There are several stock exchanges in Canada, but accessing them from the UK and Europe, is not always so straightforward.
The Canadian stock market gives investors access to a variety of companies from commodities and financials to technology and industrials. According to Interactive Investor, the five most purchased shares in the second quarter of 2021 were Hut 8 Mining Corp (HUT), Galaxy Digital (GLXY), Hive Blockchain Technology (HVBT), Neo Lithium Corp (NLC) and Greenbank Capital (GBC).
On most broker platforms, investors can trade US stocks, therefore if the Canadian companies have a dual listing on an exchange like the New York Stock Exchange, they’re easy enough to buy and sell.
The largest stock exchange in Canada is the Toronto Stock Exchange, which features companies like the Royal Bank of Canada (RY), Shopify (SHOP) and Brookfield Asset Management (BAM).
Brokers such as Interactive Investor, Interactive Brokers, Hargreaves Lansdown, Degiro, Fineco, Saxo Trader and Trading 212 are some of the providers that let you buy Canadian stocks that are solely listed on the Toronto Stock Exchange (TSX), which is owned by TMX Group. They also own the junior TSX Venture Exchange.
For example, AJ Bell YouInvest offers dealing in several international markets that includes Canada, for shares that are available as CDIs, which are UK securities that have an underlying interest in an overseas security and can be easily bought and sold.
According to AJ Bell, if you invest in Canadian stocks within a stocks and shares ISA, a lifetime ISA, a Junior ISA or through a dealing account, there is a form called NR301 that needs to be filled out, which allows investors to benefit from a reduced tax rate of 15%, compared with the full withholding tax rate of 25%.
However, there are other stock exchanges in the country that can also be accessed.
The Canadian Securities Exchange (CSE) features approximately 700 listed securities of mainly small-cap issuers. The largest sectors represented are technology and mineral exploration, with companies such as Cannabix Technologies, Happy Supplements and Asante Gold Corporation listed on the exchange. So it’s of particular interest to those looking to invest in smaller, innovative companies.
For those interested in cannabis or blockchain for example, there are at least 173 and 33 related stocks, respectively. Most of the companies on the exchange have a market cap of under C$50 million, with some over C$100 million.
In the UK, stocks traded on the CSE are eligible for SIPPs under the tax law. Traders interested in these stocks will need to complete exchange agreements to access the price information on these exchanges and may need to complete an appropriateness assessment to allow the broker to gauge whether you have the necessary experience and knowledge to understand the risks involved.
While stocks may not appear on a trading platform, it is possible to open a request with a broker to see whether they will provide access to that stock. Brokers will typically only quote prices for stocks which are popular or where there has been at least one previous trader request.
Interactive Brokers and Killik & Co give investors access to CSE stocks. In Germany, investors can also use ING-DiBa.
The easiest way to invest in the Canadian stock market, while also ensuring diversification is through exchange traded funds or trackers. There are four that track the MSCI Canada index, which are:
- UBS ETF (LU) MSCI Canada UCITS ETF
- iShares MSCI Canada UCITSETF;
- HSBC MSCI Canada UCITS ETF USD;
- Xtrackers MSCI Canada UCITS ETF
The total expense ratio of these ETFs range from 0.33% per annum to 0.48%.