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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$$$]

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