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The latest tally of international securities transactions is out this week, and it’s not a pretty picture for Canada.
Foreign investors added $709 million in Canadian securities in June, the first investment since January, and while that might seem like good news, National Bank of Canada economist Warren Lovely says Canadians should hold their applause.
Foreign investors bought $6.9 billion in Canadian bonds in June, down from $9.7 billion in May. Corporate bond purchases led the way, followed by provincial government bonds. There was a $1.3 billion reduction in foreign holdings of federal government bonds.
But they dumped equities. Foreign investors reduced their exposure to Canadian shares by $3 billion in June, following a divestment of $11.5 billion in May. Most of this was in the banking sector and trade and transportation industries.
Meanwhile, Canadians acquired $9 billion in foreign securities, most of it in U.S. stocks and non-U.S. bonds. This resulted in a $8.3 billion outflow from the Canadian economy in the month and brought the total exit for the second quarter to $43.7 billion, said Statistics Canada. There was a similar outflow in the first quarter.
In 2024, foreign buying soaked up almost 75 per cent of net Government of Canada debt issuance, but that share dropped dramatically in the first half of this year.
Domestic investors were left to pick up the slack, acquiring $100 billion of net GoC supply in the first half, said National. Annualized, that’s 6 per cent of GDP and doesn’t include the funding needs of non-central governments, public sector entities and private corporations.
https://financialpost.com/news/foreign-investors-canada-missing-in-action
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