Cross-border investment returns: StatsCan

After a pullback in June, cross-border securities investment resumed in July, according to new data from Statistics Canada.

Foreign investors added $14.8 billion of Canadian securities in July, partially reversing the $17.6 billion divestment in June.

In July, offshore investors targeted corporate bonds in their return to the Canadian markets, StatsCan said

Foreign investment in corporate debt totalled $18.3 billion in the month, led by investment into U.S. dollar-denominated securities issued by the banks.

Investors also added $7.5 billion worth of federal government bonds, representing their largest monthly investment in 2022.

Conversely, foreign investors also shed federal money market securities and sold $2.2 billion worth of Canadian equities.

StatsCan said that the reduction in equity holdings came, in part, through share buybacks by Canadian companies. The modest pullback in equity holdings in July followed a $12.7 billion divestment in June.

At the same time, Canadian investors added $4.3 billion worth of foreign securities to their portfolios in July, after dumping $14.6 billion worth in June, StatsCan reported.

In particular, investors added $5.2 billion in U.S. government bonds, while also selling $1.1 billion worth of non-U.S. foreign equities.

“Overall, Canadian investors reduced their exposure to foreign equity securities in 2022 by $55.3 billion, led by sales of U.S. shares,” StatsCan said.

The increase in cross-border investment activity resulted in a net inflow of $10.5 billion to the Canadian economy in July, more than reversing the net outflow of $3.1 billion in June.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.