Foreign investors continued their interest in Canadian securities for a third consecutive month in January, according to data released by Statistics Canada Thursday.
Foreign investment rose 6.3% to $11.8 billion from $11.1 billion with purchases of debt instruments attracting the bulk of the inflow of funds.
Foreign investors pumped $10 billion into the Canadian bond market, with two-thirds of the amount invested in Canadian federal government bonds.
Canadian corporate bonds received the remainder of the inflow led by foreign acquisitions on the secondary market, largely investing in mortgage-backed securities.
Foreigners, however, disposed of $649 million of Canadian stocks in January, the second monthly divestment in the past year, contributing to a 5.5% decline in Canadian stock prices, the sharpest decline since February 2009.
StatsCan reported Canadian investors reduced their investments in foreign bonds to the tune of $5.6 billion, which is the largest divestment since October 2008 at the height of the global financial crisis. The bulk of the sell-off was in U.S. government bonds.
Canadians also reduced their exposure to foreign stocks in January, selling off $647 million from their holdings, primarily in banking shares.