MNI DATA ANALYSIS:Forgn Investors Cut Cdn Gov Bonds,Add Corps>

By Yali N'Diaye

     OTTAWA (MNI) - Foreign investment in Canadian securities rose C$6.1 

billion in March, with a focus on money market instruments and private 

corporate bonds, data released by Statistics Canada showed Thursday. 

     Meanwhile, Canadian investors cut their foreign securities holdings 

by C$1.9 billion, as a C$10.5 billion divestment in equity and 

investment fund shares outweighed debt investments (C$8.6 billion). 

     For the first quarter, foreign investment in Canadian securities 

was C$18.3 billion, the smallest since the third quarter 2015. 

Securities transactions generated a net outflow of funds from the 

economy of C$1.7 billion after eight consecutive quarters of net 

inflows. 

     -- FEDERAL GOVERNMENT DIVESTMENT 

     Foreign investors divested a record C$13.6 billion in federal 

government bonds, mostly through sales of short-term bonds with a 

maturity of five years or less on the secondary market. The divestment 

also reflected retirements. 

     Instead, foreign investors increased exposure to the short term of 

the Canadian curve with a C$6.3 billion investment in money market 

instruments. 

     Total debt investment was up C$5.6 billion. 

     --NON-CAD CORPORATES 

     Foreign investors also increased their holdings of Canadian private 

corporate bonds by C$11.3 billion, the largest investment since October 

2017, with a preference for euro-denominated bonds. 

     The focus on euro-denominated corporate bonds was consistent with a 

general preference for non-US bonds within foreign currency denominated 

bonds. 

     Overall, foreign investors divested C$0.7 billion in Canadian 

bonds, with an C$11.2 billion divestment in Canadian dollar-denominated 

securities. Within foreign currency bonds, there was a C$12.2 billion 

investment in non-US denominated bonds and a C$1.7 divestment in US 

dollar-denominated bonds. 

     --LITTLE EQUITY INTEREST 

     On the equity side, foreign investment in Canadian shares was just 

C$0.7 billion in March. 

     Canadian investors were even less interested in foreign equities, 

with a C$10.5 billion divestment in equity and investment fund shares, 

the largest divestment since January 2016. Canadian investors cut U.S. 

holdings by a record C$7.4 billion and non-US holdings by C$3.1 billion, 

the largest divestment since April 2017. 

     On the debt front, Canadian investors added exposure to foreign 

debt as their holdings increased by C$8.6 billion, the largest 

investment since December 2014, favoring both non-US bonds (C$3.7 

billion) and U.S. corporates (C$2.4 billion). 

--MNI Ottawa Bureau; email: yndiaye@mni-news.com 

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