Not only are the majority of sectors in the TSX under-represented, the Canadian economy is also very small, making up just 4 percent of the global market. TSX Top 10 Companies by Market Cap Company While there are a few strong utilities and telecoms to choose from across the country, the consumer retail, health care and technology sectors are sorely lacking. More than 70 percent of the TSX Composite Index is made up of only three sectors (Energy, Materials, and Financials). The Canadian market is very poorly diversified. dollar losing value, they also stand to gain with every small drop of the greenback. Given the current state of the US economy and the increasing demand for Canadian resources, look for this trend to continue in the short term.įoreign investors purchasing stocks directly on the Canadian exchanges (and thus in Canadian dollars), are not only protecting their investments against the U.S. Strong currency:ĭriven by the recent surge in commodity prices and depreciating US Dollar, the loonie has strengthened and now trades slightly above par with the greenback. While the six major banks in Canada held off on dividend increases during the financial crisis of 2008-2009, half of them have already raised their dividend this year, with the other half expected to do so by the end of 2011. This strong financial position means that Canadian banks now borrow at considerably lower rates than those of many of their international counterparts. Financially sound:Īccording to a survey by the World Economic Forum, Canada’s banking system is the soundest in the world, indicating that Canada’s major banks are generally healthy with excellent balance sheets. Investors can look to Canada for opportunities to capitalize on the increasing world demand for precious metals, oil and gas and agriculture resources. Canada also has the world’s largest source of potash, which is necessary for makingfertilizer. Another 10 percent are oil and gas companies. There are over 3,600 companies listed on the two Canadian stock exchanges, and nearly 1,500 are mining stocks. 60 percent of all public mining companies in the world are listed on the Toronto Stock Exchanges. THE PROS Resource rich:Ĭanada is the largest exporter of minerals in the world and that resource focus has created a thriving mining industry. Let’s take a look at the pros and cons of investing in Canada. The Canadian stock market has been handily out-performing other indexes around the globe, with the TSX Composite Index averaging 15 percent growth per year over the past 20 years.Īs safe and promising as the Canadian economy appears, there are also plenty of risks for investors. The Canadian landscape is rich in resources, the financial sector is fundamentally sound and our commodity-backed currency is one of the strongest among developed markets. Canada is considered to be one of the safest places to invest in the world.
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