Foreign investment rose in May after a relatively quiet April, with non-residents purchasing $1.7 billion in Canadian securities, Statistics Canada said today.

Investment for the month occurred entirely in debt securities as foreign investors reduced their holdings of Canadian shares, the agency said.

Meanwhile, Canadians continued increasing their holdings of foreign securities but by only $305 million, substantially less than in the previous three months. Canadians invested in foreign bonds and stocks but sold off some of their holdings of foreign money market paper.

After a number of months of lacklustre activity in the sector, foreign investment in Canadian bonds surged in May with non-residents purchasing $2.6 billion worth.

Most sectors experienced an increase in holdings with purchases of corporate bonds totalling $2.1 billion, and provincial government issues totalling $1.4 billion.

However, foreign investors continued to reduce their holdings of federal government bonds for a fourth consecutive month, selling off $950 million. Over the last six months, non-residents have sold off $6.9 billion of federal government bonds.