Foreign money flowed back into Canadian markets in July, snapping a months-long streak of divestment and delivering the strongest foreign portfolio demand since last fall.
Nonresident investors purchased a net C$26.7 billion of Canadian securities, a swing large enough to more than erase the C$22.3 billion of selling logged in the first half of 2025, according to Statistics Canada’s monthly international securities report.
Foreign holdings of money market instruments rose by C$11.1 billion, driven by federal Treasury bills and Canada bills, with additional demand for provincial paper that appetite extended along the curve.
After unloading Canadian stocks in the first six months, foreign investors bought C$11.8 billion of shares in July. Purchases were concentrated in banks along with energy, mining, trade, and transportation names.
The S&P/TSX Composite finished the month up 1.5% from June, a backdrop that may have supported the turn in sentiment as global risk appetite improved.
The rebound in stock demand does not erase the earlier divestment, but it marks the first solid sign that international investors are willing to add Canada risk again.
The combined moves produced a net inflow of C$9.3 billion into the Canadian economy through portfolio channels that is the first net inflow since January and a notable break from the outflow trend that had characterized the winter and spring when foreign investors were consistently trimming Canadian positions.
Sustained follow through would help ease funding conditions for federal and provincial borrowers and could provide marginal support for bank funding and equity valuations, though a single month is not a trend.
Domestic investors acquired C$17.4 billion of foreign securities in July, with a record C$16.6 billion plowed into foreign bonds.
Buying centered on U.S. government debt, reflecting both the depth of that market and the appeal of high quality duration. Canadians also added C$1.8 billion of foreign money market instruments.
They trimmed foreign equities by a net C$987 million, selling non U.S. shares while adding to U.S. stocks. Those cross-border flows partly offset foreign buying of Canadian assets, but the month still ended with a positive net balance for Canada.
The preference for government paper over corporate credit suggests the hunt was for safety and liquidity rather than pure yield pickup.
The swing back into Canadian bank and resource shares hints at selective confidence in rate-sensitive and commodity-linked parts of the market.
If that mix persists, it could compress government borrowing costs relative to private issuers and keep leadership on the TSX with the heavyweight financial and energy sectors.
One month’s strong inflow can be revised and can reflect issuance calendars, seasonal patterns, or tactical shifts around earnings and macro data.
