On the morning of August 23, 2024, traders were actively engaged in their work on the floor of the New York Stock Exchange in New York City. (Photo by Michael M. Santiago/Getty Images)
A new report from Moomoo Financial Canada Inc. reveals that Canadian investors are increasingly drawn to U.S. tech stocks, particularly the major players in artificial intelligence. This growing interest has been spurred by the impressive performance of tech stocks, both in Canada and the U.S.
According to Simply Wall Street Pty Ltd, the Canadian tech sector has surged 29.9% in the past year and 9.6% over the last three months. Among the top performers are Constellation Software Inc., which has seen a 54.6% rise year over year, and Descartes Systems Group Inc., with a 32.4% increase. These gains highlight the appeal of tech stocks for Canadian investors, but U.S. tech giants still hold a significant lead in capturing their attention.
Moomoo’s survey found that 71% of Canadian retail investors prefer investing in U.S. stocks, with many citing the dominance of large U.S. tech companies as the driving factor. As of August 21, the S&P/TSX composite index had climbed over 10% since the start of the year, while the S&P 500, heavily influenced by the tech sector, had jumped more than 17%. This preference for U.S. stocks underscores investors’ confidence in the potential of artificial intelligence, a sector primarily dominated by U.S.-based companies.
Justin Zacks, vice president of strategy at Moomoo, commented on the survey results, noting that the strong performance of the tech sector is likely fuelling continued interest in U.S. stocks. He emphasized that with many of the largest tech companies headquartered in the U.S., it is understandable why Canadian investors continue to lean toward American markets.
Despite this focus on tech, Canadian investors are also showing interest in more conservative investment options. Defensive sectors such as utilities and materials have emerged as other popular choices. This trend suggests that while Canadians are excited about the possibilities of tech, they remain cautious about the broader economic outlook.
Moomoo’s survey reflects this caution, with 51% of Canadian respondents expecting a recession in the next six months. Though there is uncertainty about Canada’s economic future, economists are hopeful that the country will narrowly avoid a recession. RBC Economics has noted that Canada’s rapid population growth has helped stave off a recession, even as output declines and unemployment rises. However, with inflation still a concern, the economic slowdown makes it feel as though the country is teetering on the edge of a downturn.
Interestingly, despite concerns about a potential recession, Canadian investors remain confident about their financial futures. The survey found that 29% of respondents feel very confident in reaching their financial goals, while 63% are somewhat confident. This optimism suggests that while there is caution in the market, Canadian investors still believe they can navigate the challenges ahead.
