How Canada’s sofi investments are boosting the stock market in Canada
On the heels of the country’s latest global recession, Canada’s stock market is surging on hopes of further inflating the economy.
As of June 30, the S&P 500 index has gained almost 50 per cent this year, more than any other Canadian index since 2010, when the world’s financial crisis hit.
Investors have bought a number of Canadian companies, including Sofi, a Canadian-based company that invests in medical technology, technology and healthcare.
But for many Canadians, those investments are not enough to keep the Canadian economy growing.
“If I’m the average Canadian who’s looking to buy a home, and I have no idea what the value of that house is going to be in five years, I’m not going to buy it,” says David Leveque, an economist with the University of Toronto’s Munk School of Global Affairs.
“I’m not gonna invest my money in a company that’s going to go out of business, which will have negative implications for my retirement.”
Sofi shares soared on news that Canada’s biggest healthcare technology company, Sofi Health, had been acquired by Canadian giant Anthem.
That means the company’s stocks have climbed to $16.65.
Sofi stock has gained more than 80 per cent in the past three years, and it’s up about 15 per cent since the end of the global financial crisis.
While the company was already under pressure from investors in 2009 when Anthem bought Sofi for $7.2 billion, the deal was one of the biggest ever by Canadian corporations in terms of a merger, and has contributed to the stock’s rally this year.
In Canada, SoFi shares have surged by nearly 50 per.cent this year – a level not seen since 2009 when the stock was trading at $12.45.
“The whole notion that we can’t invest in the Canadian market, that we don’t have to, is pretty much the most outrageous idea I’ve heard in a long time,” says Leveques mother, Margaret.
“In Canada, you can’t even invest in Canadian companies.
And now the CEO of Sofi is going around saying they can’t buy Sofi because they’re Canadian, which is crazy.”
But Margaret is a big Sofi fan, and her son and other Sofi fans are buying Sofi stocks.
Margaret Leveques son says Sofi investing is making his parents rich – and making the stock price go up.
“They’re making my parents rich, and making them feel rich, so I’m very proud of them for doing that,” says Margaret.
That’s because the Sofi deal has helped keep Sofi’s stock price up more than 70 per cent over the past four years.
“Sofi is not going anywhere.
They’ve done everything they can to keep SoFi alive, and they’ve kept the stock going higher,” says Jim McVean, a senior vice-president at Sofi.
“It’s just a matter of what happens with Sofi.”
In addition to the new acquisition, Sofis shares have risen by more than 100 per cent during the past two years, thanks to its investments in other companies.
“We’re a very aggressive company.
We invest in things like health and healthcare,” says Paul Ponce, chief executive officer of Sofic.
“When Sofi was sold to Anthem, we went to Anthem and asked them to get rid of a lot of those health and health care investments, and to invest more in technology.”
That’s why Sofi has enjoyed a huge boost in recent years.
SoFi is a health-care technology company that specializes in creating and delivering artificial intelligence, medical technologies and data analytics.
It is also the largest maker of medical imaging equipment in Canada, and sells its equipment to hospitals and health- care providers.
Sofist has invested in other Canadian companies in the last few years, including a medical devices manufacturer called Stantec.
SoFis stock is up more by more over the last year than any Canadian company, including sofihealth, because of the sofi deal.
And for a number a Canadians, this news has made their investments worthwhile.
“This was a really important thing for me to see,” says James Soh, an investment banker at H.C. Johnson & Johnson.
“As a parent, I don’t think you should be investing in things that are going to have negative consequences for your child.
You shouldn’t be investing into companies that are not going be in business in five or 10 years.”