Business Brief: Carney’s $1-trillion pitch

Good morning. I’m Jameson Berkow, capital markets reporter at The Globe. Prime Minister Mark Carney will likely spend his weekend practicing his pitch to the masters of trillions of investment dollars as he prepares to host his inaugural Canada Investment Summit next week. Today, we look at why Carney will need to focus on courting new sources of cash from beyond the U.S. But first:

Up first

In the news

China trade: Fewer than 16,000 Chinese-made EVs have entered Canada under the Carney-Xi deal, well below this year’s 49,000-vehicle quota. Ottawa says some automakers are still working through certification as Canada looks to deepen investment ties with China.

In aviation: Flair Airlines has signed a 15-year deal with Lufthansa Technik to service most of its Boeing 737 engines in Calgary, shifting work that had been done in the U.S. and elsewhere back to Canada.

Real estate: The Caisse and B.C. billionaire Ryan Beedie are teaming up on a nationwide industrial real-estate push with plans to buy or build up to $2-billion in additional properties across Canada.

In focus

Chasing a trillion

Sorry to state the obvious, but $1-trillion is a huge amount of money.

We are talking about 156 Gordie Howe International Bridges, 92 high-speed rail links between Edmonton and Calgary, or 22 renewable energy facilities on the scale of Nova Scotia’s proposed Wind West project, with each one capable of powering tens of millions of homes.

Nonetheless, that is the amount of investment Prime Minister Mark Carney is aiming to spark over the next five years, with a heavy focus on foreign funding.

On Monday, when he kicks off the largest gathering of global financial executives ever to assemble in this country, the hope is that many of them will leave with plans to start writing fresh cheques. But where the money ends up coming from – and where it goes – will end up mattering far more than the total dollar value.

Because right now, most of the foreign money coming into Canada is in the form of Americans buying up Canadian businesses. You don’t need to be an economist to know that doesn’t jibe well with Canada’s desire to become less economically dependent on our southern neighbours and foster more domestic businesses.

In a recent report, BMO chief economist Doug Porter said it was “somewhat unfortunate – or at least less encouraging” that mergers and acquisitions have been driving the surge in foreign investments into Canada since the start of last year.

Coming from an economist, that is a scathing critique.

But the Prime Minister’s inaugural Canada Investment Summit represents an opportunity to turn things around by attracting capital from further abroad than just our nearest neighbour.

There is also the Canadian Global Growth Forum, a complementary event to Carney’s summit being hosted the day before by the Canadian Venture Capital & Private Equity Association. More than half of the approximately 250 expected attendees at that event are coming from outside the U.S. and Canada.

They are also the sort of investors who buy a stake in a business and help it grow, rather than just buying them outright, which is exactly the kind of cash influx that leads to more economic growth and higher living standards (maybe not to the extent where we can all finally afford to buy a house, but at least maybe groceries).

Meanwhile, all of this is happening smack dab in the middle of the Toronto International Film Festival. With all those politicians, executives, investors and A-list actors descending on Canada’s largest city all at the same time, maybe the restaurant tips alone will make a dent in that $1-trillion goal.

Charted

Still out of reach

Canadian home prices have fallen sharply from their 2022 peak, nearly 30 per cent in inflation terms, but affordability is still well above its long-run norm. With further interest-rate relief looking unlikely, economists say more of the adjustment may have to come from home prices themselves.

Quoted

Prime Minister Mark Carney and Ukrainian President Volodymyr Zelensky unveiled a 100-year partnership spanning defence, energy, technology and trade, alongside plans to deepen co-operation on drones and other military equipment.

Up next

More files we’re following

By the numbers: Statistics Canada releases the second-quarter national balance sheet and financial flow accounts, while the U.S. reports August inflation data.

Earnings: Kroger Co. will report its quarterly results.

Morning update

Global markets took a breather as oil prices ​retreated from a four-month high, though the recent surge in ‌energy costs continued to fuel inflation worries and expectations that central banks may need to tighten policy.

Wall Street futures were in positive territory ahead of key inflation data, while TSX futures followed sentiment higher.

Overseas, the pan-European STOXX 600 was up 0.55 per cent in morning trading. Britain’s FTSE 100 rose 0.53 per cent, Germany’s DAX gained 0.685 per cent and France’s CAC 40 advanced 0.59 per cent.

In Asia, Japan’s Nikkei closed 1.93 per cent lower, while Hong Kong’s Hang Seng dropped 0.6 per cent.

The Canadian dollar traded at 72.19 U.S. cents.