Canadian investors moved funds out of the country in February, reversing January’s strong inflow and signalling a clear shift toward foreign markets.
They purchased $25.4 billion in foreign securities. At the same time, foreign investors bought $6.2 billion in Canadian assets. The gap led to a net outflow of $19.2 billion, compared with a $35.4 billion inflow in January.
Canadian investors bought a record $32.9 billion in foreign shares, with $29.2 billion going into U.S. stocks. Investment outside the U.S. remained limited, with $3.7 billion directed mainly to European markets.
At the same time, investors reduced their holdings of foreign bonds by $7.5 billion, including a record $12.6 billion sell-off of U.S. government bonds. Some of that was offset by $4.8 billion in purchases of U.S. corporate bonds.
Foreign investment in Canada slowed after January’s surge. Most of the February inflow went into bonds, which attracted $22.6 billion. Investors continued to favour corporate debt, adding $11.1 billion, while federal government bonds drew $8.4 billion.
However, foreign investors pulled back from other areas. They sold $7.3 billion in Canadian money market instruments and $9.2 billion in equities.
Overall, Canadian investors are moving more money into foreign equities, while foreign investors are focusing mainly on Canadian bonds and reducing exposure to equities.