Foreign investment in Canadian securities surged by $11.0 billion in November, mostly going to bonds. This pushed the year-to-date investment to $28.9 billion just over the average for the last five years and easily surpassing the $8.5 billion invested in 2005.

1.	Reverse of balance of payments signs.

Meanwhile, Canadians added $5.3 billion worth of foreign securities to their investment portfolios over the month, with nearly three-quarters going to foreign stocks. Canadian acquisitions of foreign securities have been strong since February 2005. Year-to-date investment has totaled a record $72.5 billion for 2006.

Foreign investments in Canadian bonds soar

Building on October's $2.1 billion purchase, non-residents invested a further $11.3 billion in Canadian bonds in November, the second highest month on record. November saw the largest foreign purchases of net new issues (new issues less retirements) in Canadian bonds in two years, which accounted for two-thirds of November's investment.

Foreign acquisitions of Canadian bonds over the month were almost equally split between corporate bonds and government bonds. On a sector basis, the $3.4 billion purchase of federal government bonds was all in outstanding issues. However, the investment of $5.1 billion in corporate bonds and $2.4 billion in provincial government bonds were mostly through new issues placed in foreign markets.

Geographically, European investors acquired a record $4.9 billion worth of Canadian bonds in November, after buying $3.4 billion worth the month before. American investors were a close second, buying $4.3 billion worth in November.

On a currency basis, just over half ($6.1 billion) were bonds denominated in foreign currencies. The $5.2 billion of bonds denominated in Canadian-dollars were largely concentrated in outstanding issues.

Large sales of Canadian money market paper

November saw sizable sales of Canadian money market paper by non-residents, totalling $1.7 billion. Overall, non-residents have bought $3.4 billion worth so far in 2006, largely due to the record $4.6 billion purchased in June.

On a sector basis, November's sell-off was focused on Canadian government t-bills and paper of federal enterprises, amounting to $1.5 billion. Geographically, European investors accounted for 70% of all the Canadian money market paper divested in the month.

Buying of Canadian shares remains moderate

Non-residents acquired $1.5 billion of Canadian stocks in November, with American investors buying $3.2 billion worth, partially offset by a $1.0 billion sell-off by European investors.

Overseas shares continue to attract Canadian investment

Following two quiet months, November saw Canadian investment in foreign stocks rebound to $3.7 billion, mainly on the strength of purchases of overseas stocks ($3.4 billion). Canadian investment of $317 million in US shares rounded out the buying in November. Overseas mining, oil and gas extraction, banking, and insurance firms were top picks for the month. Canadian mutual funds and pension funds led all investors in November.

Acquisitions of foreign bonds soften

Investment in foreign bonds was significantly lower in November at $1.1 billion, following the record purchase of $5.8 billion in October. Nevertheless, purchases of foreign bonds have been strong over the past three years, particularly in 2006. The total purchases so far in 2006 have amounted to nearly $40 billion, far surpassing the annual investment of $27.6 billion over the record year of 2005.

Acquisitions of overseas bonds showed no sign of slowdown. Canadians bought $2.8 billion worth over November, adding to the back-to-back record purchases totalling $6.1 billion over the previous two months. Meanwhile, acquisitions of US corporate bonds remained robust at $1.0 billion while Canadians sold off $2.8 billion US government bonds.

Canadians invested $2.4 billion in maple bonds over the month. Those issued by US corporations totalled $1.5 billion, nearly twice the amount issued by overseas issuers.

Investment in foreign money market paper continues

Residents bought $496 million worth of foreign money market paper in November, up slightly from the $457 million acquired in October. However, November's buying shifted from US corporate paper to overseas paper. Canadians have been buying overseas paper five months in a row totalling $4.1 billion. November alone saw foreign investment of $628 million worth in overseas paper.