Canadian securities attracted strong demand in May
Foreign investors loaded up on debt issued by Canada’s governments in May, new figures from Statistics Canada reveal.
Canadian federal government bonds attracted $12.9 billion while provincial government bonds added a further $5.8 billion and corporate took the total to $20.9 billion marking a third consecutive monthly net acquisition.
Recently, John Beck of Franklin Templeton Fixed Income shared with WP why bonds are a key portfolio diversifier in today's volatile market.
Canadian bonds have seen $110 billion from non-resident investors so far in 2024, compared to less than $58 billion in the same period of 2023.
Corporate papers were focused on instruments issued by Canadian chartered banks with a total $10.9 billion invested in May, the largest investment since December 2022.
However, foreign investors cut back their exposure to Canadian shares by $9.5 billion, the biggest pullback since June 2022, driven by redemption of shares due to M&A activity and sales on the secondary market.
The S&P/TSX Composite Index was up 2.6% in May while the S&P 500 gained 4.8% in the month.
Canadian investors added $3.9 billion in foreign securities to their portfolios, including $3.1 billion in bonds, mostly non-US and $0.7 billion in shares, mostly US. The slowdown reflects a pause following a record investment in foreign securities by Canadian investors of $51.5 billion in the first quarter of 2024.
New data from Edward Jones Canada shows that Canadians are divided on whether now is a good time to invest, with 43% believing it is, 40% saying it is not, and 17% unsure.
Overall, international transactions in securities generated a net inflow of funds of $17.0 billion in the Canadian economy in May, following an inflow of $40.4 billion recorded in April.
