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By Yali N'Diaye
OTTAWA (MNI) - Foreign investors acquired C$2.8 billion of Canadian
securities in August as their acquisitions of Canadian equities and
money market instruments outweighed their divestment in Canadian bonds,
data from Statistics Canada showed Tuesday.
Meanwhile, Canadian investors cut their portfolios' exposure to
foreign securities by C$0.2 billion after a C$13.1 billion investment in
As a result, the net inflow of funds into the Canadian economy,
which is part of the financial flow account, was C$3.0 billion in
- OUT OF CANADIAN BONDS
Foreign investors rotated out of Canadian bonds in August, which
was reflected in a C$7.4 billion divestment.
They sold C$C$3.8 billion of federal government bonds, for a C$32.5
billion divestment year-to-date, the largest since January-August 2003.
Foreign investors also sold C$3.3 billion of private corporate
bonds, the largest divestment since June 2015. Statistics Canada noted
that new private corporate issues abroad were at their lowest level in
Provincial bonds were the only bond category to attract foreign
flows in August, and even then, it was barely C$1.0 billion.
- FOCUS ON MONEY MARKETS, EQUITIES
Inflows into Canadian money markets and equities offset the
divestment in bonds.
Foreign investors' holdings of money market instruments were up
C$4.9 billion in August. Their acquisitions of Canadian equity and
investment fund shares reached C$5.3 billion, the highest level since
May 2017, and the third straight investment.
During the month, Canadian short-term interest rates increased 14
basis points, while long-term rates were up 4 basis points. Canadian
stock prices fell 1.0%.
- CANADIAN INVESTORS FAVOR FOREIGN BONDS
While foreign investors moved out of Canadian bonds, Canadian
investors favored foreign bonds over foreign equities.
Investment in foreign bonds was up C$3.6 billion, mostly non-US
bonds and, to a lesser extent, U.S. corporate bonds.
Canadian investors reduced their holdings of foreign equities by
C$3.7 billion, with a focus on U.S. shares (-C$27.0 billion), while they
acquired non-US shares.
--MNI Ottawa Bureau; email: firstname.lastname@example.org