Foreign investment in all types of Canadian securities strengthened in November with non-residents adding $15.0 billion to their holdings, the largest such inflow of funds since May.
Canadian investors purchased $2.8 billion of foreign securities, evenly split between stocks and bonds. For the 11 months ending in November, foreign investment in Canadian securities was $88.2 billion compared with $14.7 billion of Canadian investment in foreign securities.
Foreign portfolio investment in Canadian securities
Foreign acquisition of Canadian debt securities strengthens
Foreign investors acquired $6.2 billion of Canadian bonds in November, the largest such inflow since May. This investment consisted of secondary market purchases of Canadian government bonds and acquisitions of new Canadian corporate bond issues.
Activity on the secondary market was primarily composed of $2.1 billion in foreign acquisition of provincial government bonds and $1.2 billion of federal bonds. Non-resident investment of $2.8 billion in new bond issues of Canadian private corporations was evenly split between financial and non-financial corporations. Canadian long-term interest rates fell 23 basis points in November and the Canadian dollar depreciated against the US dollar.
Non-resident investment in the Canadian money market increased to $5.7 billion in November. This was the fifth straight monthly acquisition of these instruments, a period during which foreign holdings increased $23 billion. Activity in November was led by a $4.8 billion foreign purchase of federal paper, partly reflecting new issues in the month. The differential between long- and short-term interest rates narrowed in November.
Non-residents purchase additional Canadian stocks as prices ease
Non-resident acquisitions of Canadian corporate shares increased to $3.1 billion in November, led by secondary market purchases by US investors. November marked the seventh straight month of such investment, and the largest since March. Canadian equity prices were down 0.4% in November, following a 5.4% increase in October.
Canadian acquisition of foreign bonds up further
Canadians purchased $1.6 billion of foreign bonds in November, the third straight month of investment in these instruments following six months of divestment. Acquisitions mainly focused on bonds issued by US firms from the energy and financial sectors.
Canadians reduced their holdings of foreign money market instruments by $291 million in November. The retirement of European government paper more than offset the acquisition of US Treasury bills over the month.
Canadian investors continue to strengthen their position in foreign equities
Canadians further increased their holdings of foreign equities in November as they added $1.5 billion to their portfolios, spread almost evenly between US and non-US foreign instruments. Canadian investment in the US stock market, led by pension funds, resumed after the divestment in October. US stock prices were down 0.5% in November following a 10.8% gain in the previous month.