Canadian foreign investment spree hits record amid 'capital bleed'
BNN Bloomberg
Canadians are shunning their domestic market and investing record amounts abroad, according to National Bank of Canada Financial Markets.
Canadians are shunning their domestic market and investing record amounts abroad, according to National Bank of Canada Financial Markets.
Net purchases of overseas securities by locals soared to $144.4 billion (US$799 million) in the first 11 months of 2021 -- shattering a previous record of $73.3 billion set in 2006, the bank said, citing Statistics Canada. Canadians spent an all-time high of $81.8 billion on U.S. securities.
“This is a big-time capital outflow, with Canadian investors taking exposure to foreign markets like never before,” National Bank chief rates and public sector strategist Warren Lovely wrote in a note Monday.
“The apparent abandonment of Canada by domestic investors is part of an overall capital bleed that needs redressing.”
Still, Lovely noted that foreign investors continue to pour money into Canadian securities to the point that net portfolio flows are positive for Canada as a whole. National Bank previously raised concern about Canadian capital flight in a Nov. 2021 report entitled “Canada’s can’t afford to bleed capital like this,” which said sustained lower investment in mining, quarrying and oil extraction explained the decline. The bank points to U.S. information technology companies as being net beneficiaries of Canadian investment outflows.
Tech stocks account for only 9 per cent of the S&P/TSX Composite, compared with 28 per cent in the S&P 500 Index.
