Considering Canada's Commodity Complex
From the commodity development point of view, Canada fares well, with a large landmass (the second largest country), an abundance of multiple natural resources, and a somewhat small population base. With the growing prominence of themes around de-globalization, balkanization, and more narrowly focused economic arrangements, the potential resource base within one's borders looks to become a more critical theme versus reliance on imports – especially from countries outside alliances and trade blocks.
The Canadian equity capital market is roughly 50% commodity-oriented. With the economy exposed directly to commodities, the current price levels for many commodities support overall market performance. Further, recent geopolitical events help support policy initiatives that can stimulate resource development in the country.
There is a high degree of correlation between the CAD and oil price. Given the significant skew of energy, particularly oil, to the overall economy, the CAD is widely regarded as a "petro-dollar." With the current energy balance in Europe and the significant reliance on Russian energy, Canada's positioning among the world's most important oil and natural gas producers is worthy of focus.
While vitally important, oil is only one of Canada's Commodity exports. In Ontario, the provincial government released a "Critical Minerals Strategy Unlocking potential to drive economic recovery and prosperity 2022-27" to help promote the development of resource-rich north and legacy mining areas (Ontario's Critical Mineral Strategy). Similar efforts are under way in British Columbia and Alberta across Canada's legacy mining regions, among other sites.