Foreign Investors Continued to Buy Canadian Assets in June

Canada reported that foreign investors bought a net C$10.5 bln of Canadian securities in June. This brings the total net foreign purchases in Q2 to a little more than C$38 bln compared with about C$23.5 in Q1 and less than C$1 bln in Q4 08. Foreign investors were net sellers of Canadian asset (~C$7 bln) in Q3 08. June was the sixth consecutive month of foreign net purchases and Q2 was a record.

International investors bought about C$5.52 bln of Canadian bonds and officials note that it was concentrated in the five-year benchmark government bond. About C$2.3 bln of Canadian shares were bought and a little more was put into money market paper.

For their part Canadians bought C$1.44 bln of foreign securities in June. Some of the Net C$4 bln of foreign equity was financed by the sales of C$1.9 bln of foreign bonds and C$660 mln in money markets.

Although Canada was the net importer of portfolio capital in June, the Canadian dollar was the worst performing major currency in the month, losing almost 6% against the US dollar. However, for the entire second quarter, which saw the record net purchases of Canadian assets the Canadian dollar appreciated almost 8.5% against the greenback, which was the poorest performance, though within the dollar-bloc and among the other perceived commodity currencies, like the South African rand and Brazilian reai.