In a recent report released by Statistics Canada, December 2023 witnessed a flurry of activity in Canada’s international securities transactions, highlighting notable shifts in investment patterns and global economic dynamics.
Canadian investors made headlines with a remarkable $29.4 billion investment in foreign securities during December. This surge, an all-time high, was predominantly fueled by a staggering $29.5 billion acquisition of foreign shares. Of particular note was the significant interest in US equity securities, with a whopping $23.2 billion injected into the market, marking the largest investment in three years. Investors showed keen interest in large-cap technology shares and broad US equity market index funds. Additionally, Canadian acquisitions of non-US foreign shares amounted to $6.3 billion, primarily targeting European shares. This surge coincided with a positive trend in global equity markets, with US share prices climbing by 4.7% according to the Standard and Poor’s 500 composite index.
Conversely, foreign investment in Canadian securities amounted to $10.4 billion, primarily concentrated in debt instruments. Foreign investors added $11.0 billion of Canadian debt securities to their portfolios, focusing on private corporate debt denominated in US dollars and issued by Canadian chartered banks. Furthermore, non-resident investors acquired $5.3 billion of government debt securities, particularly federal government bonds and provincial government paper. However, December saw a modest divestment of $532 million in Canadian shares by foreign investors, marking the 11th month of divestment in 2023.
The report also provided insights into annual trends in cross-border portfolio investments for the year 2023. Despite central bank policy rate increases in major economies, Canadian investors added $33.4 billion of foreign bonds to their portfolios, with a focus on foreign government bonds. Additionally, Canadian investors injected $13.1 billion into US shares in 2023, following a significant divestment in the previous year. Conversely, foreign investment in Canadian securities remained strong, with non-resident investors acquiring $79.7 billion worth of Canadian bonds in 2023, primarily in private corporate bonds denominated in foreign currencies. However, foreign investors reduced their holdings of Canadian shares by $48.7 billion during the same period.
The unprecedented surge in Canadian investment in foreign securities underscores investor confidence amid positive market sentiments. Conversely, foreign investment in Canadian securities remained steady, with a notable focus on debt instruments.