MNI DATA ANALYSIS:Frgn Investors Sell Record C$25b Cdn Bonds>

By Yali N'Diaye

     OTTAWA (MNI) - Foreign investors rebalanced their portfolio 

holdings of Canadian securities in December to cut exposure to bonds 

while further adding to Canadian equities, Statistics Canada reported 

Friday. 

     Overall, foreign investors reduced their holdings of Canadian 

securities by C$19.0 billion in December, the largest divestment since 

October 2007. 

     For 2018 as a whole, their investment in Canadian securities rose 

C$69.6 billion, not even half the C$189.2 billion investment recorded in 

2017. 

     Meanwhile, Canadian investors reduced their portfolios' exposure to 

foreign securities by C$0.4 billion, bringing down the investment to 

C$58.1 billion in 2018 from C$84.7 billion in 2017. 

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

which is part of the financial flow account fell to C$11.4 billion in 

2018, the lowest in 11 years, including a net outflow of C$18.5 billion 

in December. 

     - RECORD DIVESTMENT IN CANADIAN BONDS 

     Foreign investors rotated out of Canadian debt, with a record 

divestment of C$25.7 billion in December, reflecting a record C$24.8 

billion divestment in Canadian bonds. 

     The divestment was across all bond categories, led by corporate 

bonds, where retirements mostly explained the C$15.5 billion reduction 

in portfolio holdings. The C$8.0 billion divestment in private sector 

bonds was a record. 

     For 2018 as a whole, foreign investors divested a record C$38.2 

billion in federal government bonds, following a C$29.2 billion 

investment in 2017. 

     Instead, foreign investors favored Canadian equity and investment 

fund shares, with a C$6.7 billion investment. 

     - CANADIAN INVESTORS FAVOR NON-US STOCKS 

     Canadian investors also focused their investments on stocks, with a 

preference for non-US shares, where investment was up C$1.1 billion, 

compared to a C$0.4 billion divestment in U.S. shares. Overall 

investment in foreign equity and investment fund shares rose C$0.6 

billion. 

     Canadian investors cut their portfolio exposures to foreign debt by 

C$1.1 billion, including C$1.5 billion in U.S. bills and C$2.0 billion 

in U.S. Treasuries. 

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

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