By Akhil Shah
OTTAWA (MNI) Non-resident investors added C$11.8 billion worth of
Canadian securities to their portfolios in July, resuming “the pattern
of significant acquisitions,” Statistics Canada reported Friday in its
report on Canada’s international transactions in securities.
During the same time period, Canadian investment in foreign
securities increased by C$1.3 billion and remained concentrated in
stocks.
The majority of the foreign investments focused on Canadian
short-term debt instruments. Led by federal Treasury bills, foreign
investors acquired C$7.3 billion worth of Canadian money market
instruments in July.
Investments in Canadian money market paper has increased in the
recent months with non-residents buying C$12.7 billion since April. This
was because of a weakening of stock prices in most major world markets,
and an increase in the supply of Treasury bills along with a narrowing
of the spread between long- and short-term rates.
Foreign investors also increased holdings of Canadian bonds in
July, purchasing C$2.0 billion worth after divesting C$4.5 billion in
June. The activity was focused on Canadian private corporate bonds,
split between new issues and secondary market acquisitions, the agency
reported. However, this increase was offset by a divestment in Canadian
government bonds for a second straight month, led by secondary market
sales.
Non-resident investors bought C$2.5 billion worth of Canadian
stocks in July, mostly a result of Canadian direct investment
acquisitions of foreign firms, resulting in new issues of Canadian
shares to foreign shareholders of the acquired firm, Statcan reported. A
2.7% decline in Canadian stock prices moderated the overall inflow.
Canadian investors increased holdings of foreign equity in July,
adding C$2.8 billion worth to their portfolios, marking a seventh
consecutive monthly gain. Investments remained concentrated in U.S.
corporate stocks as prices retreated 2.1% in July (though most of it
occurred during the last days of the month). This was the lowest level
of investment in three months, and followed acquisitions of C$6.2
billion in May and C$3.9 billion in June.
Resident investors continued to shy away from foreign bonds, as
they withdrew C$1.7 billion in July. This marked the fifth straight
month where investors divested from these instruments, totaling C$12.1
billion. The selling was concentrated in U.S. government bonds and
focused on medium- to long-term instruments. Canadians acquired C$191
million worth of foreign money market paper in July as they added
sovereign debt and non-financial corporate paper to their portfolios.
— Akhil Shah is a reporter with Need To Know News in Ottawa
** Market News International **
[TOPICS: M$C$$$ MAUDS$]