Foreign investors dumped Canadian bonds in record numbers in December, finishing a weak year for foreign buying of Canadian securities, National Bank Financial Inc. (NBF) reports.
Statistics Canada published the latest batch of international securities transaction data today, which shows that foreign investors sold off almost $19 billion worth of Canadian securities in December. In particular, they dumped $24.9 billion in Canadian bonds, which NBF notes amounts to the largest monthly selloff in history.
“Divestment in federal government bonds was primarily driven by secondary market sales, while the dump in corporate bonds and federal government enterprises was mainly due to retirements,” the firm says.
StatsCan reports that Canadian investors also reduced their holdings of foreign securities by $425 million in December, driven by selling in U.S. Treasuries. Overall, Canada saw a net outflow of $18.5 billion in December.
With the outflow in December, the economy recorded a net inflow of just $11.4 billion for 2018 overall, which is down sharply from $104.5 billion in 2017. “2018 was generally a weak year for foreign demand of Canadian securities,” NBF says.
For the full year, foreign investors acquired $42 billion in Canadian debt securities, compared with $132.6 billion in 2017. “The weaker external demand for Canadian government bonds mainly contributed to this decline,” it says.
Foreign investors also acquired $27.5 billion worth of Canadian equities in 2018, StatsCan reports. This was down from a record $56.5 billion worth of equity investment in 2017.
In total, Canadian investment in foreign securities reached $58.1 billion in 2018, down from $84.7 billion in 2017. StatsCan says that investors primarily targeted foreign bonds.