Analysis:Frgn Portfolios Pile On Record C$24B Cdn Bonds in Jul>

--Foreign Investment in Canadian Securities +C$24.0B

--Canadian Investment in Foreign Securities -C$1.8B

By Yali N'Diaye

     OTTAWA (MNI) - Foreign investors piled on Canadian bonds in July, 

helping boost their total portfolio holdings of Canadian securities by 

C$24.0 billion over the month, following a C$0.9 billion divestment in 

June, Statistics Canada reported Monday. 

     Meanwhile, Canadian investors divested C$1.8 billion in foreign 

securities, as a C$1.1 billion investment in debt securities, mainly 

U.S. Treasuries (C$0.7 billion), was more than offset by a C$2.9 billion 

divestment in foreign equities. 

     Divestment in foreign equities was led by non-US equity, with C$2.5 

billion, while holdings of U.S. stocks were down C$0.5 billion despite a 

1.9% gain in U.S. stock prices over the month. 

     Foreign investors, on the other hand, purchased C$1.6 billion in 

Canadian equities, while Canadian stock prices edged down 0.3% in July. 

Investment resulted from cross-border mergers and acquisitions. 

     The bulk of foreign investors' purchases, however, targeted 

Canadian bonds, with a record C$23.8 billion. 

     During the month, when the Bank of Canada raised its overnight 

policy rate by 25 basis points to 0.75% as had been widely expected by 

analysts, short-term Canadian rates rose 8 basis points and long-term 

rates were up 35 basis points. In the U.S., short-term rates rose 9 

basis points and long-term rates 13 basis points. The loonie appreciated 

against the greenback by 3 U.S. cents. 

     Purchases of Canadian federal government debt increased by C$8.0 

billion, the largest investment since May 2016. 

     Foreign investors also focused on private sector corporate bonds, 

with purchases reaching C$12.9 billion, the largest investment since 

March 2015, led by new issues in foreign markets (C$11.4 billion), 

largely denominated in foreign currencies. Roughly half of such bonds 

were issued by Canadian banks, the agency said. 

     Overall, foreign investment in Canadian debt rose C$22.3 billion in 

July, the largest gain since May 2012. 

     Year-to-date, foreign investment in Canadian securities reached 

C$124.0 billion, with C$97.3 billion in securities issued by private 

corporations. 

--MNI Ottawa Bureau; email: yali.ndiaye@marketnews.com 

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