RTTNews - Transactions in securities resulted in substantial inflows of funds to Canada in May, Statistics Canada said in report released Monday morning.
Foreign acquisitions of Canadian securities reached a five-year high of C$18.9 billion in the month, more than double the revised C$9.05 billion from the previous month, fueled by new issues of Canadian corporate bonds.
Meanwhile, Canadians sold C$985 million of foreign securities, marking their first divestment in 2009.
Non-resident investors purchased an unprecedented C$19.4 billion of Canadian bonds in May, largely corporate bonds. At the same time, they reduced their holding of Canadian money market instruments by C$1.5 billion, mainly due to retirements.
Canadian stock prices rose 11.2% in May, closing the month at the highest level since September 2008.
Canadian firms, mainly from the energy and resources sectors, issued C$9.3 billion of new bonds in foreign markets in May, nearly all US dollar-denominated bonds placed in the US market. Interest rate differentials between corporate and government securities continued to narrow in the United States. Reduced borrowing costs and the strength of the Canadian dollar may have contributed to strong cross-border new issues of corporate bonds in May.
Foreign investors also acquired C$6.5 billion of Canadian bonds on secondary markets in May. Acquisitions were comprised of existing bonds from Canadian governments and their enterprises as new issues were reduced for these sectors in May.
Non-residents continue to acquire Canadian stocks
Non-residents have picked up Canadian stocks for four months in a row, adding C$1.1 billion to their portfolios in May. Foreign investment remained focused on shares of the technology and financial sectors, the best performing sectors on the Canadian stock market so far this year.
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