Earlier in the week, Bank of Montreal (BMO) said that Canada's foreign direct investment (FDI) flows would be a big focus of Thursday's quarterly balance of payment data.
After recording the first annual surplus in 12 years in 2025, net FDI dropped back into an outflow in Q1, noted the bank.
FDI in Canada was reasonably solid at $20 billion, but Canadian investment abroad jumped to $37 billion, pointed out BMO.
Notably, net merger and acquisitions activity, which was a big driver of the net inflow last year, remained in a net inflow in Q1. The bank prefers the inflows to be in other categories.
Reinvested earnings have turned into a large net outflow, partly driven by the large stock of external investments by Canadian companies in the past few decades, stated BMO.
"Other flows", which are largely greenfield investments, recorded a small net outflow in Q1, but that series is "bouncy," it added.