Carney gambles on the world's biggest investors betting on Canada

Image source, ReutersByMichael Race, Business and economics reporter and Jessica Murphy, Canada digital editorPublished9 hours agoIt's been a little over 18 months since Canadian Prime Minister Mark Carney said his country's relationship with the United States, based on over a century of tight economic and military cooperation, was "over".Trade talks collapsing, tit-for-tat tariffs, and Donald Trump's talk of making Canada a "51st state" have all fuelled this bitter feud between the two North American neighbours.Now, as Canada's top pitch man, Carney is looking to leverage personal relationships from his time spent in the top tiers of global finance to woo some of the world's wealthiest asset managers and business leaders to bet on his country. For two days, Toronto will host more than 100 global investors overseeing more than C$100tn ($72tn; £53) in assets, in the hope that new economic relationships will help Canada navigate an increasingly unstable geopolitical climate. "Canada has what the world wants," said Carney ahead of this "first of its kind" investment summit.On Monday and Tuesday, a luxury hotel will host guests from major sovereign wealth funds from around the world - including the United Arab Emirates and Norway - and chief executives from major finance companies, like BlackRock's Larry Fink and Blackstone president Jon Gray.There, Carney hopes to pitch them on Canada's energy and resource sectors, as well as the country’s political stability, in the hopes of getting them to invest in AI, defence, transportation, and infrastructure projects across the country.It is all part of a strategy to build a "more independent, more resilient economy" in Canada in the wake of the tariff war with the US, which has escalated in recent weeks. But there is no guarantee that the deep-pocketed investors will be easily sold, and challenges include a track record in Canada of lengthy approvals for projects. A recent report by the Canada Pension Plan Investment Board, which will co-host the summit, cautioned that the scale and depth of investible opportunity is the country's greatest weakness."Global capital is looking for opportunity, but opportunity alone does not make a market investible," said Naomi Powell, director of the CPP Investments Insight Institute. Figure caption, Watch: How much can Canada fight back in its trade war with the US?While shifting away from its closest business partner will prove a test for Carney, the former central banker has an address book full of the world's biggest business bosses and is on first-name terms with many of them."These were personal invites in many cases, literally," said Goldy Hyder, president and chief executive of the Business Council of Canada. "It's not a group of politicians inviting financiers, it's a group of former financiers and investment people inviting their former buddies," added Miville Tremblay, who worked with Carney for several years at the Bank of Canada, and saw his skills on show during the 2008 global financial crisis."He was way above everyone," he said. "He understands finance very deeply. [He] would know when they are bluffing and when the understatement meant that something really bad was happening."Knowing the minds of investors gives the prime minister, who began his career at investment bank Goldman Sachs, an advantage this week. Carney is betting his background will boost his country's economic future, though there's little doubt that Canada stands to lose the most from any permanent divorce with the US, the world's largest economy.Tremblay said Canada seeking investment from overseas was not new, but that the selling pitch to large corporations had now changed. For the past 25 years, Canada's trade ministers used its proximity to the US as a selling point, pitching to foreign investors that they should "invest in Canada because you've got an easy access to the US market", Tremblay said. "This line doesn't work anymore."While the US-Canada trade war rumbles on, many believe there will come a moment when both sides return to the negotiating table. Bradley Saunders, North America economist for Capital Economist, said securing the future of the trade deal was the "really important thing" for Carney to achieve in the longer term."Trade exports to the US are worth 20% of Canada's GDP - that's one of the highest rates in terms of bilateral trade between any two countries in the world. "If Carney wants to attract long-term investment... he wants this to go well, he has to try and provide a stable environment - and that won't come until Canada has a certain trading relationship with the US."Tremblay added even if Canada cut its trade with the US over the longer term, it was clear "they'll have to sit down and make a compromise".Hyder cautioned that investors will want Carney to prove he can fix other barriers to investment, including ensuring indigenous communities and provinces - who have the power to slow or kill major resource projects - are on board with proposals. What tariffs will really cost Canadians and AmericansPublished4 days agoCarney says US trade war 'will come at a cost' as Canada strikes back on tariffsPublished5 days agoTremblay said the pitch has to be "Canada has stuff that the world needs" - which is the exact phrasing Carney has opted for.Unless a deal was already in the works with another nation, however, he believes it's unlikely any big announcements will be made. He said while overseas investment will be a main aim, encouraging more domestic investment from Canada's largest pension funds, which currently invest more overseas, is also important.Tremblay added the current tumultuous economic and political climate is perfect for his former boss. "He's a crisis manager. He managed the financial crisis, he managed Brexit, and now he's got a super crisis for Canada."Carney has been clear that the road ahead for Canada as it pivots away from its reliance on the US will be a tough one. So far, the majority of Canadians support his course of action, despite some criticism he is turning away from climate commitments as well as towards closer ties with nations like Saudi Arabia and China, as he pushes Canada's rich resources. Still, Drew Fagan, a professor at the University of Toronto's Munk School of Global Affairs, says the challenge for the prime minister is the current rift with the US happening more rapidly than the time it takes to develop and build new global trade partnerships. "And in the interim, that's where the valley of death is for him, both economically and potentially politically," he said. Related topicsCanadaMark CarneyUnited StatesEconomicsTrump tariffs