18 Jun 2015
Foreign investors continue to accumulate Canadian assets – Nomura
FXStreet (Barcelona) - Charles St-Arnaud, Research Analyst at Nomura, reviews the foreign investor holdings data of Canadian securities, noting that CAD-denominated bonds remain in favour.
Key Quotes
“Non-residents increased their holdings of Canadian securities by C$12.9bn in April, after expanding their holdings by C$22.6bn in March. The buying was seen in all instruments with C$5.0bn going into bonds, C$4.2bn into money-market instruments and C$3.7 into equity.”
“The increase in bond holdings was mainly concentrated in government bonds (C$5.8bn), with strong buying of federal government bonds (+C$6.8bn), but selling of provincial bonds (-C$1.0bn) for a fourth month out of five. In money-market instruments, the buying was in both government instruments (+C$2.8bn) and corporate instruments (+C$1.5bn).”
“The inflows were mostly from the US (C$8.3bn), while there was some decent buying from EM countries (C$2.1bn), Japan (C$1.5bn) and the UK (C$1.3bn), while there was some selling from 'other OECD countries'.”
“It is also interesting to note that flows into CAD-denominated assets have also rebounded in recent months, suggesting a greater willingness by foreign investors to have exposure in CAD. This could be the result of the relative stability in the value of the Canadian dollar since February, after the sharp depreciation seen in late 2014 and January 2015 following the surprise BoC rate cut.”
Key Quotes
“Non-residents increased their holdings of Canadian securities by C$12.9bn in April, after expanding their holdings by C$22.6bn in March. The buying was seen in all instruments with C$5.0bn going into bonds, C$4.2bn into money-market instruments and C$3.7 into equity.”
“The increase in bond holdings was mainly concentrated in government bonds (C$5.8bn), with strong buying of federal government bonds (+C$6.8bn), but selling of provincial bonds (-C$1.0bn) for a fourth month out of five. In money-market instruments, the buying was in both government instruments (+C$2.8bn) and corporate instruments (+C$1.5bn).”
“The inflows were mostly from the US (C$8.3bn), while there was some decent buying from EM countries (C$2.1bn), Japan (C$1.5bn) and the UK (C$1.3bn), while there was some selling from 'other OECD countries'.”
“It is also interesting to note that flows into CAD-denominated assets have also rebounded in recent months, suggesting a greater willingness by foreign investors to have exposure in CAD. This could be the result of the relative stability in the value of the Canadian dollar since February, after the sharp depreciation seen in late 2014 and January 2015 following the surprise BoC rate cut.”