Canada Records Foreign Divestment

Foreign investors reduced their holdings of Canadian securities by C$17.3 billion in August 2026, missing forecasts for a C$23.59 billion acquisition and marking the first monthly net divestment of the year. Non-resident investors cut their holdings of federal government debt securities by a record C$17.5 billion. The outflow was partly offset by purchases of Canadian corporate bonds (+C$7.6 billion) and provincial government bonds (+C$1.6 billion). Meanwhile, foreign investors sold C$9.9 billion in Canadian equities, reducing their exposure across all industries except banking. Despite August’s outflows, foreign investment in Canadian securities totaled C$161.6 billion in the first eight months of 2026, compared with C$27.1 billion over the same period in 2025.

Foreign investors acquired C$20.7 billion of Canadian securities in July 2026, below the forecast of C$28.64 billion and down sharply from C$41.25 billion in June. Activity was led by strong foreign purchases of federal government bonds, which totaled C$22.7 billion. Since the beginning of the year, foreign investment in federal government bonds has reached an unprecedented C$104.0 billion, compared with C$13.8 billion over the same period in 2025. Consequently, the share of outstanding federal government bonds held by foreign investors rose from 40.2% to 46.5% during the first seven months of 2026. Meanwhile, a C$11.9 billion foreign divestment in money market instruments moderated overall investment, primarily involving private corporate paper (-C$7.6 billion) and federal government paper (-C$3.2 billion). Foreign investors also acquired C$7.2 billion of Canadian shares, the largest monthly investment of 2026.

Foreign investors added C$40.8 billion of Canadian securities to their holdings in June 2026, sharply higher than C$8.8 billion in May and well above market expectations of C$15 billion. The increase was led by strong foreign purchases of debt securities, which totaled C$39.9 billion. Federal government debt securities accounted for most of the increase, with non-resident investors acquiring C$25.4 billion. Non-resident investors also purchased C$16.2 billion of private corporate bonds, mainly instruments issued by Canadian chartered banks and denominated in US dollars and euros. Foreign investors acquired C$901 million of Canadian shares after divesting C$16.1 billion in May. By sector, investors mainly acquired shares in manufacturing, partly offset by divestments in the trade and transportation, and finance and insurance sectors. Foreign investors acquired a record C$100.6 billion of Canadian securities in the second quarter.