Quote:
Originally Posted by Hackslack
I mean, obviously they chose to take their money and spend it outside Canada. 2 times the amount they spent in Canada… but why?… the most exodus of dollars in modern Canadian history… they chose to spend elsewhere in more investor friendly regulatory jurisdictions…
As the report states:
“Canada is emerging from an unprecedented capital recession. The renewed interest comes after a decade of weak business investment, stalling productivity, and stagnating living standards. Between 2015 and 2024, more than $1 trillion of investment exited Canada—the largest capital exodus in Canadian history. For every dollar of inward FDI, two dollars exited.”
Private sector determined it was more favourable to invest outside Canada than within.
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Sure, and in 'normal times' it made sense for some successful businesses to expand into other markets. The article was written in the context of future opportunities for more investment in Canada, given recent political events. Obviously, the Canadian market is much smaller economy than our neighbour to the south. Investment elsewhere in the past has not necessarily been at the expense of Canadian investment.
As Loco101 pointed out, Canadian lenders have invested in U.S. retail branches, wealth management, and commercial lending. The obvious reason is to tap a much larger market. TD is now the 10th biggest bank in the US, starting 20 years ago with $20bn US to buy regional banks, and now with $366bn in asssets in the US. There are thousands of banks in the US, so it's not been too difficult to find reasonably inexpensive opportunities for acquistion. There are only six banks of any size in Canada, (if you include National), and other than RBC absorbing HSBC there aren't as many opportunities for investment in the banking industry here. Scotiabank has an international presence in Latin America, the Caribbean, Europe, and Asia.
Not all the investments in the US were a good idea - but it's understandable why the banks might think it was a good business decision. TD in particular didn't prevent money laundering and so have had to pay out US$3 billion in fines and accept an asset cap barring the bank from growing above a certain level in the U.S. (which means that they'll be looking at other ways to invest anyway). With so many alternatives, US banking is less profitable too.
With Canadian lumber companies expanding into the US, there's a shortage of available lumber here as fires and beetle-struck areas of forest reduce the available fibre. In the US there have been opportunities to acquire poorly invested mills to modernize and run successfully. Softwood Lumber tariffs only apply to fibre shipped to the US from Canada - if a Canadian company sells lumber there from a US mill they just pay normal taxes on profits.
Stantec are based in Edmonton, but they can only get so much work in Canada. They could stay a modest Canadina success, or continue to expand operations in the rest of North America, Australia, New Zealand, Europe, and the Middle East. That seems to not be a 'bad thing' unless you view investment outside Canada in that light.
The 'exodus of dollars' argument ignores the profits that then come back to Canada, (or at least to Canadian shareholders) if those outside Canada investments are successful.
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