Canadian investors stampeded into U.S. stocks in December, driving a large portfolio outflow to end the year. But for 2020 overall, the Canadian economy recorded positive cross-border investment flows, Statistics Canada says.
StatsCan reported that Canadian investors acquired an unprecedented $26.9-billion worth of foreign securities in December, including a record $22.4 billion in U.S. equities.
“Acquisitions mainly targeted investment fund shares tracking broad U.S. market indices, as well as shares of large-capitalization technology and pharmaceutical firms,” StatsCan said.
Alongside the record buying of U.S. stocks, Canadian investors added $4.4-billion worth of non-U.S. foreign shares in December, StatsCan noted.
Foreign investors bought $5.1-billion worth of Canadian securities in December, resulting in a $21.9-billion monthly net outflow from the Canadian economy.
Despite that large monthly outflow, cross-border portfolio investment added $87.1 billion to the Canadian economy in 2020, StatsCan said.
Overall, foreign investors acquired a record $141.1 billion of Canadian debt securities in 2020. More than half of that total was federal government debt, as foreign investors bought $38.3-billion worth of federal bonds and $37.3 billion in federal money market instruments.
“The overall borrowing needs from the federal government increased substantially in 2020 to support Canadian enterprises and households impacted by the Covid-19 pandemic,” StatsCan said.
For the year, foreign investors sold $14.1 billion worth of Canadian equities in 2020.
“The investment trend changed over the year as [foreign investors] sold $33.2 billion of Canadian shares in the first half of the year but purchased $19.1 billion in the second half,” StatsCan said.
Canadian investors acquired $40-billion worth of foreign securities in 2020, mostly in U.S. stocks. After dumping a record $29.2 billion in U.S. stocks in March as the pandemic hit, Canadians bought $70.2-billion worth of U.S. equities the rest of the year, StatsCan said.
On the fixed-income side, Canadian investors added $20.9-billion worth of U.S. corporate bonds in 2020, and sold $21.5 billion in U.S. government bonds.