Analysis:Frgn Portfolios Reinforce Cdn Bond Exposure in Aug

--Foreign Investment in Canadian Securities +C$9.8B

--Canadian Investment in Foreign Securities +C$12.0B

By Yali N'Diaye

     OTTAWA (MNI) - Foreign securities portfolios reinforced exposure to

Canadian bonds in August, explaining most of their C$9.8 billion investment in

Canadian securities over the month, Statistics Canada reported Monday. 

     Canadian investors, for their part, split purchases of foreign securities

between bonds and equities, with a focus on the U.S. market. 

     Investment in Canadian bonds rose C$8.2 billion in August, following a

C$23.8 billion increase in July, bringing the total year-to-date to C$89.6

billion, the largest such investment on record.

     Foreign investors favored Canadian government bonds, where their exposure

rose C$6.1 billion, with a focus on secondary market purchases of Canadian

dollar-denominated securities. 

     Foreign investors also bought C$4.3 billion Canadian federal government

bonds, as well as C$2.9 billion of private corporate bonds. 

     Canadian equities were less popular, with investments falling to C$0.2

billion in August from C$1.6 billion in July, the smallest such investment since

last April. 

     During the month, long-term Canadian interest rates fell 12 basis points,

and U.S. equivalent rates were down 11 basis points. 

     Canadian investors added C$12.0 billion to their foreign securities

holdings in August, with a preference for the U.S. market. 

     Of the C$4.8 billion investment in foreign debt, C$4.9 billion was in

bonds, the largest investment since February 2016, led by U.S. corporate bonds

(C$2.7 billion), U.S. Treasuries (C$1.6 billion), and to a lesser extent, non-US

bonds (C$0.6 billion). 

     Investment in foreign equity recovered C$7.2 billion in August, including a

C$6.7 billion investment in U.S. shares.

--MNI Ottawa Bureau; +1 613 869-0916; email: yali.ndiaye@marketnews.com

[TOPICS: MACDS$,M$C$$$]