Suddenly Canada’s share market looks less attractive to foreign buyers

New data shows that the international appetite for local shares and bonds is dwindling

Suddenly Canada’s share market looks less attractive to foreign buyers
Greg Quinn

International investors bought fewer Canadian bonds in November and reduced holdings of money market paper, leading to a slowdown of foreign purchases of the country’s securities compared with the previous month.

Global investors bought C$2.58 billion ($1.78 billion) of Canadian assets following the revised October purchase of C$19.1 billion, Statistics Canada said Tuesday in Ottawa. Canadian purchases of international assets reached a record high on the month, mostly on investment in U.S. stocks and Treasuries.

The data show the effects of what Bank of Canada Governor Stephen Poloz suggested in recent speeches would be an extended period of monetary policy divergence between Canada and the U.S. The Federal Reserve lifted rates in December for the first time since before the 2008 credit crisis. Meanwhile swaps trading suggests Poloz is likely to cut rates again in 2016, possibly as early as Wednesday.

Foreign investors bought C$1.53 billion of bonds, down from C$12.4 billion in October. They also added C$2.77 billion of stocks and divested C$1.72 billion of money-market paper.
The total acquisition from January to November of 2015 of C$96.6 billion compares with C$90.2 billion in the same period of 2014.

The record C$16.5 billion purchase of international assets by Canadians in November was led by C$8.21 billion of bonds and C$7.93 billion of stocks. That included record purchases of C$8.7 billion of U.S. Treasury bonds and C$7.4 billion of U.S. equities, in a month where Canada’s dollar fell 2.1 percent against the U.S. dollar.

With assistance from Erik Hertzberg in Ottawa.