Canadian investors continued their stampede into U.S. equities in August, driving an outflow of funds from the Canadian economy, Statistics Canada reports.
Investors added $12.7-billion worth of U.S. equities in the month, pushing the total for the year to $44.5 billion, which marks a turnaround from a $2.5-billion divestment in the same period last year.
Alongside the buying of U.S. stocks, investors added $2.9 billion of other foreign equities in August, which was partly offset by a $3.3-billion drop in foreign debt holdings.
“The decline in [foreign debt in] August followed seven consecutive months of investment,” the national statistical agency reported. It said investors also reduced their holdings of foreign money market instruments by $2.7 billion in the month.
Overall, Canadian investors increased their exposure to foreign securities by $12.3 billion in August, while foreign investors added $10.0-billion worth of Canadian securities.
“The investment activity targeted debt securities and was moderated by a foreign divestment in equity securities,” StatCan said.
Offshore investors added $21.9-billion worth of Canadian debt securities in August, including $10.9 billion in corporate bonds and $9.7 billion in federal government bonds.
“Foreign investment in federal government bonds has reached $69.9 billion so far in 2024, compared with $3.9 billion over the same period in 2023,” the agency noted.
In August, foreign investors shed $11.9-billion worth of Canadian equities, it said.
“This was the third monthly divestment in four months and the largest since June 2022,” StatCan said. “On an industry basis, the divestment in August was mainly in shares of the energy and mining industry.”
With Canadian investors’ appetite for U.S. stocks outpacing foreign buying of Canadian securities, cross-border securities transaction activity generated a net outflow of $2.4 billion from the economy in August — partly reversing the $6.4-billion inflow recorded in July.