Foreign investors increased their holdings of Canadian securities by $3.7 billion in July, Statistics Canada said today. Nearly all of the increase occurred in Canadian bonds because of a surge in net new issues which totalled $3.8 billion.

July’s net new issues were the largest since March 2003. Corporations had $2.8 billion in net new issues followed by provincial governments with $1.1 billion.

Non-residents also returned to Canadian stocks by purchasing $640 million in July, more than offsetting the $400 million sold off in June. StatsCan said the buying in July was primarily in outstanding shares with American investors doing the bulk of the investing.

However, foreign investors reduced their holdings of Canadian money market paper by $632 million following two months of exceptionally heavy buying totalling $3.2 billion. Asian investors were the principal sellers of money market paper in July—a reversal from June when they were the biggest buyers, StatsCan said.

Meanwhile, after divesting their holdings of foreign securities in June, StatsCan said Canadians resumed investing in foreign securities by purchasing $587 million worth in July.

Canadians added to their holdings of foreign bonds and equities during July.

Canadian investors purchased $465 million of foreign bonds in July, StatsCan said, continuing a trend that began in December 2003.

Canadians also purchased $122 million of foreign equities in July, partially offsetting the $740 million divested in June. The statistical agency noted that Canadians shied away from overseas equities, investing solely in US securities in July,