Foreigners Buy Canadian Stocks At Fastest Pace Since 2017

Foreign investors are returning to Canada’s $3.2-trillion U.S. stock market after fleeing during the height of the COVID-19 pandemic.

The nation’s equities are on pace to record the highest foreign inflows since 2017, adding $22.7 billion U.S. from January through the end of April this year, according to Statistics Canada.

The S&P/TSX Composite Index has rallied nearly 16% this year, outpacing the S&P 500 Index’s 12% rise, thanks to its large weighting in cyclical and value stocks.

Financial firms, materials stocks and oil and gas companies -- all beneficiaries of accelerating economic growth -- make up 56% of Canada’s benchmark index.

Rising commodity prices, a strong earnings outlook and an accelerating vaccine rollout have boosted investor confidence in Canada.

The country’s economy expanded at a 5.6% annualized rate in the first quarter, despite the headwind of coronavirus containment measures.

A rising Canadian dollar has also helped encourage capital flows from foreign investors. The loonie is the top-performing currency against the U.S. dollar among its G10 peers this year, rising more than 3%, partly because of higher prices for oil, lumber and other commodities.