Cashed-up Aussies keen to connect with Canada

Australia is a nation of investors. Some 10.2 million Aussies – or 51% of the population – hold investments in 2023, up from 46% (9 million) who held investments in 2020.

According to the Australian Securities Exchange (ASX) Australian Investor Study 2023, the median portfolio size of on-exchange investors has increased from $130,000 in 2020 to $170,000 in 2023.

The vast majority of Australian investors (70%) use online brokers to place trade orders.

However, the study shows that among young Aussies in particular some of the main reasons for not investing tend to be either financial or knowledge based. The most common reason is a lack of funds (42%), with not knowing where to find information (32%) or which products to invest in (28%) also cited as significant factors.

Since 1986, the ASX Australian Investor Study and its predecessor, the ASX Share Ownership Study, have provided a guide on the evolution of investment markets and changing investor behaviour.

With the median portfolio size of on-exchange investors increasing in 2023 another emerging trend is Australians increasingly assessing other options and jurisdictions to invest their hard-earned cash.

The Toronto Stock Exchange (TSX) in particular is one attractive destination for retail investors. As Mining.com.au reported in June 2023 there is ongoing positive market sentiment among Australian investments in Canada. ASX-listed miners and investors alike are finding not just resources but also comfort having exposure to the wider North American market.

On the back of this, retail investors have been keen to get a piece of the action. For retail investors – non-professional or often termed mum and dad investors – investing in companies listed and operating in Canada can be easy and accessible.

Cashing in on Canadian equities

Saxo is a fintech specialist that operates a multi-asset trading and investment business for those retail investors keen to put their cash into Canadian equities.

Saxo Australia CEO Adam Smith tells Mining.com.au for trading in Canadian equities it’s as simple as selecting an investment broker/platform that operates in Australia and provides access to the TSX and TSX-V, such as Saxo.

“Once you’ve established your Saxo account, you’re also able to establish a CAD currency sub-account, meaning you can make a single currency conversion from your AUD account to your CAD sub-account, and won’t need to pay currency conversion fees each time you buy a Canadian stock.”

Saxo competes with a number of investment brokers and trading platforms in Australia across various market segments. These range from well-known Australian bank-owned brokers such as CommSec and NAB Trade to more recent brokerage market entrants including Stake, MooMoo, eToro, Plus500, Tiger, and other advanced options like CMC Markets, IG, and Interactive Brokers.

Some platforms require a minimum balance to get started and fees and commissions vary between brokers. While some such as Saxo enable people to establish a CAD currency sub-account, investors should be mindful that investing in Canadian stocks is exposed to the AUD/CAD exchange rate.

Saxo is a wholly owned licensed subsidiary of the Copenhagen-based Saxo Bank, which holds more than US$100 billion in client assets, has over 1 million clients worldwide, and 30 years-plus of financial market experience.

Clear tilt towards mining

Saxo Australia’s CEO tells this news service that like Australia, the Canadian equity market is dominated by the mining, financials, and energy sectors, which are all notoriously high-value sectors.

“The higher tilt towards physical resources makes the Canadian equity market attractive for finding high quality companies in these industries, but investors must be selective.”

Smith notes while the steps for Australian investors wanting a piece of a Canadian company’s action is straightforward there are external factors that should always be monitored. The recent events in Panama over First Quantum Minerals’ (TSX:FM) copper mine have shown that global mining operations are not always easy for shareholders.

“The higher tilt towards physical resources makes the Canadian equity market attractive for finding high quality companies in these industries, but investors must be selective

Prior to selecting a broker or trading platform and depositing funds into a share trading account, the CEO says investors should assess a wide array of factors. In addition to the aforesaid external factors, he says monitoring the target company’s performance over time, such as its earnings report and outlook for the year ahead are critical.

Additionally, considering the industry in which the company operates, and the broader market trends like whether it’s growing or contracting, as well as monitoring general sentiment are also important.

“Are equities buoyant due to rising confidence or are they undervalued due to investor fear/concern?

Consider your own circumstances – are you seeking to invest for the longer term, or to make a shorter-term trading profit? How much can you afford to invest and ‘lock away’ in a stock? What’s your diversification approach? This should all impact your trading strategy, behaviour and outlook.”

Founded in 1861, TSX is the senior marketplace owned by the TMX Group, which also owns and operates the TSX Venture Exchange (TSX-V), a venture capital marketplace for emerging companies. 

The main TSX market hosts some 1,640 stocks, while the much smaller TSX-V has 1,649 official listings. Combined they have a total market capitalisation of companies reaching $3.5 trillion. Roughly 45% of that market value is concentrated in two sectors, namely mining and financial services.

The TSX has grown into the 11th largest bourse however, the Toronto exchange is not the only one in Canada – the Montreal Stock Exchange is the second largest in the country.

While in 2022 about $27 billion of equity capital was raised on the TSX and TSX-V only a small portion came via the retail investor market. Yet retail investors have a significant effect on market sentiment, which represents the overall tone in financial markets.

There are roughly 80 major stock exchanges around the world worth a combined $110 trillion in value. The top two exchanges – the New York Stock Exchange (NYSE) and Nasdaq – command 42.4% of global market capitalisation.

Yet Goldman Sachs forecasts that by 2050 emerging markets’ share of the global stock market value will surpass America.

All asset classes

Saxo holds an investment grade credit rating from Standard and Poor’s (S&P).

Smith says through Saxo Australia, Aussie investors can access more than 72,000 financial instruments across 3 trading platforms – Saxo Investor, award-winning SaxoTraderGO, and the customisable SaxoTraderPRO.

“They can trade across all major asset classes, from stocks to bonds, FX, options, futures, CFDs and across more than 50 global exchanges. They can also use Saxo’s platform offering to manage their self-managed superannuation funds (SMSFs) or trusts.”

“They can trade across all major asset classes, from stocks to bonds, FX, options, futures, CFDs and across more than 50 global exchanges. They can also use Saxo’s platform offering to manage their self-managed superannuation funds (SMSFs) or trusts

The CEO notes Saxo’s ethos is to help people make more of their money – to provide the tools to diversify their portfolio, invest globally, and build wealth.

Clients of Saxo in Australia can invest in European, Asian, or North American stocks as easily as they can invest in companies on the ASX.

Dual strategy

Of those markets, as mentioned, Canada is particularly attractive with a growing number of Australian mining companies dual listing on one of the country’s exchanges.

Companies tend to dual list in countries with a similar culture or share a common language. Australia and Canada are very similar economies in terms of size, wealth, governance systems, observable socio-economic characteristics, as well as minerals and resource endowments.

ASX-listed companies with a dual listing in Canada include Australian lithium chemicals company Allkem (ASX/TSX:AKE), iron ore miner Champion Iron (ASX:CIA / TSX:CIA), NexGen Energy (ASX:NXG / TSX:NXE), which is focused on the production of clean energy fuel, as well as African gold explorer Perseus Mining (ASX/TSX:PRU) and SSR Mining (ASX:SSR / TSX:SSRM).

Listing on both the ASX and TSX (or TSX-V) has becoming increasingly favoured as companies seek to reach more investors while maintaining trading variation on each separate market.

A dual listing refers to any company (or security) being listed on two or more different exchanges. There are a range of benefits to dual listing, including additional liquidity, increased access to capital, and having shares trade for longer periods if the various bourses are in different time zones.

Dual listing also offers the advantage of the price difference between two markets. Known as arbitrage, investors can undertake a simultaneous purchase and sale of the same or similar asset in different markets to profit from sometimes tiny differences in the asset’s listed price. It’s a strategy to exploit short-lived variations in the price of identical or similar financial instruments in different markets.

Saxo Australia’s Smith tells Mining.com.au the 5 most popular Canadian equities among Saxo’s Australian clients in 2023 year-to-date (in order of by number of trading clients) include Shopify (TSX:SHOP), Barrick Gold (TSX:ABX), Encore Energy (TSX-V:EU), NexGen Energy (TSX:NXE), and Scandium International Mining Corp (TSX:SCY).

“Other than Shopify, you can see an obvious mining/energy bias there, as discussed. There are certainly high-quality mining, resources, and energy equities in the Canadian market – it’s about finding the ones that will bring investors the best return, in line with their investment goals and time horizons.”

Write to Adam Orlando at Mining.com.au

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Written By Adam Orlando
Mining.com.au Editor-in-Chief Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Orlando has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.