Sell off US stocks to buy Canadian stocks, Canadians "take over for the country"

Under the dual pressure of Trump's tariff threats and market uncertainty, Canadian investors are selling off U.S. stocks and are flooding into the domestic stock market at a record pace. The "Buy Canada" movement is spreading to the financial markets.

On April 15, it was reported that statistics showed that from April 7 to 11, net inflows into ETFs primarily holding Canadian stocks reached CAD 2.5 billion (approximately USD 1.8 billion), the highest level since May 2021.

Derek Benedet, portfolio manager at Purpose Investments, wrote in a report that the week of April 7 was "one of the most active trading days in ETF history." It was calculated that the three days with the highest average daily trading volume for ETFs all occurred during the week of April 7.

The massive influx of funds into Canadian stock ETFs came amid severe turmoil in the global financial markets following Trump's announcement of "reciprocal tariffs" on April 2.

After funds fled dollar assets, Canadian investors began to pour into the domestic market due to factors such as low valuations and interest rates.

Bloomberg Intelligence predicts that the earnings growth of S&P/TSX constituents will outpace that of S&P 500 companies by 2025, and the price-to-earnings ratio of Canadian stocks is also lower than that of their U.S. counterparts.

In addition to low valuations, Canada's interest rates are lower than those in the U.S., which means that in a tariff-driven stock market decline, Canadian stocks are more likely to attract inflows.

The "Buy Canada" Movement Spreads to Financial Markets

Athanasios Psarofagis, an ETF analyst at Bloomberg Intelligence, pointed out that Canadian investors typically hold heavy positions in U.S. stocks, and now they want to reduce these holdings amid market uncertainty and trade disputes.

He attributed Canadian investors' interest in domestic stocks to a mix of patriotism and a "buy the dip" mentality. Psarofagis stated:

"Canadian investors are frustrated with the U.S. They think, 'Forget it, given what's happening right now, I'm not going to buy U.S. stocks; I'd rather buy Canadian stocks.'"

This sentiment is the latest evidence of the "Buy Canada" movement, as Canadians seek domestic alternatives for everything from fruits and vegetables to pension investments.

Philip Petursson, chief investment strategist at IG Wealth Management based in Winnipeg, Manitoba, also noted a strong aversion to holding U.S. stocks.

"Many clients say, 'I want to sell all my U.S. positions' because they don't like what's happening and don't want to be associated with it," he said.

"We advise against doing that, but clients are starting to see opportunities elsewhere in the world; the U.S. is no longer the only option."