Foreign investors slash holdings of Canadian stocks

Written By Unknown on Selasa, 16 April 2013 | 22.39

Non-resident investors reduced their holdings of Canadian stocks in February by the biggest monthly amount in more than five years, according to new figures from Statistics Canada.

Foreigners cut their equity holdings by $11.6 billion that month. Stats Can said that was the largest such divestment since October 2007.

Most of the reduction in equity holdings by foreign investors was due to those investors tendering their Canadian shares to foreign direct investors because of cross-border mergers and acquisitions, the agency said.

At the same time, Canadian investors boosted their holdings of foreign securities by a net $4.4 billion in February. Most of that increase was due to purchases of foreign bonds.

"Canadian investment in foreign securities has exceeded foreign investment in Canadian securities in three of the last four months," Statistics Canada reported.

Canadian investors added $400 million to their holdings of foreign securities in February, as Canadian pension funds bought U.S. stocks.

U.S. stock prices rose by 1.1 per cent that month and have outperformed Canadian stocks for the last couple of years. Canadian equity markets have been hurt by their relatively higher concentration of resource issues, which have underperformed recently.

Foreigners went on a buying spree for Canadian bonds in February, acquiring $8.0 billion worth — mainly Canadian-dollar denominated short-term federal government bonds.

But foreigners shied away from Canadian money market instruments that month, cutting their holdings by $2.8 billion.

Statistics Canada noted that the Canadian dollar depreciated by 3.3 cents against the U.S. dollar in February and ended the month below parity for the first time since last summer.


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