On Sept. 21, institutional investing reporter James Bradshaw, financial reporter Tim Kiladze and deputy Ottawa bureau chief Bill Curry answered reader questions about Prime Minister Mark Carney’s recent efforts to bring more business to Canada in the midst of a trade war with the United States.
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Bradshaw → answer → States
In a search for new partners, Mr. Carney has been pushing the notion of “a unique alliance” with the European Union, and received an invitation from the EU’s top official to become the bloc’s first associate member.
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Carney → push → member
Meanwhile, at the first-ever Canada Investment Summit, Mr. Carney announced plans for the privatization of major airports, a nationwide internet network and a “productivity mega deduction.”
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Carney → announce → airports
Readers asked what the summit was like from the inside, how a deeper EU partnership could affect Canada and how increased investment could affect Canadians.
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investment → ask → Canadians
One line has stuck with me: “The lobby is where it’s at.”
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it → stick → where
That was said to me by a Canadian exec one morning last week at an event adjacent to the summit, and the point was, it’s the networking that matters, not necessarily the panels.
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that → say → summit
The lobby areas outside summit events were often quite busy with lots of people talking and making their way through the crowd.
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lots → talk → crowd
As for the feel, the big thing to me was that it actually didn’t feel all that different from a lot of conferences I’ve covered and attended over the years.
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I → feel → years
But it was the same type of cocktail chatter and energy you may see in your own industry.
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you → see → industry
That’s a good summary, Tim.
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That → ’ → ?
One of the unique aspects of the summit was that generally, the CEOs and investors did not have any support staff with them.
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CEOs → have → them
So it was interesting to see these executives and cabinet ministers mingling one on one in the hallways of the Four Seasons hotel.
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executives → see → hotel
Some execs at the investment summit said they never set foot in Canada before then.
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they → say → Canada
Why wasn’t Canada seen as a place for foreign investment?
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Canada → see → investment
That question gets to the crux of the summit.
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question → get → summit
Canada tended to get lumped into a “North American” investment strategy at a lot of the world’s largest money managers.
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Canada → tend → managers
And because the U.S. is the world’s largest economy, with the deepest capital markets, lots of advanced industries, plenty of innovation, and all of it done in the world’s dominant currency - the U.S. dollar - most of that money just flowed to the U.S.
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most → do → U.S.
A deal in Canada had to really stand out.
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deal → have → Canada
Canada also had a reputation - often one it deserved - of being a slow and cumbersome place to invest.
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it → have → reputation
We had a lot of regulations.
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We → have → regulations
Sometimes you needed more than one approval to start a project - from federal, provincial and municipal governments, plus regulators.
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you → need → governments
You might have to hedge currency changes in the U.S. dollar so that didn’t eat into the returns on your investment.
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that → have → investment
For investors, time is money - the longer the investment takes to start paying back, the weaker the return.
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investment → take → investors
So this really mattered.
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this → matter → ?
The president and COO of Blackstone, the US$1.3-trillion asset manager, talked about a project they invested billions of dollars in to transmit electricity from Quebec to New York state.
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they → talk → state
It took 16 years to complete.
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It → take → years
He then called Canada a “sleeping giant” economically.
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He → call → Canada
We’re trying to shed the sleepy part of that reputation now.
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We → try → reputation
Will they track and report on the progress of these projects in raising financing?
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they → track → financing
It’s hard to track.
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It → ’ → ?
But I’d argue that from the government’s perspective, a big goal of the summit was, well, vibes-based.
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goal → argue → summit
Simply showing Canadians that major institutional investors like us and are interested in what we have to offer is a win.
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we → show → what
It helps to feel loved when your biggest trading partner and historical ally tries to knock you down.
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partner → help → you
What I think has been lost, however, is that these funds have long liked Canada.
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funds → think → Canada
A subsidiary of Saudi Arabia’s Public Investment Fund, for instance, bought major grain handling assets in the Prairies, and Blackstone, the U.S. private equity giant, holds $50-billion worth Canadian assets, many of them in real estate.
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Blackstone → buy → estate
We ran into some issues with too much regulation and decision bottlenecks, but it’s not like we were a banana republic until now.
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we → run → regulation
Is Carney simply selling the country to the global 1%?
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Carney → sell → %
What’s the benefit of foreign investors vs. trying to cultivate homegrown opportunities?
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benefit → ’ → opportunities
Homegrown investment certainly has its advantages, but if Canada is really going to be ambitious about building infrastructure, scaling up businesses, building the technology behind AI, etc., it’s not likely there is enough money - enough capital - at home.
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Canada → have → home
On top of that, governments are reaching the limits of how much more debt they can take on.
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they → reach → debt
…and 63 more, not listed.
The Aporia
