Canada ranks third as an attractive destination for investment, according to a new survey of corporate executives worldwide.
Canada recorded its highest ever ranking in the Capital Confidence Barometer report published on Wednesday from consulting firm Ernst & Young Global Ltd. (EY).
Canada placed below the United States and Brazil, but ahead of China and the United Kingdom.
“This is the highest ranking Canada has achieved in survey history, and indicates the growing attractiveness of the Canadian market,” EY said in the report.
Expectations for Canadian M&A activity and the outlook for the economy are both positive. “The next 12 months are shaping up to be one of the strongest M&A periods in Canadian history,” the report said.
Indeed, 78% of Canadian executives surveyed said they intend to actively pursue M&A in the next 12 months, and 93% see the global M&A market improving. Moreover, 73% of Canadian execs said their M&A deal pipeline will increase over the next 12 months, compared to just 33% six months ago, the survey found.
By comparison, 54% of U.S. executives surveyed said they expect to engage in M&A in the next 12 months, and 52% of global respondents.
The top-ranked sectors within Canada are mining, financial services, and consumer products.
Additionally, most Canadian executives said both the domestic economy and the global economy is improving.
The survey found that 86% of respondents expect the Canadian economy to improve, up from 49% who said that a year ago. As well, 87% of Canadian executives expect the global economy improving, also up from 49% last year.
“Positive economic outlooks, tied with high appetite for transactions and the growing attractiveness of the Canadian market means competition for assets will intensify,” says Doug Jenkinson, partner with EY Canada, in a statement. “In order to be competitive, executives will need to focus on their core areas for growth. Having the right due diligence measures in place will mean companies can execute plans quickly and at an accretive valuation.”
Despite these rosy outlooks for the economy and M&A activity, expectations for Canadian corporate earnings and stock market performance have both dimmed a little, “with the outlook shifting from improving to stable,” the report said.
Risks to the outlook primarily centre around geopolitics, “particularly around the threat of economic nationalism and the looming spectre of trade wars,” it added.
EY surveyed more than 2,500 executives in 43 countries during March and April for the report.