Foreign Investors Start Reducing Their Exposure to Canadian Debt Securities

Statistics Canada issued its International Transactions in Securities report yesterday, which showed that foreign investors have begun reducing their holdings of Canadian securities by $2.0 billion in December of last year.

According to the report, foreign investors dumped Canadian debt securities but also made additions to their Canadian equities portfolios.

Key points from the report:

-Foreign investors poured in $188.5 billion into Canadian securities in 2017, led by strong acquisitions of Canadian bonds.

-Foreign investors reduced their holdings of Canadian bonds by $4.0 billion in December of 2017.

-The divestment activity was focused mainly in provincial government bonds.

-Foreign investment in Canadian money markets came to $401 million in December.

-In December, Canadian short-term interest rates were up by 17 basis points and the Canadian dollar appreciated against the USD by 2.1 US cents.

-The Canadian equity market received foreign inflows of $1.7 billion in December.

And while foreign investors were reducing their exposure to Canadian bonds, Canadian investors were acquiring foreign securities by to the tune of $22.0 billion in December. Canadian investors in December purchased foreign equities totaling a record $19.8 billion - $11.4 billion went into the US market while $8.4 billion to other foreign markets.

"In 2017, Canadian investment in foreign securities reached $84.7 billion compared with $13.8 billion in 2016.," said Stats Canada.

Image credit Nicolas Raymond