Canadian investors dive into foreign securities

Canadian investors snapped up a record $29.2 billion in foreign securities in April, more than reversing a $25.2-billion divestment in March, according to Statistics Canada.

The bulk of the buying activity came in non-U.S. stocks and bonds.

Investors added $14.7 billion worth of foreign stocks, including $9.7 billion of non-U.S. stocks, in April. The buying volume in non-U.S. equities was the largest since the end of 2000, StatsCan noted.

“The investment activity in April focused on European shares and, to a lesser extent, Asian shares,” StatsCan said, noting that Canadian investors also added $5.0 billion worth of U.S. stocks to their portfolios.

At the same time, Canadian investors also bought $14.5 billion worth of foreign debt, led by a record $9.6 billion acquisition of non-U.S. bonds. Investors also added $2.1 billion in U.S. corporate bonds in the month.

Conversely, foreign investment in Canadian securities dropped in April, sliding to $22.2 billion and down from $46.5 billion in March.

“Foreign investment in April targeted private corporate bonds, and was moderated by a divestment in Canadian equities,” StatsCan reported.

Indeed, foreign investors added $24.3 billion in private corporate bonds in April: “largely new bonds denominated in foreign currencies and issued by banks,” the agency said.

However, foreign investors trimmed their exposure to Canadian equities by $615 million in April.

“Canadian companies buying back shares from their foreign investors contributed to the overall reduction,” StatsCan said. “Foreign purchases of Canadian shares on the secondary market moderated the overall decline, mainly shares of the trade and transportation industry.”

Overall, the surge in buying by Canadian investors resulted in a net outflow of $7.0 billion in April, following a record net inflow of $71.7 billion in the previous month.

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.