Investing.com -- In February 2025, Canadian investors increased their holdings in foreign securities, with a record investment in US equity securities, according to a report by Statistics Canada. A total of $27.2 billion was invested, a significant increase from the $3.0 billion divestment seen in January. The investment was primarily concentrated in US shares, particularly in large capitalization technology and financial firms.
This surge in investment was led by an unprecedented acquisition of $29.8 billion in US shares, the largest since December 2023. This was slightly offset by the sale of $2.0 billion in non-US shares. Despite reaching an all-time high in mid-February, the Standard and Poor's (S&P) 500 composite index was down by 1.4% by the end of the month.
However, Canadian investors decreased their exposure to foreign debt securities by $0.7 billion in February. While there was an increase in holdings of US government money market instruments and US corporate bonds, there was a decrease in holdings of US government bonds and non-US foreign debt instruments.
On the other hand, foreign investors decreased their holdings in Canadian securities by $6.5 billion in February, marking the first divestment in 12 months. This was led by a reduction of $21.9 billion in Canadian shares, the highest monthly divestment since October 2007. The industries most affected by this reduction were management of companies and enterprises, manufacturing, and energy and mining. The S&P/Toronto Stock Exchange composite index saw a slight decrease in February.
Despite the divestment in Canadian shares, non-resident investors increased their exposure to Canadian bonds by $9.9 billion, although this was a decrease from the $33.5 billion investment in the previous month. There was also an increase in exposure to Canadian money market instruments by $5.6 billion, following a significant divestment in January.
The activities in the Canadian bond market in February were characterized by foreign acquisitions of $19.2 billion of corporate bonds, which were offset by divestments of $6.4 billion in federal government bonds and $2.9 billion in provincial government bonds. The foreign investment in Canadian money market instruments targeted private corporate paper, with an increase of $7.3 billion, and provincial governments paper, with an increase of $1.9 billion.
