Folks offshore acquired a further $9.5 billion of Canadian securities in October, mainly adding sizeable amounts of corporate bonds and stocks to their portfolios, according to figures released this morning by Statistics Canada.
The nation's number crunchers said Canadian investment in foreign securities decelerated to $821 million, with investment in U.S. government Treasury bills largely offset by sales of foreign equities.
Strong foreign acquisitions of Canadian bonds totalling $7.8 billion in October were led, for a third month, by corporate bonds. Foreign purchases of Canadian private corporate bonds amounted to $5.1 billion in October, with the bulk in new US dollar denominated bonds issued by financial and transportation firms.
StatsCan also says non-residents added provincial government bonds to their portfolios for a seventh consecutive month with purchases of $3.0 billion in October, nearly all secondary market transactions. Non-residents have acquired $20.1 billion of provincial government bonds so far in 2010, exceeding the previous high annual foreign investment of $17.5 billion in 1993.
In contrast, non-residents reduced their holdings of federal government bonds by $755 million in October, mostly shorter term-to-maturity instruments. This marked the second divestment in 18 months. Nevertheless, foreign acquisitions so far in 2010 have amounted to $36.5 billion, exceeding net annual inflows in any previous year.
At the short end of the spectrum, non-residents also reduced their holdings of Canadian paper by $1.2 billion. This was mainly due to retirements of foreign-currency denominated instruments issued by the federal government and its enterprises, as well as by provincial governments.
Non-residents purchased $3.0 billion of Canadian equities on the secondary market in October, adding to the $3.4 billion acquired in September. Again, foreign investors added shares of chemical and fertilizer producers but sold bank and gold shares. Canadian stock prices continued their upward trend in October, rising 2.5%, and ending the month at the highest levels since August 2008.
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