Foreign investors piled into Canadian securities in January, while Canadian investors shed their foreign holdings, which combined to produce a record fund inflow to start the year, according to the latest data from Statistics Canada.
After dumping more than $20 billion worth of Canadian securities at the end of 2018, foreign investors returned to Canada in January, adding $28.4 billion in Canadian debt and equities. At the same time, Canadian investors sold $8.8 billion of foreign securities, generating a record net inflow of $37.2 billion, StatsCan reported.
Foreign buying in January comprised $19.4 billion in bond purchases, and $9.0 billion in equity acquisitions.
StatsCan said that on the debt side, investors focused on government debt, mainly federal securities, with foreign buying of federal government bonds reaching a record $12.9 billion in January.
Investors also acquired $5.1 billion in money market instruments during the month, but they sold $1.3 billion in corporate bonds.
Much of the foreign buying of Canadian stocks was driven by M&A activity, which involved new shares being issued to foreign investors, StatsCan noted. The energy and mining sectors saw most of the foreign acquisitions in January.
At the same time, Canadian investors sold foreign equities in January, particularly U.S. stocks, StatsCan reported. It said that Canadian holdings of foreign equities overall dropped by $10.3 billion during the month, which was partially offset by $1.5 billion in foreign debt acquisitions.
The foreign bond buying was focused primarily on U.S. corporate bonds, StatsCan noted.