Foreign investors bought a net $800 million of Canadian securities in February, but Canadian investors added a total of $10.1 billion of foreign securities to their portfolios.

BMO Nesbitt Burns notes that while money market paper and stocks were sold, Canadian bonds were in back demand. “Notably, following months during which foreign purchases of Canadian assets were concentrated in corporate bonds denominated in U.S. dollars, bonds of the federal government and its enterprises drew interest.”

Foreign investors also added $2.2 billion of Canadian dollar-denominated bonds to their portfolios, which BMO Nesbitt says is the first net-inflow in three months. “With few new issues, secondary market activity was brisk, with $2.3 billion in purchases. However, this was not enough to offset $3 billion of sales over the prior two months.”

Canadian investors’ $10.1 billion buying binge marked the second largest net addition of foreign securities ever, BMO says. “For stocks, $4 billion was due to U.S.-based Newmont Mining’s takeover of Franco Nevada through an exchange of shares. On top of that, Canadians bought $2.1 billion of foreign stocks in the secondary market. The appetite for foreign bonds also returned, with Canadians buying a record $4 billion, concentrated heavily in U.S. Treasuries and corporates.”

RBC Financial Group economists note that these flows “may change with more up to date releases as the Bank of Canada hints at steering towards a more restrictive monetary policy stance than the U.S. Federal Reserve that could pull more net foreign portfolio flows into Canadian dollar denominated instruments given recent strengthening in the dollar.”