Canadians poured a record amount into U.S. equities in February, even as a movement to boycott U.S. products and vacations gained momentum.
Investors acquired $29.8 billion (US$21.5 billion) in U.S. shares and sold $2 billion of non-U.S. shares that month, during which the S&P 500 reached a record, according to Statistics Canada data on Thursday. That was a big turnaround from January, when Canadians sold U.S. equities.
The increased exposure to U.S. investments by Canadians is a stark contrast from a huge decline in southbound travel demand from Canada, and the campaigns to buy local products to protest against U.S. President Donald Trump’s trade war and his threats against the country’s sovereignty.
The S&P 500 is down 14 per cent since its record close on Feb. 19 in U.S. dollar terms. American stocks have faced intense volatility since Trump’s April 2 announcement of so-called reciprocal tariffs on nations around the world, many of which he later delayed.
In February, foreign investors also reduced their exposure to Canadian shares by $6.5 billion, the highest monthly divestment in the Canadian equity market since October 2007, the agency said.
These moves may have been driven by worries about the impact of Trump’s tariff policy on Canada, which would hurt the economy and the earnings of some Canadian companies.
Trump signed an executive order on Feb. 1 to put 25 per cent import taxes on a wide array of Canadian goods, with 10 per cent on energy. He later carved out significant exemptions, but there are now 25 per cent tariffs on steel and aluminum, tariffs on Canadian-made autos, and potentially more measures to come.
Non-resident investors increased their exposure to Canadian bonds by $9.9 billion in February and to Canadian money market instruments by $5.6 billion. Acquisitions of corporate bonds, private corporate paper and provincial government bonds led the activity.
In January, Canadian investors sold $17.6 billion of foreign equity securities, the largest divestment since March 2022, and the nearly 90 per cent of that value was U.S. shares.
Randy Thanthong-Knight, Bloomberg News
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