Investing Trends for Canadian Markets in 2024

How things are shaping up for 2024

In 2024, several trends are shaping the investment climate in Canada, driven by economic factors, technological advancements, and shifting consumer preferences. Before delving into these trends, let's provide a summary of Canada's current economic climate to help contextualize everything.

Investors will hope for more certainty in 2024 after an unpredictable 2023 characterized by record inflation levels and new conflicts in the Middle East, in addition to the ongoing Russian invasion.

Canadians will closely monitor the Bank of Canada's interest rate policies and potential future cuts (currently at 5.00%). While inflation has been gradually decreasing, there are concerns that tighter monetary policies may stifle growth, with predictions ranging from a slight downturn to a potential recession in the Canadian economy. Concerns are also related to the conditions of Canadian Housing and Employment, which have been impacted by supply-side issues and a nationwide slowdown.

According to Morgan Stanley forecasts, Business and gross fixed investments are predicted to remain flat in 2024 before potentially rebounding in 2025 if easing monetary policies are adopted. This aligns with the slowing consumer consumption and growth rates witnessed within the Canadian economy in 2023.

Factors to keep in mind in 2024

Recession and What it Means for Canadian Investors

Many experts have been warning of recessions in recent years. While the economy is heading for a downturn, it's impossible to say if a worse recession is on the way.

For investors, a recession means plummeting or volatile stock prices negatively impacting portfolios. Prices may experience wild swings as alarmed investors attempt to react to the market's volatility. The phenomena also dissuade many potential investors who will think twice before entering.

Recession also drives investors towards Fixed income investments or bonds for protection, as these assets are more sheltered against the effects of recession and falling prices.

US Presidential Election Year and its historical implications for investors

Given how closely intertwined the Canadian and American economies are, an election year in the US has major implications for Canadian investors.

As noted in an article published by BMO, the S&P 500 has not declined in a year when an incumbent American president is running for re-election, as sitting Presidents use all policy levers to boost the economy and shore up their support for re-election.

Responsible Investments

Investment trends in the last decade emphasize positive environmental and social changes through responsible investments. Investors are increasingly conscious of their impact on their surroundings and incorporate Environmental, Social, and Governance (ESG) factors when selecting investments. Renewable energy projects, clean technology, and companies with strong ESG practices prioritizing these goals appeal to a wider range of individual and institutional investors.

According to the Canadian RI Trends Report 2023, Responsible Investment Assets under management (AUM) accounted for 49% of all Canadian professionally managed assets in 2022.

Sectors to look into

Technology and the AI revolution

2023 was the year of Tech companies, with the 'Magnificent Seven' expanding their already dominant businesses.

Canada's technology sector was a hotbed for investment in 2023, with large strides made in artificial intelligence, biotechnology, and fintech, attracting attention from global investors. With a robust startup ecosystem and a skilled workforce, Canada is positioned as a hub for technological innovation.

Investors are particularly interested in companies contributing to the development of cutting-edge technologies. Artificial intelligence, blockchain, and biotech companies are experiencing heightened interest in their growth potential.

Real Estate Investment:

Real estate has historically been a stable investment option in Canada, and this trend continues into 2023. However, the dynamics within the real estate sector are evolving. Urbanization trends, remote work considerations, and changing consumer preferences influence the real estate market.

Investors are diversifying their portfolios by exploring alternative investment opportunities beyond traditional residential and commercial real estate. The industrial and logistics sectors are gaining attention due to the growth of e-commerce, while investments in sustainable and eco-friendly developments are becoming increasingly popular.

Healthcare and Biotechnology:

The healthcare and biotechnology sectors are experiencing a surge in investment interest in Canada. The ongoing global health challenges have underscored the importance of robust healthcare infrastructure and innovation. Investors are keenly eyeing companies involved in pharmaceuticals, medical technology, and healthcare services.

Canada's strong research institutions and supportive regulatory environment contribute to the attractiveness of the healthcare and biotech sectors. Investors are looking for opportunities that address pressing health issues and contribute to advancements in medical science.

Investing in US stocks with Remitbee

Investing in US stocks from Canada requires the conversion of your currency into USD. While your brokerage can handle these without hassle, they usually don't come cheap.

If maximizing profits is your goal, you can look into services like Remitbee that allow you to convert currency online, with instant quotes for CAD to USD and no additional charges!

Conclusion

In 2023, Canada presents a diverse and dynamic investment landscape shaped by sustainability goals, technological advancements, and changing market dynamics. Investors seeking opportunities in the country should stay informed about these trends to make well-informed decisions and capitalize on the evolving market conditions. Whether in sustainable investments, technology, real estate, healthcare, or investing in American markets.