Foreign investors added federal government debt and Canadian corporate debt to their holdings in July, driving inflows to the Canadian economy, according to new data from Statistics Canada.
The national statistics agency reported that offshore investors acquired $11.0-billion worth of Canadian securities in July, up from $5.2 billion in June.
“The investment in July focused on debt securities and was mainly in bonds,” StatCan said.
Specifically, foreign investors added $8.8 billion of federal government debt securities, including $6.5-billion worth of federal bonds.
Through the first seven months of the year, investors have acquired $59.4 billion in federal bonds, compared with $12.5 billion over the same period in 2023, StatCan reported.
In July, foreign investors also added $6.9 billion of corporate bonds.
“The activity reflected issuances of new bonds by financial institutions and denominated in foreign currencies,” the agency noted.
At the same time, foreign investors reduced their holdings of corporate paper by $6.3 billion in July, and they added $1.9-billion worth of equities, following two straight months of divestment, StatCan said.
While foreign investors increased their holdings of Canadian securities, Canadian investors added just $4.5 billion in foreign securities, down from $16.4 billion in June.
“The slowdown in activity targeted both foreign debt securities and foreign shares,” StatCan noted.
Indeed, after adding $10.0-billion worth of foreign equities in June, Canadian investors added just $2.1 billion in July.
“The lower acquisition was largely the result of a reduction in investment in U.S. equity securities from $12.5 billion in June to $6.4 billion in July,” it said.
Investors also added $2.3 billion of debt securities, while reducing their exposure to foreign money market instruments by $2.4 billion in July — reversing a similar investment in June.
StatCan noted that the monthly investment in U.S. government bonds came in at $2.1 billion in July, up from around $700 million in June.
Year-to-date, Canadian investors have acquired $24.6-billion worth of U.S. government bonds this year, StatCan said, compared with $2.3 billion over the same period in 2023.
Given the rise in foreign flows, and the decline in offshore investment by Canadian investors, portfolio flows generated a net inflow of $6.5 billion into the Canadian economy in July, it concluded.