With 246 IPOs and Secondary Offerings, Canada is Showing Many Signs of Euphoria

With 246 IPOs and secondary offerings, C$13 billion of purchases by foreigners, Canada is showing many classic signs of euphoria, including over-optimism from analysts and pundits.

March 24 (Bloomberg) -- Stock sales in Canada may eclipse the $40.6 billion reached in 2010 as demand for capital spreads beyond the resource sector, said Philip Smith, Scotia Capital’s deputy head of global investment banking.

“This year promises to be above average, just based on the first quarter,” Smith said in an interview. “I think you’ll see much more activity in technology, media, telecom, consumer products and industrial products.”
[...]
“Finally you’re starting to see it’s a broad enough market that has real depth to it,” said Smith, 44. “Even though oil and gas and mining will be pretty strong, I don’t think they’re going to be as dominant going forward as they have been in the past two years.”

Canadian companies have raised $10.3 billion in 246 initial public offerings and secondary sales this year.

IPOs may also rebound after “climbing out of the chasm that was 2008,” Smith said. “Our IPO pipeline is pretty good; there are potentially a couple of very large IPOs in the back half of the year.”

There have been 31 IPOs in Canada this year worth $110 million, a plunge from 36 deals worth $1.85 billion in the year- earlier quarter, according to Bloomberg data.
[...]
“It’s time for us to look outside of Canada,” said Smith, whose team travels to Latin America every two weeks. “I expect that’s going to continue, but it’s going to be very sector- specific, where we see something that ties into our overall platform and also complements what our investing clients want.”

March 17 (Bloomberg) -- Foreigners bought a net C$13.3 billion ($13.4 billion) of Canadian securities in January, led by purchases of federal government bonds.

Foreign investors bought C$10.1 billion of bonds during the month, Statistics Canada said today in Ottawa, with federal government bonds accounting for just over half of the purchases. Non-residents also bought C$1.33 billion of stocks and C$1.86 billion of money-market paper. Economists predicted a C$6 billion net purchase of Canadian securities for December, according to the median of three estimates by Bloomberg News.

Purchases of Canadian bonds rose to an unprecedented C$95.9 billion last year, as the country’s relatively faster growth and stronger fiscal record attracted investors. Canada is seeking to become the first Group of Seven country to balance its budget following the global recession, aided by a quicker-than-forecast expansion that is fueling revenue. The economy expanded at a 3.3 percent annual pace in the fourth quarter, the fastest among Group of Seven nations.

Canadians bought a net C$1.98 billion of foreign securities in January, led by U.S. stocks, Statistics Canada said.