Foreign investors are piling back into Canada’s US$3.2 trillion stock market after a pandemic-driven exodus.

The nation’s equities are on pace to record the highest foreign inflows since 2017, adding US$22.7 billion as of the end of April, according to Bloomberg calculations based on Statistics Canada data. Overseas investors were net sellers in the past two years, partly because of a lack of large-cap technology stocks, the early winners of the COVID-19 pandemic.

The S&P/TSX Composite Index has rallied nearly 16 per cent this year, outpacing the S&P 500 Index’s 12 per cent rise, thanks to its large weighting in cyclical and value stocks. Financial firms, materials stocks and oil and gas companies -- all beneficiaries of accelerating economic growth -- make up 56 per cent of the Canadian benchmark.

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The TSX is traditionally a destination for investors looking for a higher risk-reward ratio, with energy and mining stocks making up about a quarter of the index. Rising commodity prices, a strong earnings outlook and an accelerating vaccine rollout have boosted investor confidence. The economy expanded at a 5.6 per cent annualized rate in the first quarter, despite the headwind of coronavirus containment measures.

A rising Canadian dollar has also helped encourage capital flows from foreign investors. The loonie is the top-performing currency against the U.S. dollar among its G10 peers this year, rising more than 3 per cent, partly because of higher prices for oil, lumber and other commodities the nation produces.