Foreign investors reduced their holdings of Canadian securities by $4.2 billion in January after a cumulative acquisition of $55.1 billion in the previous six months.
Canadian investors acquired foreign securities for a ninth straight month as they added $1.3 billion to their holdings, purchasing equities while selling debt instruments.
Foreign portfolio investment in Canadian securities
Non-residents make first divestment in Canadian short-term paper since June 2011
Foreign investors removed $4.6 billion from their holdings of Canadian short-term instruments in January after accumulating $26.0 billion in the second half of 2011. The divestment was primarily in Federal Treasury bills where retirements exceeded acquisitions. This was partly offset by foreign investment of $1.1 billion in provincial government and corporate paper.
Bonds have an original term to maturity of more than one year.
Money market instruments have an original term to maturity of one year or less.
Government of Canada paper includes treasury bills and US-dollar Canada bills.
Non-resident acquisitions of Canadian bonds slowed to $1.9 billion in January. Inflows were led by purchases of federal and provincial bonds on the secondary market, mainly by investors from the United Kingdom. These acquisitions were moderated by net retirements of provincial bonds for a fourth straight month. Canadian long-term yields increased eight basis points in January, with the resulting differential between long- and short-term rates widening by five basis points.
Non-residents sell Canadian shares as prices increase
Foreign investors reduced their holdings of Canadian stocks by $1.4 billion in January, as Canadian equity prices gained 4.2% in the month. On a geographical basis, sales were led by investors from the United Kingdom, with a $1.1 billion divestment. This was the first monthly divestment in Canadian stocks since April 2011, and the largest since November 2008.
Canadian investment in foreign equity markets sustained
Canadians added a further $3.4 billion of foreign stocks to their holdings in January, spread evenly between US and non-US equities. US equity prices increased 4.4% as all other major world stock markets also posted gains during the month. Demand in January was led by Canadian pension funds. January marked the 13th straight month of investment in foreign stocks, a period during which Canadians have added nearly $30 billion to their portfolios.
Canadians reduce their holdings of foreign debt instruments
Canadian investors reduced their holdings of foreign debt instruments by $2.1 billion in January. The divestment, the first in four months, was mainly in US government bonds and Treasury bills. This was partially offset by a fourth straight monthly acquisition of US corporate bonds. US long-term interest rates were up by eight basis points in January, the first increase in three months.