Foreign investors loaded up on Canadian debt in November, while domestic investors jumped back into U.S. equities, according to Statistics Canada.
The national agency reported that offshore investors acquired $30.1 billion worth of Canadian securities in November, marking the largest monthly total since April 2020 when buying surged in response to the onset of the pandemic.
The cross-border activity was concentrated on debt securities, with foreign investors adding $31.4 billion worth in the month, up from $20.4 billion the previous month.
StatsCan reported that investors targeted federal debt — adding $8.6 billion in bonds and $6.5 billion worth of money market securities — along with $9.8 billion in corporate debt.
Conversely, foreign investors trimmed $1.3 billion worth of Canadian equities in the month.
“The reduction reflected retirements of Canadian portfolio shares resulting from cross-border merger and acquisition activities. Foreign purchases of Canadian shares on the secondary market, led by shares of chartered banks, moderated the overall reduction,” StatsCan said.
At the same time, Canadian investors ramped up their buying of foreign securities in November.
In total, domestic investors added $17.5 billion in foreign securities, StatsCan reported. This was up from $5.4 billion in October.
Canadian investors jumped into U.S. stocks in November, buying $7.4 billion worth of equities, up from just $652 million in October. Large-cap tech stocks and index funds were the primary targets, StatsCan said.
Additionally, investors bought $4.0 billion worth of non-U.S. foreign shares in November, reversing a $2.5-billion divestment in October.
Canadian investors also added $6.1 billion in foreign debt, including $2.8 billion in U.S. corporate bonds and $1.6 billion in U.S. government bonds.
In a research note, National Bank Financial Inc. (NBF) said November’s $17.5-billion net investment means Canadian investors acquired $144.4 billion worth of foreign securities during the first 11 months of 2021.
“In dollar terms, you won’t find a prior [year-to-date] tally remotely close,” NBF said, noting that the previous record was $73.3 billion about 15 years ago.
Even with the record flow into foreign securities, net portfolio flows are still positive for Canada, as foreign buying of Canadian securities has been even stronger.
“An improved current account means Canada is less reliant on foreign inflows,” NBF said. “Still, the apparent abandonment of Canada by domestic investors is part of an overall capital bleed that needs redressing.”