Foreign purchases of Canadian securities at 4-year low

Net purchases of Canadian securities from outside the country are at their weakest level since April 2009, says Desjardins senior economist Benoit Durocher.

They’re at $48.6 billion over the last 12 months, and the level of global investment has clearly been declining since the start of 2013, he says in a research note.

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Because of this, the S&P/TSX composite index is under-performing compared to most other industrialized countries’ indexes, he adds.

Investments totalled $8.4 billion in September, mostly due to increases in the prices of equities and investment funds, but these types of monthly results can be volatile. In June, net foreign purchases were -$15.4 billion.

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Durocher says the lower demand is due in part to Ottawa’s attempt to cut back the deficit, as it’s issuing fewer debt bonds. But this is only part of the cause, as the drop in foreign demand exceeds this situation.

To encourage more demand, he says Canada should keep the dollar below parity.

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Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.