Canadian investors made a significant impact on the global market in December, as they purchased a record amount of foreign securities. Though foreigners reduced their holdings of Canadian shares, they made up for it by adding debt securities to their portfolios.
According to Statistics Canada’s report on Friday, these international transactions in securities resulted in a net outflow of 18.96 billion Canadian dollars, which is equivalent to $14.08 billion, from the Canadian economy. However, Canadian investment in foreign securities reached an all-time high of C$29.4 billion during that month.
The surge in investment was fueled by a striking C$29.47 billion worth of share buying. This increase more than compensated for the decrease in Canadian investors’ holdings of foreign shares over the previous two months.
Notably, investment in U.S. equities reached its highest point in three years, hitting C$23.2 billion in December. Large-cap technology stocks and investment fund shares tracking broad U.S. market indexes were the primary focus of Canadian investors, as indicated by the data agency.
At the same time, nonresident investors purchased a net C$10.44 billion in Canadian securities, slightly lower than the C$11.31 billion added in November.
Foreign investors demonstrated continued interest in Canadian debt securities by adding C$10.97 billion to their portfolios in December. This comes after their acquisition of C$16.33 billion worth of Canadian debt securities the previous month. The majority of this investment was directed towards private corporate debt, with Statistics Canada highlighting that it primarily consisted of new instruments denominated in U.S. dollars and issued by Canadian chartered banks.
Nonresident Investment in Canadian Equities Shrinks
Nonresident investment in Canadian equities inched lower by C$532 million, continuing the trend of the previous two months.
International Securities Report Highlights
The monthly international securities report provides insights into transactions involving equity and investment fund shares, bonds, and money market instruments. These transactions involve both Canadian and foreign issues. It’s important to note that transactions between affiliated enterprises are not included in the report.
Foreign Investment in Canadian Securities in 2023
In 2023, during a period marked by central bank policy rate hikes in major economies and price increases in global stock markets, foreign investors injected C$32.42 billion into Canadian securities. This figure represents a significant decline from the C$137.61 billion invested in the previous year.
Although non-resident investment in Canadian shares decreased by C$48.7 billion after a reduction of C$12.02 billion in 2022, non-resident investment in Canadian bonds remained robust, with investors adding C$79.66 billion to their holdings.
Canadians Ramp Up Investments in Foreign Securities
Canadian investors substantially increased their exposure to foreign securities over the year, with a total of C$53.04 billion added.
Canadian investors added approximately C$16 billion worth of foreign shares, including C$13.1 billion of U.S. shares. This followed the sale of about C$71.3 billion in 2022. On an annual basis, Canadians acquired C$33.37 billion of foreign bonds after purchasing C$48.49 billion the previous year.