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(CEP News) Ottawa - Purchases of Canadian bonds helped accelerate foreign investment in Canadian securities in May to $10.7 billion, a result completely at odds with economists' expectations of a contraction in Canada's international transactions in securities.
Consensus estimates prior to the release of Statistics Canada's report had put May's figure at $3.5 billion. But the statistical agency said Thursday foreign investors scooped up $7.7 billion worth of new Canadian bonds, mainly long-term provincial and private corporate sector debt instruments. Non-residents also added $490 million worth of outstanding Canadian bonds and money market instruments to their portfolios in May. In terms of stocks, foreign investors bought $2.5 billion shares in May for a fourth straight month of equity investment. Two-thirds of the buying was in secondary markets with shares of technology, mining and energy firms drawing most of the foreign inflows, Statistics Canada said. Foreign investors also disposed of federal government enterprise bonds for the first time in nine months, Statistics Canada said. Meanwhile, Canadian investors diversified their portfolios by buying "a sizable amount of foreign securities," Statistics Canada said. Canadian investors bought $5.1 billion worth of stocks with some $4.4 billion going to non-U.S. stock. Total purchases of foreign stocks since February 2008 have amounted to $15.8 billion, Statistics Canada noted. Canadian investors also purchased $1.2 billion in foreign money market paper, the second investment in such instruments since the asset-backed commercial paper meltdown in August 2007, Statistics Canada said. Half of the May acquisition went into U.S. Treasury bills as short-term interest rates in the U.S. rose by a sharp 44 basis points. Statistics Canada also said there was a nominal $187 million divestment of foreign bonds in May and added Canadians continued to divest themselves of Maple bonds. By Sean McKibbon,
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