Foreign investment in Canadian securities grows

Non-Canadian investors help to fuel growth.

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story_images_Canada-flagNon-resident investors favoured Canadian securities in August, while interest in Canadian equities fell, according to new figures released by Statistics Canada.

According to the release, foreign investors purchased $7.5 billion of Canadian debt securities in August, up substantially from the $2 billion acquired in July.

Foreign investment in Canadian bonds was $4.7 billion in August, with new bonds issued by corporations, both private and public, shown as a key target. While foreign investors acquired $19.5 billion in federal government bonds between January and August 2012, non-residents reduced their holdings of Canadian government bonds in August for the second time in three months, mainly federal bonds with short-term maturities.

Following a large divestment of Canadian money market investments in July, foreign investment in this area reached $2.8 billion in August. Foreign acquisitions of paper issued by Canadian private corporations posted the second largest inflow on record. This, combined with investment in provincial government paper, accounted for most of the activity over the month.

On the equities side, foreign investors divested themselves of $0.6 billion in Canadian equities in August, following a $4.7-billion investment in July. Canadian stock prices increased further in August, posting the largest monthly gain since January.

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