Although it's easy to think of the New York Stock Exchange as "the" stock market, in fact it is only one of many. Many significant economies host their own stock markets, and typically more than one. The U.S. alone has 13 and, when measured by volume, investors generally hold that there are 60 "major" stock exchanges around the world. These include markets located in Tokyo, China, the U.K. and Europe.
One of the largest and oldest is the Toronto Stock Exchange, founded in 1852. If you'd like to trade on it, or simply buy stock in Canadian companies, here's what you'll have to do. (Note to Readers - This article is written from the perspective of a U.S. citizen. Global requirements may change by nationality.)
How to Buy Canadian Stocks in 2019
Buying Stock in Canadian Companies
For a U.S. investor, the easiest way to buy stock in a Canadian company is to find one which trades on a domestic stock exchange. This is easier than it may seem.
Several hundred Canadian firms have listed their stocks on U.S. exchanges, in particular the New York Stock Exchange and the Nasdaq. The NYSE alone hosts 120 listings from Canada with a combined market value of $1.3 trillion.
Buying this way means that you will not have to jump through any particular hoops or international barriers. If the stock is listed domestically, you can purchase it just like any other stock on the exchange. This provides you with an easy way to access companies in one of the wealthiest countries on Earth.
Buying Canadian-Invested Funds
Another alternative for U.S. investors is to find domestic mutual funds and ETFs with Canadian corporate holdings. This is also one of the easiest options available, because once again you will not have to negotiate any barriers. You can buy shares in these funds the same way you would a domestic investment. Since these funds will hold shares of stock in Canadian companies, you can expose your portfolio to that economy without having to purchase stocks on a Canadian marketplace.
Buying Stocks On A Canadian Exchange
Perhaps you want to buy stock in Canada, though.
The Toronto Stock Exchange is Canada's most significant stock market, so if you're looking to purchase equities actually within the Canadian economy it's likely you will do so there. Your major market options include:
- The Toronto Stock Exchange (TSX) (this has subsets such as the TSX Venture Exchange)
- The Canadian Securities Exchange (CSE)
- The Montreal Exchange
- Nasdaq Canada
- The NEO Exchange (this appears to have been formerly called CNQ)
Buying directly from a Canadian stock market can involve one of two processes:
- Many online trading platforms such as E*Trade directly support purchasing on certain Canadian stock exchanges. In this case it's most likely that you will buy from the Toronto Stock Exchange, as this is the most widely accepted market for globally focused markets.
- Most brokers can help you make purchases on any Canadian stock exchange. In order to invest, therefore, you would contact a brokerage and confirm that they can help you with this process. Then you would open an account and request your stocks.
Financial and Tax Implications
Whether you buy your stocks from a U.S. market or a Canadian one, you will now own shares of a foreign company. This can have potential tax implications.
As part of this process, you should make sure to consult with either a tax attorney or a CPA about what your rights and responsibilities will be when it comes to owning shares in Canadian companies. This is very important, as you don't want to be taken by surprise come tax season (or worse, audited).
Why Buy Canadian Stocks?
There are several reasons to invest in the Canadian economy. Its large natural resources sector gives this country a massive source of both current and potential wealth, while at the same time it has developed an advanced skills-based economy like those in the U.S. and Europe. This advanced skills economy is relatively rare for a country with so many natural resources, as is its relatively low rate of inflation.
Arguably just as important, though, the Canadian economy is renowned for its stability. The country's financial, business and banking policies have shielded its domestic economy from many of the worst excesses of the global economy in recent decades. While it has missed out on much of the speculative growth of the past 30 years, it also has effectively protected itself from many of the worst slowdowns.
In addition to low inflation and a low budget deficit, Canada has also not experienced the worst of the political extremes that appear to plague many advanced economies. That makes it unlikely that the country will experience politically-induced economic shock. Altogether, that makes it an excellent market for investors who want long-term stability with the promise of growth.