MNI DATA ANALYSIS:Foreign Investors Favor Cdn Corp Bonds In May>

By Yali N'Diaye

     OTTAWA (MNI) - Foreign investors acquired C$2.2 billion of Canadian 

securities in May, the smallest increase since last December, with a 

focus on corporate bonds, data from Statistics Canada showed Monday. 

     Meanwhile, Canadian investment in foreign securities increased 

C$5.7 billion in May, following two months of divestments, led by bonds. 

     --FOCUS ON CORPORATES 

     Foreign investors increased exposure to Canadian corporate bonds by 

C$8.6 billion, bringing the total year-to-date to C$41.9 billion, up 

from C$35.5 billion during the same period in 2017. 

     Purchases were split between government enterprises (+C$3.9 

billion) - which can include agencies such as Canada Mortgage and 

Housing Corporation and Export Development Canada - and private 

corporations (+C$4.6 billion). 

     --GOVERNMENT DEBT SELLING 

     On the other hand, foreign investors cut exposure to Canadian 

federal government debt by C$1.5 billion. 

     Year-to-debt divestment in Canadian federal bonds was C$35.1 

billion, compared to a C$2.0 billion investment between January and May 

2017. 

     Foreign investors bought C$3.2 billion in U.S. dollar denominated 

bonds, C$2.8 billion in Canadian dollar denominated bonds, and C$1.4 

billion in non-USD foreign currency bonds. 

     The spread between U.S. and Canadian long-term yields widened by 73 

basis points in May. 

     --EQUITY DIVESTMENT 

     Foreign investors also reduced exposure to both Canadian shares and 

investment fund shares by a total of C$2.8 billion, the first divestment 

in six months. 

     Redemptions of Canadian equities related to mergers and 

acquisitions explained a large share of the divestment. 

     Canadian stock prices rose 2.9% in May. 

     --CANADIAN INVESTORS FAVOR BONDS 

     Likewise, Canadian investors favored bonds in their acquisitions of 

foreign securities. 

     Debt purchases totaled C$9.2 billion, mostly bonds (C$8.5 billion). 

     Canadian investors reduced exposure to foreign equities by C$3.5 

billion. 

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

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