By Ketki Saxena
Investing.com - Statistics Canada reported today that foreign investment in Canadian securities, as well as Canadian investment in foreign securities rebounded in July, following significant divestments in June.
Foreign investors acquired $14.8 billion of Canadian securities, while Canadian investors added $4.3 billion of foreign securities to their holdings. The activity resulted in a net net inflow of funds of $10.5 billion into the Canadian economy, following a net outflow of $3.1 billion in June.
Foreign investment in Canadian securities
The $14.8 billion worth of Canadian securities acquisition by Foreign investors (after divestment of $17.6 billion in June) was largely driven by debt securities, largely those issued by Canadian private corporations and, to a lesser extent, federal government bonds.
Foreign investment in Canadian private corporate debt securities was driven largely by new issuances of US dollar-denominated instruments of Canadian chartered banks. Foriegn investors also increased their exposure to federal government bonds by $7.5 billion.
Foreign investors continued to divest their holdings of government paper both federal (-$3.5 billion) and provincial (-$2.8 billion), and Canadian equities (-$2.2 billion). Canadian companies buying back shares from their foreign investors contributed to the overall divestment of Canadian equities in July.
Canadian Investment in Foreign Securities
Canadian investors meanwhile acquired $4.3 billion of foreign securities in July, following a divestment of $14.6 billion in June.
The activity was led by Canadians’ investments in US government bonds, which totalled $5.2 billion in July, the largest investment in 2022.
Canadian investors marginally reduced their holdings of foreign shares in July, largely in US equities. StatsCan notes that In July, investors added $1.1 billion of non-US foreign equities to their portfolios, and sold approximately the same amount of US shares.