Canada’s rapid population growth, driven by record-high immigration levels, has raised concerns about housing affordability. However, major companies are planning to capitalize on this influx.
Canada's population grew at its fastest rate since 1957 last year, with 98% of this growth from international migration. Prime Minister Justin Trudeau plans to curb temporary immigration, targeting 485,000 new permanent residents this year and 500,000 in 2025 and 2026.
Corporate Strategies Amidst Population Growth
Air Canada sees a "generational structural opportunity" from increased travel demand due to new immigrants. Dollarama's CEO Neil Rossy considers the growing population a future driver for their business, with BMO Capital Markets estimating nearly a third of Dollarama's 2025 sales growth will come from elevated immigration.
Telecom giants Rogers Communications and Bell (BCE) are also banking on strong immigration. Despite a government cap on international student permits, Rogers' CEO Tony Staffieri reported robust growth in their wireless business, largely fueled by new immigrants.
Economist Insights and Stock Picks
Economist David Rosenberg highlighted that while Canada’s rising population might not significantly impact the S&P/TSX Composite Index, specific sectors could benefit. Rosenberg suggests focusing on where immigrants spend money, including discount retailers like Dollarama, grocery chains like Loblaw and Empire, and basic household goods providers such as Canadian Tire and Sleep Country Canada.
Housing Market Concerns
Rosenberg advises looking at real estate investment trusts like Canadian Apartment Properties and InterRent, considering many new arrivals might rent rather than buy. Utilities and telecoms, such as Hydro One, Fortis, Bell, and Rogers, are also on his list.
The Bank of Canada has cautioned about making broad generalizations about the economic impact of new arrivals, noting that newcomers often have high initial consumption but may later reduce spending to save money or send remittances home.
Ernest Wong from Baskin Wealth Management notes that population growth has benefited companies, particularly in the Greater Toronto and Vancouver areas.
However, slowing immigration could pose a challenge to economic growth in the coming years.
Conclusion
While immigration boosts the Canadian economy, its impact varies across sectors. Companies are strategically positioning themselves to benefit from this demographic shift, despite potential challenges in housing and broader economic growth.
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