Foreign investors piled into Canadian bonds in January, while Canadian investors dumped U.S. stocks, according to new data from Statistics Canada released Monday.
The national statistical agency reported that foreign investors added $33.5 billion worth of bonds in January, led by record investment in provincial government bonds ($10.8 billion worth), with strong corporate bond buying ($15.4 billion) and $7.3 billion in federal government bond additions.
The surge in bond buying marked the largest investment in Canadian bonds by foreign investors since April 2020, when the onset of the pandemic drove massive new debt issuance.
The stampede into bonds was partially offset by reduced exposure to Canadian money market instruments, which was down $18.9 billion in January — including $10.5 billion in corporate paper and $8.9 billion in federal government paper. That, StatCan said, reflected “a reallocation of foreign investment from short-term to long-term debt instruments for these sectors.”
Foreign investors also trimmed their exposure to Canadian equities by $6.6 billion in January.
At the same time, Canadian investors reduced their holdings of foreign securities by $3.2 billion overall, led by a $15.6 billion divestment from U.S. stocks.
“Following eight consecutive months of significant investment in U.S. securities from February 2024 to September 2024, investment patterns have changed with Canadian investors reducing their exposure to U.S. securities for three of the last four months for a total divestment of $9.5 billion,” StatCan said.
Over the same period, Canadian investors have added $25.0 billion in non-U.S. foreign securities, it noted.
In January, investors also reduced their holdings of non-U.S. foreign stocks by $1.9 billion and trimmed their holdings of U.S. government paper by $1.4 billion, StatCan reported.
This selling activity was partly offset by investors adding $14.4 billion in foreign debt securities in January.
Overall, international securities transaction activity generated a net inflow of $11.1 billion to the economy in January, StatCan said.
