Canada has historically had a reputation as a safehaven to global investors, but those days are suddenly gone. Statistics Canada (Stat Can) released its securities trade for February. The data revealed global capital continues to flee the country’s capital markets at a record pace. Even worse, domestic investors are now joining them.
Canadian Investors Flee To Foreign Securities, Sets Record For Bonds
Canadian investors are sinking record amounts of cash into foreign markets. Investors bought $24.2 billion in foreign securities in February, after sending $7.6 billion in January. Most of the capital was sunk into foreign bonds, setting a record.
Canadian Investors Are Sinking Record Cash Into Foreign Bonds
Monthly distribution of the net flow of Canadian capital into foreign bonds. Positive numbers indicate more capital sunk into foreign bonds than withdrawn.
Source: Statistics Canada.
The US was the biggest winner of Canadian investors chasing foreign investments. In total, a record of $16.3 billion in foreign bonds were purchased in February. American bonds represented $9.1 billion of that flow. That was on top of the $9.1 billion in US equities purchased by Canadians in the month.
Foreign Investors Continue To Flee Canada, Anything But Loonies
Canadians weren’t leading the trend, but joining the global capital flight from the country. Foreign investors dumped $8.8 billion worth of securities in February. This follows an unusually busy period of divestment over the past 3-months, amounting to a $31.0 billion sell off.
Canada Is Seeing Domestic & Foreign Investors Pull Their Cash
Canada’s net flow for international securities—the balance of money flowing into capital markets. If the net flow is negative, more capital left than arrived.
Source: Statistics Canada.
In addition, foreign investors reduced an “unprecedented” amount of government paper, a catchall term for debt securities. They reduced holdings by $15.1 billion in February. It broke down into $11.8 billion in Federal, and $3.3 billion in provincial paper. This follows a record $15.5 billion sell off of private paper in January.
The one highlight was Canadian corporate bonds, which saw a mild bounce. Foreign investors scooped up $13.3 billion in February, the highest monthly haul in a year. The catch is they were led by US dollar denominated bonds, issued by Canadian banks. A strong indicator that investors see a weaker loonie in our future.
The latest update shows a disturbing trend that’s emerging—Canada struggles to attract capital sufficient to offset its debt. A hyper focus on housing is concentrating its economy in just one area. It’s even gotten to the point where its government is borrowing money to buy the mortgage bonds it guarantees. This is like using a payday loan to pay off your credit card—it might work, but there’s a reason moves like this aren’t seen outside of a crisis.
Things aren’t projected to get better for the country. The OECD previously forecast Canada’s addiction to debt, both public and private, will make it the slowest economic growth of any advanced economy for decades. More recently, the latest update from the Bank of Canada (BoC) forecasts the country will underperform the global economic boom. An issue complicated even further by the fact Canada’s population will overperform when it comes to population growth, obfuscating the true erosion in economic growth.
100% about the currency. Portfolio managers are calling a 50 cent loonie. If that’s your belief, US dollar bonds won’t just give the inflated yields but they’ll also appreciate against CAD holdings by the time it comes back.
https://www.bnnbloomberg.ca/portfolio-manager-says-loonie-could-fall-to-half-of-greenback-s-value-1.2057305
I moved 100% of my CAD investment dollars into USD. Even if CAD hangs in, the US market is deeper and more liquid (and more investment choice).
Maybe if this was 15 years ago, and we had a government that defended the currency and CAD still had a decent coralaition against oil prices, but that is not the case now.
I hold money in USD (for transactional costs) and save in gold (for deep savings) and only convert to the local currency when needed.
I kinda feel like an honorary Argentinian 😉
I’m sure the new “tax the rich” budget will help. LOL!
The problem with most people—they don’t understand their act is doesn’t function in a vacuum. They think tax the rich will net them money, but don’t realize the reduction in the amount of activity.
What did Punwasi call it in that interview? Velocity reduction? Higher transactional volume means reduced activity, thus longer waits for payout and lower revenues. We need someone who can do math in the Federal government. I don’t trust Pierre is capable either.
It’s too complicated. Most people will say it’s good that foreign investors leave, they don’t understand when they buy bonds it lowers their borrowing costs and cost of living in general.
Punwasi is smart but he’s an egghead. No one understands what he’s saying, so it’s impossible for him to get anyone to agree.
The housing market will follow soon
Canada iscscrewed. Two years ago I made the decision to get my life in order so that I can flee this increasingly alien, communist country called Ka-na-ta. This is an Algonquin word that means community. Canada is anything but. Debt-ridden, run by lunatic, over controlling, and criminal governments at all levels with no competition in the market places as pricing reflects predatory, monopolistic, pricing and gouging by the monopolists. As o, hasta la vista as I am out of here in a few months. Sad, but true. Canada is a cesspool overrun by a spend it all, as soon as possible, bloated government where there is 1 “public servant” for every Canadian!! This is paramount to a state run and out of control government whose economic policies run counter to almost all economic theory.
calling canada communist then describing late stage capitalism would be comedic if i didnt think you actually believe our country is communist. we are in late stage capitalism however, everyone only focuses on making more money in the short term, which for the working class makes sense, but there has been a massive collection of wealth in the hands of the rich, specifically due to how “free” (controlled by businesses rather than government) our markets are and how the government at all levels continues to prioritize profits over people. the homelessness crisis we are currently facing would not exist were our government to implement any mildly left-wing housing policy, such as a sufficient supply of socialized housing, specifically to act as a balance to stop rents from reaching such insane levels as they have. we are in late stage capitalism, and the system is destroying itself, this is entirely a conflict between the wealthy and the working, and the world makes much more sense when you keep in mind those with money are the most hungry to see their wealth grow, while the working class merely wants enough to have a comfortable life, if you think not then why does anyone retire? its becoming increasingly impossible to retire as businesses continue to gouge us on basic necessities, housing, food, internet, all have insane monopolies/oligopolies which increase the prices not to cover supplier side increases but to MAINTAIN AND INCREASE their profit margins. i understand that is how businesses operate, but shouldnt we not have this behaviour when it comes to providing basic human needs? shouldnt we have regulations in place to ensure businesses arent throwing away food AND SPENDING MONEY GUARDING THAT THROWN AWAY FOOD? business interests are diametrically opposed to human interests, our world is falling apart and it is due to capitalism
Thank you for a cogent, intelligent and deeper analysis than most of posts on this article.
@Terrence Colpitts. Canada is not communist. Speak to literally any Canadian resident who came from a communist country and have them describe what life under communism is actually like. It’s eye-opening. Not seeing “lunatic, over-controlling, and criminal governments” at any level but it seems like you might be happier elsewhere. But predatory, monopolistic, price-gouging corporations are all over the world. FYI
Oh how our government has its head in the sand! Help us
Correct a very disturbing trend in both the USA & canada spen spend spend LOOKS LIKE SPENT is now here , its BECOME obvious to common sense peoples the title liberal Democrats by polocies agendas is a FRAUDULENT TITLE in FACT HISTORY shows liberal Democrats to be AUTHORITARIAN COMMUNISTS WANTING CONTROL OVER EVERYTHING EVENTUALLY CITIZENS LIVING COMFORTABLY Upper middle class & middle class WILL PAY DEARLY some analysts believe 500 THOUSAND JOBS will be lost after justin trudeaus 50 BILLION more DEBT budget , liberal Democrats ARE now a INFILTRATED government by so called ELITES who believe in the communist ideology , SADDENING AND SICKENING that so many Canadian & Americans were DUPED by MASS MEDIA & SOCIAL MEDIA MANIPULATION , HISTORY IS REPEATING ITSELF many including the ONCE proud REVERED RCMP believe a in Canada REVOLUTION is about to TRANSPIRE when Canadians can no longer PAY for FOOD BASICS OR LIVING EXPENSES 8.22 A GALLON OF GAS there MUST BE CONSQUENCES against ALL those who ALLOWED & supported a FOREIGN ENTITY into canadas PARLIMENT , WE THE PEOPLES FREE CONSTITUTION RIGHTS MUST HAVE SAY IN THE PUNISHMENT of the treasonous LEADERSHIP
Maybe they’ll tax capital gains at 100% and then everyone can just trade houses and be landlords. Economy schmonomy, Canada only exists as an obfuscation point for money laundering.
Are young people supposed to move? Is this some kind of shift where people from worse off countries come here, and we’re supposed to move to stronger emerging economies?
Bad policies have consequences. The federal government is addicted to spending 💰 to buy votes. The “tax the rich” is just propaganda. The people that get killed is the upper middle class. The actual rich people r doing better, they can move their money else where. Can’t wait until the next election.
Where do we go? – no joke. Would love suggestions. We want out of here.
Indeed. Canada has been attracting lack luster talent. This is burdening the country and good talent that it managed to attract is fleeing. Very unfortunate.
Canada’s gov’t needs to get the cost of housing under control. It’s not a “supply problem.” It’s a problem caused by 20 years of artificially low interest rates, rampant speculation (encouraged by tax policy), and a great deal of money laundering via real estate. But the gov’t doesn’t want to pop the bubble.
Canada attracts talent in a number of fields but now young people who might move here to live, work, raise families are looking elsewhere because housing is so absurdly expensive.
George Carlin was right
The world is fine It is the political world with no reality of life Money does grow on trees and the heir is no entertainment It has to be earned the hard way .Look at Norway their economy is in the black with proper fiscal management
Who could’ve seen this coming?!?! Lmfao. Even the blind seen this coming.
This is the worse Federal Government that Canada has in its history . Unless people wake up this place will surely turn into a third world country with no limits to immigration. I hope people realize what kind of federal leader they have chosen that has destroyed this nation. I don’t blame investors as this is not the country it used to be 10 years back.
Why do you think we’re still 1st world country?
Our problem would seem to be one of a commodities store house for other countries corporate interest, we’ll sell you anything we have at whatever you’d like to pay…we lack backbone !
I believe of we start to look after our internal interest we will discover our strengths again, we need to clean our systems and rethink how we deal with what we have , we were not so long ago a nation that others looked up to now we are a Vasile of the American Corporate juggernaut!
If the Americans want to put tariffs on softwood lumber and we have to rethink our wood harvesting anyway, may as well sell them finished houses and charge them twice as much , either no or limited lumber wholesales, let them buy Russian lumber and oil!
32 billion for a pipeline when we could have built a refinery in Fort mac?
Almost 10 years ago I saw the writing on the wall with where this was going. You have a system where it exacerbates gender wars, freezes your bank account for wrongthink, and feminism in the police means that the overpaid police are busy wiping the tears off a snowflake for a comment on a blog than to deal with real crime like the rise of violent carjackings.
RIP. Canada. This is just the beginning
Amen.
God do I hate the Liberal party. Trudeau is just Biden minus the pre ice cream brain freezes.
Tax the rich scheme will certainly add to the exodus . Canada is turning into a 3rd world cesspool
FJT
Steadily killing industry like oil and gas,mining, wood.. bad policies, attack the investors and the people filling the economy, hyper tax and hyper inflation. Once these investors, mining companies and rich foreign settlers leave they won’t ever trust Canada again. This has happened before. Just when they think they can trust Canada to settle down and get to work people forget how bad leftists are and vote them back in. Canada has really gone to hell this time.
The current federal government in Canada is by far the worst we’ve ever had ! It’s as if they are being paid by a foreign entity to destroy Canada in record time ! Trudeau and Freeland should be in prison !
WAKE UP DUMBOS. ALL THE BEST DEALS ARE IN THE USA,
DON’T WASTE A PENNY IN CANADA – DITCH EVERYTHING YOU OWN IN CANADA AND JUST BUY IN THE USA.
SEE ZILLOW, REDFIN AND LANDSEARCH FOR SOME OF THE 142 MILLION HOMES IN THE USA,
We are witnessing the result of electing a party that morphed into an ideology behind one man’s affinity to please his handlers. None of us matter and he is on a laser focus to carry out his “obligations” no matter the cost. Treasonous, criminal and the laughing stock of the world is what Canada has became. It will take decades to undo the damage done even when an adult takes over the helm.
Unnecessary hype. Everything is going smoothly. The only problem I see is with the immigration policy. I just hope they ban immigration from Asia.
Interesting. Can you elaborate?
I’m 78 and “comfortably retired” with a lot more life behind me than there is ahead. My true worry is not for my wife and me, its for our children and grandchildren who, although well educated and employed, have a long way to go. I’m not an economist but one doesn’t have to be one to see that we are on a snowball tumbling down hill and rapidly picking of speed into a total economic disaster. In my years I have never witnessed anything like this. Sadly there is a point of no return and we might have already passed it. Maybe we just might have to crash and burn and then find some way for Phoenix to rise from the ashes of this Marxist induced insanity. Mercifully I won’t be around to see it all happen.
I’ve seen ads on Canadian TV for Israeli bonds. Perhaps a few rich supremacists moved some cash there and it looks like a trend.
I came from a third world country 23 years ago to a wonderful country but now I have seen it in a worse state than that third world country that I came from
Of course there’s one communist on here crying about capitalism. There’s always one maroon.maybe it’s turdope posting from his golden toilet paid for with stolen Canadian taxpayer money.