June Canadian International Transactions in Securities: Inflows Up C$7.2bln, Outflows Plunge C$9.5bln
Inflows m-o-m: C$ 7.2bln
Outflows m-o-m: C$ - 9.5bln (divestment)
Non-resident demand for Canadian Securities moderated to C$ 7.2bln from a revised C$ 10.6bln (previously reported 10.7bln) still well above the consensus estimate of C$ 5.5bln. The continuing increase was led by acquisitions of Canadian bonds at C$6.2bln, bringing quarterly investment by non-residents to C$27.6bln, the highest level since Q4 2001. Federal enterprise sector bonds led the charge, up C$3.8bln, on attractive yields, while investment in outstanding federal government bonds also increased to C$2.7bln in June from C$257mln prior. Investment in Canadian stocks however dropped to C$362mln from C$2.5bln in May.
On the other hand Canadians reduced their investments in foreign securities by C$9.5bln from a revised increase of C$ 6.3bln in May (previously reported C$ 6bln). Almost 60% of the divestment was in foreign shares as equity markets turned bearish. Canadians sold C$2.9bln in foreign bonds mostly 2 and 5-year US government bonds as prices hit their lowest levels in 6 months. Canadians also disposed of C$ 475mln in foreign short-term paper continuing a trend that began in August 2007. The C$ 6.2bln divestiment of foreign stocks followed 4 consecutive months of acquisitions averaging C$ 4bln/month, reflected weakened stock prices in major markets. Almost 90% of June’s divestment was in non-US foreign stocks.