Foreign buyers boost Canadian, U.S. securities

By Wire services | November 17, 2011 | Last updated on November 17, 2011
2 min read

Foreign investors added $7.4 billion of Canadian securities to their holdings in September, led by acquisitions of federal treasury bills, according to Statistics Canada.

Non-residents acquired $7.2 billion of Canadian short-term securities in September, just short of the $7.4-billion high of July 2011.

For the third quarter, non-residents’ investment in Canadian money market instruments was $16.2 billion, surpassing the high of $9.9 billion in the fourth quarter of 2008.

Non-residents removed $612 million from their holdings of Canadian bonds in September, following a $6-billion acquisition in August.

Canadian investment in foreign securities slowed to $718 million and remained focused on foreign stocks. Canadians added $1.3 billion of foreign stocks to their portfolios, led by acquisitions of U.S. corporate shares.

Canadian investors sold off their holdings of foreign bonds by $469 million, mostly U.S. corporate bonds. Canadians also reduced their holdings of foreign money market instruments by $151 million in September, all U.S. treasury bills.

Canadians weren’t alone in their appetite for U.S. securities. Net long-term securities transactions increased to a $68.6 billion inflow in September, topping August’s $58 billion inflow and eclipsing July’s $9.1 billion inflow.

Private foreign investors bought $28.5 billion worth of long-term securities, while “official investors” bought $37.3 billion. China continued to buy up U.S. Treasury securities to the tune of $11.3 billion in September, after a net sell-off of $36.5 billion in August.

“After the political bickering in Washington D.C. over the debt ceiling and with the S&P downgrade behind us, foreigners still want to buy American,” writes Chris G. Christopher, Jr., senior principal economist, IHS Global Insight.

“Despite the anemic economic recovery in the U.S. and its various political failings—the U.S. is still the prettiest pig at the fair. And, given the current financial and economic woes in Europe, the U.S. is beginning to look even prettier.”

Wire services