U.S. bull market lures Canadian investors

Canadians are making the most of 2017’s stellar market performance south of the border.

Since the year’s start, Canadian investors have acquired foreign securities to the tune of $67.5 billion, with more than three-quarters going to U.S. equities, reveals a StatsCan report. That compares to acquisitions totalling $15.1 billion for the same period in 2016.

U.S. stock prices rose by 15.1% from December 2016 to October 2017.

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For October, Canadian investors’ holdings of foreign securities reached $16.5 billion, representing the highest investment in foreign securities since December 2015.

Canadian investors acquired $14.2 billion of foreign equities in October—again, mostly U.S. stocks. That compares to acquisitions of $1.1 billion in September. Stock prices were up 2.2% in the month.

Canadians’ foreign debt securities reached $2.2 billion in October, and consisted largely of U.S. corporate bonds. U.S. long-term interest rates were up 16 basis points and short-term interest rates were up four basis points in the month.

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Foreign investment flows to Canadian bonds, away from financials

Foreign investment in Canadian securities totalled $20.8 billion in October, up from $16.7 billion in September, says the report. Foreign investment was led by record acquisitions of Canadian bonds.

For the year, foreign investment in Canadian securities totals $171 billion.

“Nearly three-quarters of this was in instruments issued by Canadian private corporations; mainly bonds denominated in foreign currencies,” says the report, noting firms are motivated by low interest rates to actively raise funds abroad.

Foreign investment in Canadian equities slowed to $1.7 billion in October, following a $3.9 billion investment in September.

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“Foreign purchases of Canadian shares from the management of companies as well as the trade and transportation industries accounted for most of this activity,” says the report. But those purchases were moderated by a $2.9-billion reduction in foreign holdings of Canadian equities from the finance and insurance industry. Canadian stock prices were up by 2.5% in the month, says the report.

Read the full report.

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