Michael Babad
Globe and Mail Update Published on Wednesday, Jul. 14, 2010 7:34AM EDT
Last updated on Wednesday, Jul. 14, 2010 9:42AM EDT

International investors eye Canada

Foreign investors are "getting religion" on Canada's strong economic performance compared to other countries, and their interest will have staying power, CIBC World Markets said today. "Having spent the better part of the last month on the road, seeing investors across the U.S. and Asia, we can safely say that Canada is increasingly on the lips and minds of international investors," economist Warren Lovely said in a report. "... Indeed, it's hard to recall a time when the country possessed such relative, if not absolute, strength."

On Canada's weighting in global investment portfolios, Mr. Lovely noted:
• Canada is emerging as a "growth leader" in the developed world.
• A well capitalized banking industry is seen as a strategic advantage. "Many foreign investors took note of Canada's limited direct exposure to slow-growing Europe and success in increasing exports to the faster-growing BRIC [Brazil, Russia, India and China] region."
• Canada's fiscal standing is strong, and provinces aren't feeling the same level of heat as some U.S. states.

Challenges remain, Mr. Lovely said, such as how Canada will be affected by slower growth in the United States and how the strong Canadian dollar will affect manufacturing. Nonetheless, Canadian governments "are courting international investors from a position of strength, hardly beholden to foreign capital, but happy to take full advantage of a healthy appetite for Canadian fixed income product."