Canada

Friday, February 15, 2019 - 08:37

MNI DATA ANALYSIS:Frgn Investors Sell Record C$25b Cdn Bonds


By Yali N'Diaye

OTTAWA (MNI) - Foreign investors rebalanced their portfolio holdings of Canadian securities in December to cut exposure to bonds while further adding to Canadian equities, Statistics Canada reported Friday.

Overall, foreign investors reduced their holdings of Canadian securities by C$19.0 billion in December, the largest divestment since October 2007.

For 2018 as a whole, their investment in Canadian securities rose C$69.6 billion, not even half the C$189.2 billion investment recorded in 2017.

Meanwhile, Canadian investors reduced their portfolios' exposure to foreign securities by C$0.4 billion, bringing down the investment to C$58.1 billion in 2018 from C$84.7 billion in 2017.

As a result, the net inflow of funds into the Canadian economy, which is part of the financial flow account fell to C$11.4 billion in 2018, the lowest in 11 years, including a net outflow of C$18.5 billion in December.

- RECORD DIVESTMENT IN CANADIAN BONDS

Foreign investors rotated out of Canadian debt, with a record divestment of C$25.7 billion in December, reflecting a record C$24.8 billion divestment in Canadian bonds.

The divestment was across all bond categories, led by corporate bonds, where retirements mostly explained the C$15.5 billion reduction in portfolio holdings. The C$8.0 billion divestment in private sector bonds was a record.

For 2018 as a whole, foreign investors divested a record C$38.2 billion in federal government bonds, following a C$29.2 billion investment in 2017.

Instead, foreign investors favored Canadian equity and investment fund shares, with a C$6.7 billion investment.

- CANADIAN INVESTORS FAVOR NON-US STOCKS

Canadian investors also focused their investments on stocks, with a preference for non-US shares, where investment was up C$1.1 billion, compared to a C$0.4 billion divestment in U.S. shares. Overall investment in foreign equity and investment fund shares rose C$0.6 billion.

Canadian investors cut their portfolio exposures to foreign debt by C$1.1 billion, including C$1.5 billion in U.S. bills and C$2.0 billion in U.S. Treasuries.

--MNI Ottawa Bureau; email: yali.ndiaye@marketnews.com

[TOPICS: MACDS$,M$C$$$]

Please log in to read and leave comments