Canadian investors pared back their foreign portfolio holdings in January, according to the latest data from Statistics Canada.
The national statistical agency reported that Canadian investors cut their holdings of foreign securities by $14.4 billion in January. At the same time, foreign investors added $13.5 billion worth of Canadian securities (primarily bonds), which resulted in a net inflow of $27.9 billion in January.
The monthly total was the largest since the earliest days of the pandemic, in April 2020.
The foreign divestment by Canadian investors in January also represented the largest total since March 2020, StatsCan noted. Moreover, it came on the heels of $21.3 billion investment in December and record investments of $165.5 billion in 2021.
“The reduction in the month was mainly because of sales of U.S. shares and was moderated by acquisitions of foreign bonds,” StatsCan said.
Indeed, Canadian investors sold $19.7 billion worth of foreign equities in January, marking the largest divestment since March 2020.
The selling was mainly in U.S. stocks, StatsCan said, as investors sold $16.9 billion worth of U.S. equities.
This selling activity was partly offset by Canadian investors acquiring $5.3 billion worth of foreign bonds in January, led by $2.6 billion worth of U.S. corporate bonds.
Similarly, foreign investors primarily targeted Canadian corporate bonds in their buying of Canadian securities in January.
Overall, investors added $18.3 billion in Canadian corporate bonds in January, and $3.8 billion in provincial government bonds. This was offset by selling in money market vehicles and Canadian equities ($731.0 million).