Foreign investors continued to channel money into Canadian securities in November, but the data point to growing caution toward Canadian equities and a clear preference for debt at a time of falling interest rates.
Foreign investors added $16.3 billion of Canadian securities to their portfolios in November, well below October’s $46.6 billion inflow. At the same time, Canadian investors stepped up purchases of foreign assets, acquiring $16.5 billion worth. The offsetting movements resulted in a modest net outflow of $161 million from the Canadian economy, a sharp reversal from October’s $58.2 billion net inflow.
The bulk of foreign demand was concentrated in Canadian debt securities, particularly private corporate instruments. Purchases of corporate bonds and money market instruments totalled $19.6 billion, underscoring strong appetite for credit exposure as short-term interest rates fell to their lowest level since mid-2022. Government debt also attracted inflows, led by provincial and federal bonds, though the gains were partially offset by divestments in other government paper.
In contrast, foreign investors reduced their exposure to Canadian equities by $7.5 billion, following a sizable investment the month before. Sales were concentrated on the secondary market and were reinforced by share retirements linked to mergers and acquisitions. Energy and mining stocks saw the largest reductions, while banking shares attracted modest inflows, reversing the sector dynamics seen in October.
The equity pullback occurred even as Canadian share prices rose 3.7% over the month, suggesting that higher valuations may have encouraged profit-taking rather than renewed confidence in the market’s outlook.
On the other side of the ledger, Canadian investors showed renewed enthusiasm for foreign equities. Purchases of non-US shares reached their highest level since April 2022. US equities also saw renewed inflows, led by large-cap technology stocks, nearly offsetting October’s divestment.
Capital continues to move actively in and out of Canada, but the preference for debt over equity points to lingering uncertainty about growth prospects and earnings durability in the months ahead.