Foreign investors returned in August: StatsCan

Canadian debt back in demand, domestic investors add U.S. securities

After two months of divesting, foreign investors resumed buying Canadian securities in August, Statistics Canada reports.

The national statistical agency said that international securities transactions generated a net inflow of $9.8 billion in August, pushing aggregate inflows through the first eight months of the year to $112.6 billion.

In August, foreign investors added $15.5-billion worth of Canadian securities, primarily debt securities, StatsCan reported. Meanwhile, domestic investors acquired $5.7-billion worth of foreign securities, largely in U.S. stocks.

“The foreign investment activity reflected a strong demand on the secondary market for long-term debt securities issued by government entities,” the agency reported.

Foreign investors added $13.3 billion of Canadian debt in the month, partially reversing the $17.5 billion that was shed in June and July.

In particular, investors acquired $7.6 billion of federal government bonds, $2.5 billion of provincial bonds and $1.8 billion of federal enterprise bonds.

Foreign investors also increased their holdings of Canadian short-term debt securities for a second straight month.

Alongside the rebound in debt investment, foreign investors bought $2.3-billion worth of Canadian stocks in August, which is the largest total since February 2019.

Bank stocks were the focus, StatsCan reported, as the banking index rose 4.2% in the month — outpacing the 2.1% gain in Canadian stocks overall.

At the same time, Canadian investors added $7.7-billion worth of U.S. stocks in August, led by large-cap tech stocks. That group also acquired $2.1 billion of foreign debt securities, primarily U.S. corporate bonds and Treasuries.

This was offset by investors selling $4.1 billion of non-U.S. foreign equities in the month.