Corporate takeovers pull foreign funds into Canada

Corporate takeovers pull foreign funds into CanadaLast Updated: Tuesday, May 6, 2008 | 9:36 AM ET CBC News

Corporate takeovers last year by foreign firms in Canada, especially in the resource sector, pushed foreign direct investment holdings here past the half-trillion dollar mark for the first time, Statistics Canada said Tuesday.

"Foreign direct investment acquisitions activity surpassed that realized during the high-tech bubble of 2000," the federal government agency said, as 2007's total hit $500.9 billion.

Foreign companies sent the bulk of their investment — 55 per cent — in Canada into the manufacturing and oil and gas industries. Financial, insurance and management industries combined amounted to 22.7 per cent.

While foreign money flowed in last year, Canadian direct investments outside of the country declined for only the second time since 1986. Canadian holdings amounted to $514.5 billion, a decrease of $15.4 billion from 2006.

The only other decline was seen in 2003, and Statistics Canada said the rise of the Canadian dollar played a significant role in both cases.

Overall, Canada's net direct investment position, which is the difference between Canadian direct investment abroad and foreign direct investment in Canada, narrowed in 2007 to $13.7 billion. This was the smallest surplus since this account moved out of deficit in 1997. The surplus was down from $92.2 billion in 2006.

cbc.ca

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