Investing in Canadian Capital Markets: More than just oil and gas.
Investing opportunities are abundant in Canadian capital markets. Utilizing our two main equity markets, the Toronto Stock Exchange and the TSX Venture Exchange, investors in Europe can access a multitude of securities in specific industry sectors.
Canada is a global leader in energy, energy transition, critical materials and precious metals for public companies
Geographically, Canada is the second largest country in the world, with a relatively small population of 38 million. It’s a country that prides itself on stability. In our view, several Canadian-specific features are the differentiating factors:
Canada ranks highly for ESG practices among nations with the largest oil reserves
It has robust equity markets. The TSX and the TSXV surpass many global benchmarks for listing, market capitalization, and trading volumes. Typically, the average financing size on the TSX is $68 million, and $3.5 million for more junior companies listed on the TSXV, allowing investors access to early-stage opportunities.
Canada is fortunate to possess resources that are in the ground and available for development today. We have what the world needs. Just one example: critical minerals, such as lithium, that have a key role in the future of low and zero-emission transportation.
A strong public / private partnership that is working to maximize Canada’s leading position in many industries. The collaboration that is happening between industry, government (both federal and provincial), and our leading universities is unique globally.
Currently, the Canadian dollar is towards the lower end of its recent range vis-à-vis the U.S. dollar allowing for advantageous pricing in our cross-border exports. The Bank of Canada has recently (and aggressively) raised interest rates in Canada over the past few months, strongly underpinning the currency.
It is a leader in the New Economy. Canada is considered a global leader in its effort to protect the planet. According to a Fraser Institute report, which offered a ranking system of 33 high-income countries, Canada came in 10th place in a range of measures that included air and water quality, greenhouse gases, and biodiversity. Canada was only three points behind third-place New Zealand, with Sweden ranking first.
Canada’s role in the North American zero-emission vehicle and battery market is developing. It already has a head start. Over 80 % of the country’s electricity production is non-emitting — owing to our wealth of hydroelectric resources, nuclear, and a small but growing share of wind and solar. For comparison, the U.S. and Australian grids are about 40 % and 20 % non-emitting respectively (source, Business Council of Canada).
Demographics work in Canada’s favour. Canada has brought in more people on a per capita basis, than any other major developed nation. Approximately 300,000 to 400,000 skilled immigrants arrive per year, and immigrants to Canada are typically better educated than native-born.
It is an exciting time for this young nation. With its vast natural resources, an educated and innovative population and a capital structure that offers opportunities for European investors, Canada has never looked more attractive.
Tim Morton, CFA
Canadian Capital Markets Analyst
Peterson Capital