Foreign investors stay hungry for Canadian debt

Foreign investors continued to snap up Canadian securities in July, while domestic investors pulled back from foreign investment, Statistics Canada says.

The national statistical agency reported that foreign investment in Canadian securities came in at $11.6 billion in July — led by $10.3 billion in corporate bonds and $5.2 billion of government bonds amid rising interest rates.

With four straight months of strong buying activity, foreign investors added $48.1 billion worth of Canadian securities over that period, StatsCan said.

In July, foreign investors also trimmed their holdings of Canadian equities by $1.2 billion. And through the first seven months of the year, foreign investors dumped $36.7 billion in equities, StatsCan reported.

Instead, the focus has been fixed income, with investors buying up $75.9 billion in Canadian debt securities, “led by investment in private corporate bonds,” StatsCan said.

At the same time, Canadian investors curbed their buying of foreign securities in July, adding just $2.6 billion in the month, down from $14.4 billion in June.

“The investment activity in July focused on U.S. equity securities and was moderated by a divestment in foreign bonds,” the report said. Specifically, Canadian investors added $5.5 billion worth of U.S. equities in July, primarily large caps and index funds.

This was largely offset by investors selling $5.4 billion in foreign bonds during the month.

Domestic investors also added $1.9 billion of foreign money-market instruments to their portfolios in July, which was the largest amount so far this year.

Overall, the continued strength in foreign buying, combined with the decline in activity by Canadian investors, resulted in a $9.0-billion net inflow for the economy in July, StatsCan said.

Staff

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