Canadian Investment Opportunities

Abstract

CANADA, IN MY OPINION, is one of the most interesting areas for investment, for the following reasons: 1. Stability of Government; 2. Strength and conservatism of Government financial policies; 3. Growth. The ten years since the end of World War II have witnessed a population increase of 24%, a national volume of output which has risen by more than one third, and a dollar value of manufactures which has more than doubled. The gain in personal consumption expenditures has outstripped that of the United States, as has industrial production, private capital expenditures, total corporate profits after taxes and gross national products. This growth has been the result of Canada's unique position and its unusual characteristics. Its position as a friendly, next door neighbor of the United States gives it a vast market. The United States is by far Canada's largest trading partner. Further, in the past thirty years the importance of the United States as an export market has increased sharply as the United States has increased its industrial activity and further depleted many of its natural resources. The United States' share of Canada's exports has risen from 40% of the total to about 60% in recent years. Inasmuch as Canada is short on fabricating facilities in many areas, the United States' share of Canada's imports is greater although over the same thirty year period it has grown from about 67% to about 72 % of the total. In contrast with the expansion of trade in the United States, Canadian trade with the United Kingdom has diminished in relative importance during that period. Canadian exports have declined to 17% of the total and imports have shrunk to 10% of the total. This enormous trade with the United States has boosted Canada to a position of fourth in international commerce and on a per capita basis it exceeds that of most other leading trading countries. Since Canada is a relatively unexplored, undeveloped nation today with a population of only 16 million people, and its vast area of 3,800,000 square miles contains many minerals vitally necessary to our modern civilization, it is quite evident that this growth shall continue over the long term. I would believe that the largest single influence in the rate of this growth will be the rate of industrial activity in the United States. Canada has good seaports on both its coasts which put it in an enviable position to serve world trade. Further, additional strength may be attributed to the country and its relations with the United States because the people are largely English speaking and have a democratic government and the country is in a strategically strong position as a buffer between the United States and Russia. All of these factors combine to make Canada an ideal place for long term capital investment. Indicative of this fact is that the value of United States' investments in Canada in 1954 amounted to $9.6 billion, a new high rate and about double the value at the end of the war. Foreign investors now own about one tenth of the broad field of Canadian industry and commerce. Additional proof, if it were needed, could be supplied by the success of investment trusts formed in recent years for the sole purpose of investing in Canadian common stocks. As stated before, Canada is rapidly developing as a mineral storehouse for 166 million Americans as the great mineral deposits of the United States become depleted. It is, therefore, my opinion that in this area lies the greatest opportunity for investment.