Foreign investors restore confidence in Canadian securities

Meanwhile, Canadian investors reduced their exposure to foreign securities according to Statistics Canada data

Foreign investors restore confidence in Canadian securities
Steve Randall

After divesting more than $22 billion of Canadian securities in September, foreign investors’ sentiment swung back in favour to the tune of $8.5 billion a month later.

Canadian investors reduced their holdings of foreign securities by $1.7 billion, after buying more than $10 billion worth in the previous month.

The latest figures from Statistics Canada show that international transactions in securities generated a net inflow of funds of $10.1 billion in the Canadian economy in October, for a total of $123.8 billion in 2022.

Non-resident investors’ cash was focused on Canadian corporate debt with a total $14.4 billion acquired, while retirement of provincial government bonds offset some of this gain ($5.3 billion).

The divestment of Canadian equities continued, but at a slower pace than in the previous month with just $253 million sold in October compared to a $9 billion pull-back in September.

Canadians dump US shares

Canadians reduced their international securities holdings with US equities the largest casualty.

They divested $1.7 billion of foreign securities in October, following investment of $10.4 billion in September, with a reduction of $13 billion in equities including $11.4 billion in US shares.

However, foreign bonds were still in favour for Canadian investors who acquired $10.7 billion in October, following a $12.9 billion investment in September.

As US long-term interest rates overtook the Canadian equivalent, Canadian investors bought a record $9.3 billion of US government bonds plus $3.5 billion of non-US foreign bonds.

 

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