Foreign investors are avoiding Canada

Here’s the evidence foreign investors are seriously avoiding Canada — despite Morneau’s denialism

Source: Financial Post
Author: Steven Globerman

Many business managers and economists have publicly expressed concern recently about a deteriorating environment for corporate investment in Canada. Federal Finance Minister Bill Morneau has rejected these concerns, notwithstanding data showing that capital investment growth has slowed dramatically in the past few years.

Perhaps the most informative “vote” on the competitiveness of Canada’s private sector is the behaviour of foreign investors. Domestic investors exhibit a well-known bias toward investing in their home countries. Foreign investors, however, are more inclined to identify and evaluate candidate investment locations in a more balanced manner.

Furthermore, foreign investors engaged in “direct investment” generally own majority or full ownership shares in the Canadian businesses in which they invest. Since direct investors are involved in the management of the foreign assets they acquire, they are likely to be more aware of business conditions on the ground compared to passive portfolio investors

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