It appears Canadian investment vehicles were not as sexy to foreign investors in January as they were the month before.
Figures released Tuesday morning by Statistics Canada revealed foreign investment in Canadian securities totaled $1.3 billion in January, the lowest investment in six months. Meanwhile, Canadian investors acquired $3.5 billion in foreign securities, down considerably from a $26.9-billion investment in December.
As a result, Canada's international transactions in securities generated a net outflow of funds from the Canadian economy of $2.3 billion in January.
The agency goes on to say offshore investors added a record $10.3 billion of provincial government bonds to their portfolios in January, led by primary market activities. Canadian provinces resumed their borrowing activities in international markets, as net issuances amounted to $8.7 billion, mainly in bonds denominated in U.S. dollars. This activity followed net retirements of $1.5 billion in December 2020.
In January, non-resident investors reduced their holdings of federal government debt securities by $10.9 billion, after accumulating $75.5 billion in 2020. This was the largest divestment since March 2018. The decline of foreign holdings in the month was mainly attributable to net retirements of treasury bills.
Meantime, folks in this country propelled their holdings in foreign securities to $3.5 billion in January, as sizeable purchases of non-U.S. securities were moderated by a divestment in U.S. securities. Overall acquisition activity slowed considerably from an unprecedented $26.9 billion investment in the previous month, nearly all in U.S. shares.
Canadian investors purchased $7.1 billion of non-U.S. foreign shares, the highest investment in more than a year. Meanwhile, investors reduced their holdings of U.S. shares by $2.8 billion, a first divestment since March 2020 when global stocks markets posted substantial losses in the context of the COVID-19 pandemic. U.S. stock prices, as measured by the S&P 500 composite index, declined slightly in January, from record high levels in the previous month.
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