting serious: on current trends Céline Dion might be the only Canadian icon left. Many others are being picked off by foreigners. This year’s disappeared include Canada’s oldest corporation, the Hudson’s Bay Company; its two biggest nickel miners, Inco and Falconbridge; its steelmaker Dofasco; and ATI, its second biggest technology company.
Is Canada’s stock market really vanishing? There is some numerical evidence. Foreign takeovers have reached US$78bn in 2006 to date, equivalent to 6 per cent of average 2006 market capitalisation, according to Dealogic. On a net basis, things are more balanced. Thanks to the efforts of, for example, the biggest remaining miner, Barrick Gold , which bought US-based Placer Dome a year ago, the net attrition to foreign takeovers has been 2-3 per cent of market cap since 2004.
The reason for this is pretty simple: Canadian investors are selling their shares in Canadian companies and buying stocks in other countries. Since 2000, Canadian net purchases of foreign stocks were about $C 60b more than foreigners' purchases of Canadian stocks. Quite sensible behaviour. As the FT notes,
Canada’s equity market [has] two problems... The first is skewed composition: energy and mining have a weight of 44 per cent. Financials comprise another 31 per cent, concentrated in the “big five” banks. It is just as well restrictions on local pension funds investing overseas have been abandoned: the market is a bizarre benchmark.
http://worthwhile.typepad.com/worthwhil ... rinki.html
Mr_Canada old @ Fri Nov 03, 2006 9:53 pm
Re-he-heeeeaaaalllyyy......
Mr. Canada is very happy mood now.
Though, I still wouldn't mind getting HBC, Tim Hortons and all our beer back. 
Arctic_Menace @ Fri Nov 03, 2006 10:24 pm
While this is barely comforting, it's more about the fact that people are buying away our national symbols, and we're just investing in those of other people. Hardly comforting...
Canadaka @ Fri Jan 19, 2007 3:54 am
this is an interesting stat.
But I still think that some of these national symbol type companies should be protected somehow, like how we might protect a historic building.
random side track...
I was recently researching IP based business phone systems and a lot of these companies are Canadian. When ever I am looking at a company I always like to look at there contact page and see where there headquaters are.
sandorski @ Fri Jan 19, 2007 1:44 pm
It's all part of, The Plan.
QBC @ Fri Jan 19, 2007 1:58 pm
So what, Canadians should be buying back Canada not buying stuff overseas
sandorski @ Fri Jan 19, 2007 4:11 pm
QBC QBC:
So what, Canadians should be buying back Canada not buying stuff overseas
True enough.