Fund managers move to neutral on Canada as the TSX trades below US multiples
Critical minerals are the first area the European Union's investment bank is examining as it explores how to finance Canadian projects, and the lender is working toward a framework agreement that would enable those investments.
Nadia Calviño, president of the European Investment Bank, set out that position in an interview with CBC News's Rosemary Barton Live that aired Sunday, September 20.
"We haven't been very active in Canada until now," Calviño said.
The framework under discussion would cover critical minerals "and beyond," she told Barton, and her visit to meet federal ministers shows that "in Europe, we put our money where our mouth is."
Asked whether the bank could finance future oil and liquefied natural gas pipelines, Calviño said the European Investment Bank has "consolidated its role as the climate bank" and is "much more interested in new technologies" and green energy generation.
CBC reported that Prime Minister Mark Carney, addressing the European Parliament in Strasbourg on Thursday, September 17, set out a goal of "seamless, digital" trade in non-agricultural goods and services, co-operation on computing capacity and AI safety protocols, and exploring an integrated market for financial services.
European Commission President Ursula von der Leyen said the day before, according to CNBC, that she wanted to work with Carney "on opening the door for Canada to being the first associate member of the European Union."
The same outlet reported that associate membership does not exist as a formal category under EU treaties and would need to be created and ratified by member states.
Carney told reporters there "will be debates, plural, not just a single debate, and there will be a vote in the Canadian Parliament."
Multiple fund managers are boosting equity allocations in Canada, Bloomberg reported citing a stock market trading at a discount to its US counterpart, an improving growth outlook, and Carney's promises of tax cuts, fiscal policy certainty and regulatory rollbacks.
Bloomberg linked the shift to the Canada Investment Summit in Toronto, where Carney is seeking $1tn of investment.
About 45 percent of S&P/TSX Composite Index members were trading above their 50-day moving averages when Bloomberg reported, down from 85 percent at the beginning of 2026.
The benchmark was priced at less than 16 times earnings over the next 12 months, below the 19 times multiple on the S&P 500.
Irene Fernando, co-head of North American equities at RBC Global Asset Management, which has $834bn in assets under management, told Bloomberg the moment is "a wake up call for a lot of people to start doing their work and start paying attention to what is happening in Canada."
BMO Global Asset Management, which has $296bn in assets, was underweight Canada before this month and has moved to neutral, chief investment officer Sadiq Adatia told Bloomberg.
Net foreign buying of Canadian stocks reached $7.2bn in July 2026, the fastest rate of the year.
Over the same month Canadian investors sold more than $31bn of US shares, a record, after purchasing almost $78.1bn in the first half.
"There is no such thing as associate membership in the EU treaties," Jörn Fleck, senior director of the Atlantic Council's Europe Center, wrote on September 16, noting that ten EU member states have not ratified CETA, blocking its investment provisions from entering force.
Trump has called the prospect "laughable" and threatened tariffs if he deems it a "hostile act," CNBC reported.
A Canada-EU summit follows in Montreal on October 29 and 30.
