Record Breaking Foreign Securities Purchases By Canadians

In December of last year, Canadians set a new record by investing heavily in foreign securities, particularly in U.S. stocks. Statistics Canada’s data, released on Friday, revealed a staggering $29.4 billion outflow into international securities, marking the highest level of purchases in foreign stocks and bonds since records began in 1988.

This unprecedented surge in outflows coincided with a robust performance in the U.S. stock market during the same period. The surge in foreign securities investment was primarily fueled by Canadian investors’ appetite for U.S. large-cap technology shares and investment fund shares tracking broad U.S. equity market indexes. Notably, Canadian investors allocated a net total of $23.2 billion into U.S. stocks alone during December.

These figures underscore the heightened demand among Canadian investors for global securities, particularly in the U.S., amidst growing market optimism fueled by expectations of major central banks halting interest rate hikes and anticipation of a smooth economic transition in North America. The December outflow follows a previous record set in November, where Canadian firms heavily invested in U.S. government bonds amidst a global bond market rally.

Additionally, Canadian investors also demonstrated a significant interest in non-U.S. shares, with outflows totaling $6.3 billion, predominantly directed towards European equities.

However, there was a decrease in foreign interest in Canadian equities towards the end of the year, with a net divestment of $532 million shares following a substantial $5 billion outflow in November. Nonetheless, foreign investment in Canadian debt remained robust at $11 billion, driven by purchases of federal government bonds and money market paper.