Foreign investors returned strongly to Canada’s debt market in August while Canadians continued to buy foreign equities.
Canada recorded a net inflow of $6.4 billion from international securities transactions in August, down from $9.3 billion in July. Foreign investment in Canadian securities totalled $25.9 billion, while Canadian investors added $19.5 billion in foreign holdings.
Non-resident investors purchased $31.2 billion in Canadian bonds, the largest monthly gain since April. Investment in money market instruments rose by $1.4 billion, as buying of corporate paper outweighed sales of short-term government debt.
Foreign investors reduced their holdings of Canadian shares by $6.7 billion after a rise in July, with the decline spread across several sectors, including energy and mining. Foreign buying increased in the banking sector, while the S&P/TSX Composite Index advanced 4.8 percent from July.
Canadian investors continued to look abroad, buying $21.2 billion in foreign shares, including $17 billion in U.S. equities and $4.2 billion in non-U.S. markets, the largest such investment since March. The S&P 500 Index rose 1.9 percent in August, while the Euro Stoxx 50 was unchanged.
Canadians sold $7.9 billion in U.S. government bonds but added more U.S. corporate and non-U.S. bonds, resulting in a $1.7 billion reduction in total foreign debt holdings.