Through its website and daily newsletters, The Peak (a ZoomerMedia property) offers Canadians the news they need to understand business, tech, and other must-know stories.
In this edition of the Dispatch, The Peak looks at why foreign investors are pulling out of Canada’s stock market and why condo listings are piling up in major Canadian cities.
Canadian Stock Market Spooks Foreign Investors
Foreign investors have pulled back from Canada’s stock market like they put their hand on a hot stovetop.
Driving the news: A record $35 billion in foreign cash was withdrawn from the Canadian stock market last quarter, according to new Statistics Canada data. The reason for the retreat was undoubtedly U.S. tariffs stoking investor worries about the soundness of Canada’s economy.
- However, Canada’s main stock index still grew slightly over that time. This was likely due to the concurrent selloff in U.S. stocks, with patriotic Canadian investors putting some earnings back into their home market.
Why it matters: Investors crave certainty, and with more exposure to the erratic U.S. than pretty much any other country, Canada’s stock market can’t deliver that right now. And with a relatively small home base, domestic investors can’t prop up the market all by themselves.
Yes, but: Canada’s stock market does have its advantages in uncertain times. Namely, its high concentration of “defensive sectors” that tend to stay steady no matter the investing climate, like financials and energy.
Big picture: Thanks in part to this strength, Canada’s main stock index has continued to grow this quarter, even rattling off a 10-day winning streak and setting a new record high. But to avoid potential future tariff-related difficulties, a bit of decoupling from the U.S. is needed. —Quinn Henderson
Condo Listings Pile Up In Big Cities
If you’re in the market for a condo, the price still may not be right, but there are plenty of listings to pick from.
What happened: Canada’s ritziest real estate markets are being flooded with so many listings that there’s now a shortage of signposts to hang “For Sale” placards in Vancouver.
- The latest data shows there are more than 16,000 homes listed for sale in Metro Vancouver (up 29.7 per cent from last April) and over 27,000 listings in the Greater Toronto Area (up 54 per cent).
Why it matters: After years of a supply-constrained market when it seemed like every new listing sparked a frenzied bidding war, the surge of active listings is now starting to push home prices down and give buyers more power to shop for a deal.
Yes, but: Condos make up a large chunk of listed properties, at 46 per cent in Vancouver and 35 per cent in the GTA, and are often not designed for young families looking to buy their first home.
- The average size of condos built in 2016-17 was 665 square feet — maybe enough space for a single person or couple, but a tight squeeze for kids.
What’s next: In the past, investors would likely have scooped up these condos to rent to temporary students and immigrants. But with those taps of demand turned off, it’s unclear who the buyers for these tiny condos will be — and how far prices will fall before we find out. —Taylor Scollon
Visit The Peak’s website and sign up for the free daily email on Canadian business, tech, and finance that you’ll actually enjoy reading.
RELATED:
How Shakespeare Can Help Us Put Meaning Back In Money
8 Apps To Help You Save Money and Stay on Budget
The Non-Retirement Plan: How Paul Doyle, 76, Took His Entrepreneurial Spirit to the Caribbean
