Foreign investors stock up on Canadian bonds

Foreign investors piled into Canadian bonds in August, driving cross-border securities acquisitions to $22.0 billion in August, according to new data from Statistics Canada.

The economy enjoyed a net inflow of $23.4 billion from international securities transactions in August, as Canadian investors trimmed their foreign holdings by $1.4 billion, alongside the surge in foreign investment.

StatsCan reported that foreign investment in Canadian bonds totalled $20.1 billion in August, primarily in new issues by the banks denominated in U.S. dollars and euros. Investors also added $6.1 billion in federal government bonds, and $5.1 billion in government enterprise bonds.

At the same time, foreign holdings of Canadian equities remained relatively stable, with investors selling just $15 million worth in August, following a $16.6 billion divestment over the previous four months.

In particular, foreign investors sold shares of companies in the manufacturing, energy and mining sectors, which was somewhat offset by purchases of stocks in the banking and transportation industries, the agency noted.

At the same time, StatsCan reported that Canadian investors reduced their foreign securities allocations in August, following $4.3 billion worth of buying in July.

“The reduction in August was mainly due to sales of U.S. corporate securities and was moderated by acquisitions of non-U.S. foreign bonds,” it said.

Specifically, Canadian investors sold $1.4 billion worth of U.S. equities in August, leading a $2.3 billion divestment from foreign equities overall.

Through the first eight months of the year, investors have now sold $57.6 billion worth of foreign equities, following $71.2 billion in acquisitions over the same period in 2021, StatsCan said.

In August, Canadian investors also acquired $862 million worth of foreign debt securities, adding $2.0 billion in non-U.S. bonds, and selling $1.4 billion in U.S. corporate bonds.

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.