MNI DATA ANALYSIS: Foreign Investors Resume Cdn Bond Purchases>

By Yali N'Diaye

     OTTAWA (MNI) - Foreign investors acquired C$4.0 billion of Canadian 

securities in October, with a focus on the Canadian bond market, 

Statistics Canada reported Monday. 

     Meanwhile, Canadian investors increased their portfolio holdings of 

foreign securities by C$14.9 billion, the largest investment since 

January. 

     As a result, the net inflow of funds into the Canadian economy, 

which is part of the financial flow account, was C$4.8 billion 

year-to-date, down from C$100.7 billion over the same period last year. 

The decline was led by a C$33.9 billion divestment in Canadian federal 

government bonds combined with a C$58.8 billion increase in Canadian 

investment in foreign bonds. 

     - CANADIAN BOND PURCHASES RESUME 

     Foreign investors resumed their purchases of Canadian bonds in 

October, with a C$4.4 billion investment after two months of 

divestments. 

     In particular, they favored new issues abroad of provincial and 

private corporate bonds denominated in U.S. dollars. Purchases of new 

issues of provincial bonds were C$2.0 billion in October, mostly in U.S. 

dollars. Foreign acquisitions of new issues of Canadian private 

corporate bonds totalled C$3.2 billion on net, mainly in U.S. dollars as 

well. 

     Overall foreign investment in Canadian federal government bonds was 

up C$1.1 billion in October. It was up C$1.6 billion for provincial 

bonds and C$3.1 billion for private corporate bonds. 

     Foreign investors also continued to invest in Canadian equities 

over the month, with acquisitions up C$1.8 billion. The focus was on 

shares from the trade and transportation sectors. 

     - CANADIAN INVESTORS BUY FOREIGN BONDS, STOCKS 

     Meanwhile, Canadian investors continued to raise their portfolios' 

exposure to foreign securities, both bonds and equities. 

     Purchases of foreign bonds were up C$5.0 billion, led by non-US 

bonds (C$2.2 billion) and U.S. Treasuries (C$2.1 billion). 

     They also bought C$8.9 billion of foreign equities, the largest 

investment since January, including C$4.8 billion of U.S. shares. 

     Over the month, U.S. stock prices fell by nearly 7% and Canadian 

stock prices dropped 6.5% amid volatile conditions. 

     Short-term interest rates rose 22 basis points in Canada and 12 

basis points in the U.S., while long-term rates rose 7 basis points in 

Canada and 15 basis points in the U.S. The Canadian dollar depreciated 

by 1.2 cents against the greenback. 

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

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