Briefly:

(June 19, 2006) Non-residents invested $3.9 billion (net) in Canadian securities during the month of April, trailing Canadian acquisitions of $4.7 billion of foreign bonds and equities.

According to Statistics Canada, Canadian equities were the hot investment choice for non-residents in April, with foreign investors buying up $6.5 billion during the month, the highest purchase levels reported in more than 24 months. Regionally, U.S. residents were the largest investors, acquiring $4.0 billion worth of Canadian shares. U.K. investors followed suit with record purchases totaling $2.2 billion.

Canadian bonds fell out of favour during the month with non-residents selling off $2.2 billion, largely in federal government bonds. U.S. investors lead the overall divestment, reducing their holdings by $2.1 billion. Investors also sold off $419 million in money market holdings, led again by U.S. investors who sold $1.3 billion after purchasing $2.6 billion in March.

Canadian net purchases of American equities meanwhile fell from $2.6 billion in March to $2.4 billion in April. Acquisitions of other overseas stocks increased slightly to $1.9 billion while foreign bond purchases fell to $2.5 billion, down from $5.2 billion in March. Canadian investors also reduced their foreign money market holdings, selling off $253 million in April.

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Metals propel BMO’s Commodity Price Index

(June 19, 2006) Surging metal prices and strong gains in agricultural commodities moved the BMO Financial Group Commodity Price Index 1.3% higher in May, the second monthly increase in a row following a drop in the first three months of the years led by falling natural gas prices.

Despite the rise, sentiment turned against key commodities in the latter half of May and early June. In particularly, prices of several metals plunged, highlighting the market’s vulnerability to jitters at such high prices. The bank says it expects the volatility to continue but it also expects commodity markets to remain generally buoyant for the rest of the year.

During the month the forest products index posted a 0.8% increase, the oil and gas index fell 3.4% and the metals and minerals index rose 11.6% with significant gains in base metals and precious metals. Broad based gains also pushed the agricultural index 8.3% higher in May, 11.2% above levels posted a year ago.

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Staff

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