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Canaccord CEO Says Trade Chaos Hinders Deals, Canada Investment

The logo for Canaccord Genuity is shown in Toronto on Wednesday, March 8, 2023. (THE CANADIAN PRESS/Staff)

(Bloomberg) -- Uncertainty around North American trade has hindered capital-markets activity and stalled investments in Canada, according to Canaccord Genuity Group Inc. Chief Executive Officer Daniel Daviau, who said he remains confident that deals and financings will mount a comeback later this year. 

“Volatility doesn’t help capital markets,” Daviau said in an interview Tuesday. “I think most Canadian business leaders are finding the current state of political interaction a little frustrating. That’s true from the US level and I think it’s also true on the Canadian level where there’s a bit of lack of leadership.”

The back-and-forth over whether the US would slap tariffs on Canada came down to the wire on Monday, with an agreement to pause for 30 days reached only at the last minute. Prime Minister Justin Trudeau also resigned as leader of the Liberal Party last month and there’s a race to find his replacement. 

“You wouldn’t invest in Canada right now until you have elements of stability. And I think that’s a problem,” Daviau said.

Canaccord announced financial results for the three months through December after markets closed on Tuesday, posting record numbers in its wealth-management business. The division, which saw revenue increase by 19.7% to C$233.4 million ($163 million) in the fiscal third quarter, has been the firm’s dependable growth engine for several years.

The company’s capital-markets unit, which posted a string of gloomy quarterly reports last year, also saw revenue grow by 11% to C$210.7 million in the period, mostly due to increased investment-banking activity in the US.

Still, the firm posted a net loss of C$11.6 million in the quarter as a series of one-time expenses, including compliance and technology costs dented its bottom line. Profit on an adjusted basis was C$29.3 million, or 17 Canadian cents per share.

Daviau expects momentum at the capital-markets division to continue notwithstanding the current trade-war fears. The new US administration is expected to be more open to approving transactions, he said, while ample bank liquidity should give CEOs the confidence to take risks.

“It’s as conducive of a market as we’ve seen post-Covid for getting things done,” he said.

The firm also said Tuesday that it officially promoted Nadine Ahn to global chief financial officer after hiring her as deputy CFO in October. Ahn was previously the top finance executive at Royal Bank of Canada before being fired last April and subsequently suing for wrongful dismissal, a claim the bank disputed.

Canaccord’s current CFO, Donald MacFayden, will remain active in the firm’s US capital-markets business.

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