Canadian companies went on a foreign buying spree in the third quarter as the strong loonie boosted their buying power, according to government figures.
Canadian direct investment abroad jumped to $25.6 billion in the quarter, its highest level in 2009 after two quarters of sluggish activity, Statistics Canada figures showed. About three-quarters of that investment came from Canadian companies buying foreign firms, mostly south of the border, StatsCan said.
Canadian companies took advantage of the relative strength of the loonie and rock-bottom prices in the U.S. to snap up bargains after the worst recession in living memory. The Canadian currency gained 6% in the quarter against the greenback.
"Companies want to buy now while the dollar is strong and be well positioned as the U.S. market rebounds," said Geoffrey Marney, managing director of investment banking firm Vercor. "It's difficult to be a dominant player in the U.S. if you don't have operations there."
Canada's financial companies, which survived the global crash in better health than global peers, are eyeing the U.S with particular interest. Sun Life earlier this month said it may consider acquisitions in the U.S. to boost its insurance business, while Bank of Montreal this week acquired the North American franchise of Diners Club to double its corporate credit card business.
Marney said he's hearing of a "growing trend" of Canadian companies looking south.
Coming the other way, foreign investment in Canada also jumped in the quarter, reaching $17 billion, with funds from European Union worth $7.9 billion coming in and U.S. investment hitting $7.1 billion.
