Skip to main content

Foreigners Buying Canada Again



The short break where foreigners decided that Canada was not worth the effort was, it appears a one month phenomenon.  They’re back and the figure is $11.3 billion for July, mostly in sovereign short term instruments.  My guess is that foreign investors still see a strong likelihood that Canadian interest will rise (they will not) based on Canada’s overall economics health (forgetting Canada’s Q2/2011 negative GDP numbers).  Over the past 12 months, foreigners have purchase nearly $120 billion in Canadian assets, a similar level to what was seen in 2010 – and about 8% of Canada GDP.
Foreign portfolio investment in Canadian securities
(Source: StatsCan)

At the same time, Canadians are reducing their foreign bond holdings – not entirely surprising considering that when Canadian invest “abroad” we mean U.S.A. and the 10 year T-Bond are now down to 2% -- taking in consideration the movement in the CAD and the weak yield, there’s not much incentive for Canadians to hold foreign bonds, moreover Canadian are very concerned about foreign financial institutions – sub debt for American banks pays nearly 400 bps than the equivalent instrument for a Canadian bank…

Canadian portfolio investment in foreign securities
(Source: StatsCan)

Again 8% of GDP is a substantial amount of money, what must be worrying to the BoC is that most of these funds are in self liquidating short term instruments.  Not entirely certain what to make of this.  It could be a fear of capital control (or some other action by the Canadian authorities) to slow down the flow of hot money.  

Comments

Post a Comment

Popular posts from this blog

what people get wrong about tariffs

 The issue is simple. What percentage of the economy is dependent on tariff goods? The truth, is that the US economy is far more closed than people understand. People genuinely believe that all manufacturing has ceased to exist in the United States all given to China on the altar of woke policy the truth can be further from That statement. Only about 15% of US GDP is related to foreign trade. Of that amount, slightly more than half is from Canada in Mexico. And half of that is energy. What that means, is that about 7% of US GDP is tariff dependent. The proof in the pudding, is how little money tariff generates. People think that 30 or 50 billion is a lot it’s not in an economy that has $3 trillion. The impact on the US economy will be less visible but not absent. Inflation hasn’t occurred yet first because tests have hardly started to bite, but more importantly it’s such a small percent of the economy. Now certain things are critical. The rare earth metals from China were critical....
Post a Comment
Read more

Trump and Venezuela...

The US now owns Venezuela…and not in a good way.  America is not known for its nation building skills, and yet it now owns the disaster that is Venezuela.   Starvation and exodus are the natural progression.   In addition it will become a haven for narco-terrorists, more so than it already was. I am sure that Trump and his friends really thought that little attack very well…I guess that he will now attack Iran now.  
Post a Comment
Read more

Demographics

 I am preparing a kind of family tree for our children so that they know where they came from.  In my family I am the only survivor, although my brother and sister died recently they were both in their seventies (a story I told already).    It was a fun process, but it provided more than that.  First, I married relatively young I was 26 when I married and nearly 30 when our first child was born.   I was looking at my ancestors.  On my mother's side, she had 6 siblings, Four died before the age of 30, two in war, and two from illnesses.  Only she and a single sister survived.   The two boys had a child each but they died in WWII, and the other sister died as an infant.   what is interesting is that every one of my mother's siblings had children in their early 20s.   I know that my mom was hardly 20 when my brother was born.    What is remarkable is that among our friends, we are the only ones to have fou...
Post a Comment
Read more