Foreign investors ramped up their exposure to Canadian securities in December, while Canadian investors pulled back, according to data from Statistics Canada.
On Monday, the national statistics agency reported that foreign investors added $14.4 billion worth of securities in the final month of 2024, almost entirely in debt securities.
Overall, investors added $13.8 billion in Canadian debt during the month, including $13.9 billion in federal government bonds, which was the highest investment since April 2020, the immediate aftermath of the onset of the pandemic.
Conversely, foreign investors slashed their exposure to Canadian corporate bonds by $8.2 billion in December. This marked the largest divestment from corporate bonds since July 2020, StatCan noted.
November’s record investment in government money-market instruments also dropped in December, falling to just $0.2 billion from the previous month’s record $15.3 billion. However, foreign investment in private corporate paper held up, with $5.4 billion in monthly acquisitions.
“The investment activity in December occurred against the backdrop of a reduction of the Bank of Canada’s policy rate, from 3.75% to 3.25%, and the depreciation of the Canadian dollar against the U.S. dollar,” StatCan said.
Investors also added a modest $0.5 billion in Canadian equities in December, which marked an improvement from the $8.6 billion divestment that was recorded in November.
At the same time, Canadian investors added $5.3 billion worth of foreign equities in the month, led by $4.4 billion flowing into U.S. equities.
This was partly offset by a $1.5-billion divestment from foreign debt securities in December, resulting in net acquisitions of $3.8 billion in foreign securities during the month, down from $17.6 billion in November.
For 2024 overall, foreign investors increased their exposure to Canadian securities by $192.9 billion, up sharply from $32.8 billion in 2023, StatCan reported.
Most of the foreign buying came in debt securities, with investors adding $100.3 billion in federal government bonds during the year, along with $78.9 billion in corporate bonds — while investors reduced their equity holdings by $7.6 billion in 2024.
Canadian investors also increased their exposure to foreign securities in 2024, with investors adding $111.7 billion worth of foreign securities during the year, up from $53.6 billion in 2023.
In particular, domestic investors added $86.9 billion in foreign bonds in 2024, up from $33.4 billion in 2023. They also added $26.3 billion worth of foreign equities, which was an increase from $16.3 billion in the previous year.
“The bulk of the activity in 2024 targeted U.S. shares, with purchases totalling $41.8 billion,” StatCan said, with most of the buying coming in large cap tech stocks.
StatCan noted that cross-border securities investment has ramped up over the past five years, “reflecting the increased exposure of Canadian investors to international financial markets, notably to the U.S. market.”
From 2020 to 2024, Canadian investors added $361.6 billion in foreign securities, with two-thirds of that total ($243.1 billion) going into U.S. securities. By comparison, Canadian acquisitions of U.S. securities in the period between the financial crisis and the pandemic (2010 to 2019) totalled $228 billion, StatCan said.
The increased investment in U.S. securities over the past five years was split almost evenly between equities, $122.9 billion worth, and debt, $120.2 billion worth, including $51 billion into U.S. Treasury bonds, the agency reported.
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