Connect with us

Investment

Posthaste: Business investment in Canada is about half what it is in America, study says – Financial Post

Published

 on


And it’s Canadian workers who are paying

Reviews and recommendations are unbiased and products are independently selected. Postmedia may earn an affiliate commission from purchases made through links on this page.

Article content

Good morning!

Advertisement 2

Article content

Business investment in Canada is about half what it is in the United States and is lower than in other OECD nations, says a new study.

“Business investment is so weak that capital per member of the labour force is falling, and the implications for incomes and competitiveness are ominous,” says the C.D. Howe Institute report.

Prices are rising, but real incomes are not. The study says among the likely reasons for that, which the Bank of Canada itself has highlighted, is weak business investment and consequently low productivity.

“Investment per available worker lower in Canada than abroad tells us that businesses see less opportunity in Canada, and prefigures weaker growth in Canadian earnings and living standards than in other OECD countries,” said William Robson, one of the authors.

Advertisement 3

Article content

New business investment per worker in Canada was slightly over 50 cents for every dollar invested in America per worker in 2021, the lowest it has been since the beginning of the 1990s.

Canadian business investment also falls short of other peer nations. Projections show that Canadian workers will only see 73 cents of new capital for every dollar in other OECD nations, excluding the U.S., in 2022, said the study.

The report calculates that there will be $20,400 of new capital per worker this year for OECD countries, aside from the U.S., compared with $14,800 in Canada.

So how did we get in this state?

The oil crash in 2014 didn’t help. Capital spending in the mining, quarrying, and oil and gas extraction industry reached its peak then and has been sliding ever since. From 2014 to 2021, investment in structures and machinery and equipment fell 61 per cent and 53 per cent, respectively.

Advertisement 4

Article content

The fact that capital spending has not rebounded during this year’s oil boom reflects both a “hostile” regulatory environment and investors who are skeptical about the future of fossil fuels, said the report.

In 2016, Canadian oil and gas workers were receiving almost as much investment per person as their American counterparts.

By 2020, they were getting barely more than half as much.

Another contributor to low business investment in this country is the oversized share going to residential investment, says the report. Consumption and residential investment together have been greater than 85 per cent of GDP for an “unprecedented” seven years.

Other conditions discouraging business investment, according to C.D. Howe Institute, include:

Advertisement 5

Article content

  • Financers of investment appear to favour larger companies over small or medium-sized businesses. In 2018, the total of outstanding loans to smaller businesses hit its lowest since 2000. And the spread between bank loans to smaller firms and to larger companies is higher in Canada than almost any country in the OECD.
  • Uncompetitive corporate taxes: C.D. Howe Institute advocates lowering the corporate tax rate from 15 per cent to 13 per cent starting in 2025. A temporary investment tax credit would encourage growth
  • Regulatory uncertainty

The report says that the federal government’s own 2022 budget flags the threat low business investment poses to living standards.

It cites an OECD forecast that projects that unless investment increases, Canada will have the lowest per-capita GDP growth of any OECD country between 2020 and 2060.

Advertisement 6

Article content

“The prospect that Canadians will find themselves increasingly relegated to lower value-added activities relative to workers in the United States and elsewhere, who are raising their productivity and earnings faster, should spur Canadian policy makers to action,” said the report.

_____________________________________________________________

Was this newsletter forwarded to you? Sign up here to get it delivered to your inbox.
_____________________________________________________________

HOPE BLOOMS A young woman takes photographs of burnt cars with painted sunflowers in Irpin, Ukraine. The destroyed cars were collected from the area following Russia’s assault on Kyiv’s suburbs, from which they ultimately retreated. Photo by Alexey Furman/Getty Images

Advertisement 7

Article content

___________________________________________________

  • Prime Minister Justin Trudeau will hold a bilateral meeting with the Chancellor of Germany, Olaf Scholz. Deputy Prime Minister and Minister of Finance Chrystia Freeland, Minister of Foreign Affairs Mélanie Joly, Minister of Innovation, Science and Industry François-Philippe Champagne, and Minister of Natural Resources Jonathan Wilkinson will also be in attendance.
  • Pierre Poilievre to hold a press conference on energy policy.
  • Annie Koutrakis, Liberal MP for Vimy, and Andrew Leeming, vice-president of operational excellence at Saskatoon Airport Authority, will make an announcement related to federal funding support of airport recovery in Saskatoon.
  • Earnings: Zoom Video Communications

Advertisement 8

Article content

___________________________________________________

 

_______________________________________________________

_____________________________________________

__________

If you thought inflation was bad in Canada, spare a thought for the poor Britons. U.K. inflation in July beat expectations for the third month in a row, data showed last week, this time breaching 10 per cent. That’s the first double-digit increase since February 1982.

Advertisement 9

Article content

“If there were any doubts that the BoE would unleash another aggressive hike, this number put those to rest,” wrote BMO senior economist Jennifer Lee about the chart below.

Nor is that the peak, Lee said. “Look for over 13 per cent inflation in the fall, if the BoE is correct.”

__________________________________________

Cancelled and delayed flights, lost baggage, and incredibly long wait times are some of the issues that Canadian travellers are experiencing this summer.

Despite Canadian airlines reducing their summer flight schedule at the end of June, many travellers are still having trouble receiving compensation for travel disruptions. If that sounds like you, our content partner MoneyWise has what you need to know to get compensated if your flight is cancelled in Canada.

____________________________________________________

Today’s Posthaste was written by Pamela Heaven (@pamheaven), with additional reporting from The Canadian Press, Thomson Reuters and Bloomberg.

Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at posthaste@postmedia.com, or hit reply to send us a note.

Listen to Down to Business for in-depth discussions and insights into the latest in Canadian business, available wherever you get your podcasts. Check out the latest episode below:

Array

Advertisement

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

Adblock test (Why?)



Source link

Continue Reading

Investment

How to Start Investing With Little Money – Yahoo Canada Finance

Published

 on


analyze data

Written by Tony Dong at The Motley Fool Canada

Successful investing involves holding a diversified portfolio of stocks, staying the course, and making consistent contributions. All of this helps take advantage of compound interest, which Albert Einstein described as “the eighth wonder of the world.”

Still, for investors starting out with less money (think $1,000ish), investing can be daunting. Some stocks have high share prices that can be a barrier to entry for new investors. Trying to buy enough shares of different companies to stay diversified can be difficult.

This can be discouraging, but fear not! There is a solution if you’re strapped for cash. With this alternative, even the smallest of investment portfolios can grow strongly.

ETFs are the solution

Thanks to exchange-traded funds (ETFs), investors no longer need vast sums of money to buy dozens of individual stocks. ETFs can hold a basket of up to thousands of various stocks. Some ETFs are basically all-in-one stock portfolios that are managed on your behalf by a professional. They trade on exchanges like any other stock with their own ticker symbol.

This approach is capital efficient. For instance, an ETF might trade at a price of $20 per share yet hold over 1,000 stocks in it. With your $1,000, you can now buy 50 shares of that ETF and gain proportional exposure to all of its underlying companies. This way, you become diversified without needing to buy 1,000 different stocks!

Index ETFs are ideal

ETFs do have a cost, though — the management expense ratio (MER). This is a percentage fee deducted from your investment on an annual basis. For example, an ETF that charges a 0.05% MER would cost an annual fee of 0.05 * $1,000 = $5 on your $1,000 investment.

Keeping this as low as possible is ideal. In general, the ETFs with the lowest MERs are index funds. These are passively managed investments that track an existing stock market index, like the S&P 500. With index funds, fees are low since the fund manager isn’t actively trying to pick stocks, so fund turnover remains at a minimum.

I like the S&P/TSX 60 Index. This index tracks 60 blue-chip, large-cap stocks listed on the TSX. Buying the S&P/TSX 60 is a great way to track the long-term performance of the Canadian stock market while gaining access to a portfolio of dividend stocks.

Why the S&P/TSX 60?

From 2000 to date, the S&P/TSX 60 has returned a compound average growth rate (CAGR) of 6.59% with dividends reinvested. This is a respectable return that could turn your initial $1,000 deposit into six-figures over two decades with modest contributions. Let’s use a real-life example to see this in action.

Imagine you started investing in 2000 as a broke 18-year-old student with just $1,000 to your name. You invest it all in an index fund tracking the S&P/TSX 60. Every month thereafter, you scrounge up $100 and invest it promptly in a disciplined and consistent manner.

After holding the ETF for 22 years, consistently putting in $100 every month, reinvesting all dividends, and never panic selling during crashes (even through the Dot-Com Bubble and the 2008 Great Financial Crisis), you would end up with $126,353.

If you started with more than $1,000, held longer, or contributed more than $100 monthly, your returns would have been even better. With this strategy, maximizing your contribution rate and staying invested is key. Don’t try and time the market!

Do you want to implement this passive, hands-off investing strategy? A great ETF to use is iShares S&P/TSX 60 Index ETF, which has a low MER of just 0.20%. XIU trades at around $30 per share right now, making it accessible to investors with a smaller portfolio.

The post How to Start Investing With Little Money appeared first on The Motley Fool Canada.

Before you consider iShares S&P/TSX 60 Index ETF, you’ll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in September 2022 … and iShares S&P/TSX 60 Index ETF wasn’t on the list.

The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 21 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks * Returns as of 9/14/22

More reading

Fool contributor Tony Dong has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

2022

Adblock test (Why?)



Source link

Continue Reading

Investment

FPIs pump in Rs 8,600 crore in September; pace of investment slows – Economic Times

Published

 on


After infusing more than Rs 51,000 crore last month, foreign investors have slowed down the pace of equity buying in India in September so far, as they invested a little over Rs 8,600 crore, on sharp depreciation in rupee. Going forward, Foreign Portfolio Investors (FPIs) are unlikely to buy aggressively amid rising dollar, VK Vijayakumar, Chief Investment Strategist at , said.

Indication of further rate hike by the US Federal Reserve, fears of a recession, depreciating rupee and continued tensions in Russia and Ukraine will affect FPI flows, Basant Maheshwari, smallcase manager and Co-founder, Basant Maheshwari Wealth Advisers LLP, said.

The latest inflow comes following a net investment of Rs 51,200 crore in August and nearly Rs 5,000 crore in July, data with depositories showed.

FPIs turned net buyers in July after nine straight months of net outflows, which started in October last year. Between October 2021 till June 2022, they sold Rs 2.46 lakh crore in the Indian equity markets.

According to the data, FPIs have bought equity to the tune of Rs 8,638 crore during September 1-23.

However, FPI activity has turned highly volatile with alternate bouts of buying and selling. They have sold on seven occasions in this month so far. In fact, in the last two trading sessions, they have pulled out Rs 2,500 crore from the Indian equity markets.

Vijayakumar has attributed increased FPI selling in recent days to rising dollar and rising bond yields in the US.

In addition, the 75 basis points (bps) rate hike by the US Fed for the third consecutive time to control rising inflation and the surging dollar have impacted FPI buying, Wealth Advisers LLP’s Maheshwari said.

“The US Fed’s hawkish tone on interest rates and the fear of a global recession fuelled pessimism among investors,” Shrikant Chouhan, Head – Equity Research (Retail), Kotak Securities, said.

Foreign investors have been slowing down their equity buying in India since September. The scenario turned adverse after a hotter-than-expected inflation report dashed hopes that the US Fed would scale down its rate hikes in the coming months.

The August US inflation edged 0.1 per cent higher from the preceding month to 8.3 per cent. Compared to one year ago, it eased as it was 8.5 per cent previously.

The aggressive stance of the central bank chair, which made it apparent that the Fed will once again go for another 75 bps hike for the fourth consecutive time in its next meeting as well, dented sentiments and turned investors risk averse towards emerging markets like India, Himanshu Srivastava, Associate Director – Manager Research, Morningstar India, said.

Also, currency movement is another factor that FPIs track very closely as it has a significant impact on the returns that they make on their investments in any country. Therefore, the outflows tend to accelerate in a scenario of rapid currency depreciation.

The sharp depreciation in Rupee as it touched all-time low of Rs 81.09 against the dollar does not augur well for foreign investments, he added.

“With the dollar index above 111 and the US 10-year bond yield above 3.7 per cent FPIs are unlikely to buy aggressively, going forward. The situation will change if the dollar index and US bond yields decline,” Vijayakumar said.

In addition, foreign investors have pumped in Rs 5,903 crore in the debt market during the month under review.

Apart from India, FPI flows were positive for Indonesia and Philippines, on the other hand, South Korea, Taiwan and Thailand witnessed outflows during the period under review.

Adblock test (Why?)



Source link

Continue Reading

Investment

Top 3 investment bets for millennials to beat market volatility and make money – Economic Times

Published

 on


There is a thrill for many to do things that are so-called out of the ordinary. As mentioned in the first part of this story, millennials are the impatient investor class who are all up to ignore the stereotypes, bet even on riskier investments.

On that note, in the first part we talked about three new-age investments that go beyond the ordinary for the millennials or the digital natives. To know more about millennials and more about the investment options, you can read the first part here:
Top 3 new-age investment bets for millennials looking to take risk and earn big

Nonetheless, it is never bad to be cautious. A roller coaster ride is fun at the amusement parks but when it comes to using the hard-earned money, no one will be keen to lose their savings. It is often said volatility is the daily crux of the market. Experts also opine it can be a motivation to capitalize on the imbalances.

“Volatility is the ghost that haunts you only if you look at it. The best way to avoid volatility is to ignore it; don’t trade into a market when there’s euphoria or out of it when there’s panic. Instead, constrict and hold a diversified portfolio for the long term, or better still, a mutual fund, which isolates individuals from volatility shocks,” Utkarsh Sinha, managing director at boutique investment bank firm Bexley Advisors said.

The economy too is at a volatile juncture with slower-than-expected growth recovery and galloping inflation. For stocks, the plausibility of earnings growth is diluting and valuation is said to trade below the long-term average. So, what could be better than to have some safe options even during a volatile period, enjoy the thrills of new-age investments and still achieve the monetary goals?

Girirajan Murugan, the chief executive officer at FundsIndia, lists more instruments that will help millennials to avoid some volatility:

InvIT – Infrastructure Investment Trust

This involves a trust channeling investments from individuals/institutions toward infrastructure projects. In a developing country like ours, the demand for good infrastructure is huge and perennial, in my opinion, Murugan said, adding that an investment in an InvIT with a good management will be a fruitful investment for the long term.

However, most infrastructure projects are subject to government regulations and interference. Change in the political space could affect such investments. Lack of choices to choose from is a severe disadvantage. Being a budding avenue, the participation in this investment is comparatively low. This means that selling them in the current market could be difficult. However, if the market for this type of investment takes off, then this concern will be void.

REIT – Real Estate Investment Trust

Similar to InvITs, REITs pool resources to invest in real estate assets. “Real estate investment has not lost its flair even today, despite being a conventional investment. That’s exactly why I’d like to call this a “grandfather-approved investment,” Murugan said.

By enabling part ownership, REIT has made real estate more accessible for all sections of people. REIT investments buy you ownership to the property in question, proportionate to the investment made. The income from this asset shall also follow the same proportion.

There are 2 categories of REIT – tradable and non-tradable. Some non-tradable REITs disclose the share values only after 18 months. Non-tradable REITs also carry the disadvantage of less liquidity.

ESG (Environmental, Social and Governance) Investing

In this mode, the investment is directed toward the development of businesses that toil for the betterment of the world. One can either invest through readily available ESG Mutual Funds, or they can identify the right companies and invest in their stocks.

“As far as ESG investing is concerned, it’s a thumbs up from me, and I say this from an ethical standpoint. The reason is that a good planet and a harmonious society are something we can’t survive without. When it boils down to it, man will eventually be forced to choose survival over profitability. If you choose to do it for the purpose, rather than for profitability, this may be one of your best investments,” Murugan said.

ESG assets are on track to exceed $53 trillion by 2025 and represent more than a third of the $140.5 trillion in projected total assets under management (AuM), according to Bloomberg Intelligence.

Bexley Advisors’ Sinha said millennials are at the best point of their lives currently to invest, as they have the bulk of their lives ahead of them. With these options explained, the millennials perhaps have better insight on the options available. Remember how we introduced the generations in the first part of the story and talked about an angry young man from Bollywood? Well, keep the swag and invest with prudence.

Adblock test (Why?)



Source link

Continue Reading

Trending