Canadians have accelerated their foreign securities holdings

The latest month of stats show how things have changed since the record divestment at the start of the pandemic

Canadians have accelerated their foreign securities holdings
Steve Randall

Canadian investors have accelerated their holdings of foreign securities and foreign investors are still keen to acquire Canadian stocks.

Those are two key takeaways from the latest report on Canada’s international securities transactions from Statistics Canada, with figures from March 2021.

The stats show that Canadians added $21.2 billion worth of foreign securities, mostly US shares, building on the $13.1 billion in February and $3.1 billion in January. December 2020 posted a record high of $26.9 billion.

With foreign investors purchasing $3.1 billion in Canadian securities in March, there was a net outflow of $18 billion to bring the quarterly total to $24.7 billion, the largest net outflow since Q4 2007.

A year after a record divestment by Canadian investors, they have purchased almost $123 billion in foreign securities.

What are investors buying?

US shares were the top pick for Canadian investors in March 2021, with almost $12 billion added to portfolios.

Large-cap technology firms and investment fund shares tracking broad market indices were the main focus as the S&P500 gained 4.2% during the month to reach a record high.

Investors, mainly pension funds and mutual funds, also acquired $3.2 billion in non-US foreign shares.

Foreign debt securities were also purchased with $5.6 billion acquired, mostly US corporate bonds ($5.3 billion), mainly Canadian denominated as the loonie reached a 3-year high against the US dollar.

Foreign investors remain keen

Canada remains a popular choice for non-resident investors who added $3.2 billion in securities to their holdings in March.

Shares were in focus due to the retirement of private corporate bonds and the key areas for share acquisition were trade and transportation, and non-bank financial industries. Foreign investment in Canadian shares remained strong in March to reach $10.6 billion, compared with $9.5 billion in February.

The S&P/TSX Composite Index reached a record high by the end of March.