Canadian direct investment abroad rises 12% in 2024

Investing.com -- According to a report from Statistics Canada, the stock of Canadian direct investment abroad rose by $264.8 billion (+12.0%) to reach $2,473.5 billion at the end of 2024. This increase was primarily due to earnings reinvested by Canadian direct investors in their existing foreign affiliates, mergers and acquisitions, and valuation gains from a weaker Canadian dollar.

Concurrently, foreign direct investment in Canada grew by $77.8 billion (+5.5%) to $1,502.5 billion in 2024, with merger and acquisition transactions being the main contributors to this growth. As a result, Canada’s net direct investment position, which is the difference between the stock of direct investment abroad and in Canada, expanded by $187.0 billion to $971.0 billion by the end of 2024.

The sectors that primarily contributed to the growth in Canadian direct investment abroad at the end of 2024 were finance and insurance, management of companies and enterprises, and mining, quarrying, and oil and gas extraction. These sectors accounted for over two-thirds of Canada’s total outward direct investment position at the end of the year.

Geographically, Canadian direct investment in the United States reached $1,289.3 billion at the end of 2024, making up more than half (52.1%) of total Canadian holdings abroad. Canadian direct investment in Europe also increased, led by heightened investment in the United Kingdom (TADAWUL:4280).

In 2024, foreign direct investment in Canada was most notable in the manufacturing sector, reaching $1,502.5 billion, an increase of $77.8 billion (+5.5%) from 2023. The professional, scientific and technical services sector had the largest growth in services-producing industries. However, the management of companies and enterprises sector remained the most significant contributor to foreign direct investment in Canada at the end of 2024.

Foreign direct investment in Canada from the United States increased by $45.0 billion to $683.8 billion at the end of 2024. This represented close to half (45.5%) of all foreign direct investment stock in Canada. Holdings from Europe were also up, representing about one-third (33.8%) of total inward direct investment.

When considering the ultimate investor country, Europe represented 22.5% of the total foreign direct investment in Canada at the end of 2024. Outside of Europe, the United States, Japan, China, and Brazil posted higher investment positions when the data were presented by ultimate investor country.

In 2024, Canadian investors ultimately controlled 92.8% of Canada’s direct investment abroad. Investors from over 30 countries ultimately controlled the remaining 7.2%; of that proportion, the United States (4.6%) was the most important contributor.

In terms of industry, half (50.2%) of Canadian direct investors’ holdings abroad were in foreign affiliates operating in a different industry than their own at the end of 2024. Canadian direct investors in the wholesale trade industry had the highest proportion of foreign holdings in a different industry than their own (87.5%).

This article first appeared in Investing.com