International investors bought CA$20.7 billion of Canadian securities in July, bringing the rolling 12-month inflow to an "astonishing" CA$295.5 billion, equivalent to 8.7% of this year's gross domestic product, BMO Capital Markets said in a note Thursday.
The 12-month total was just below the record CA$301 billion reached in June, according to the bank.
The inflow was driven entirely by Canadian bonds, said BMO's Chief Economist Douglas Porter in the note. A small inflow into equities was offset by a slight outflow from money-market securities.
These inflows are helping keep Canada's borrowing costs down, with 10- and 30-year Government of Canada (GoC) bond yields about 110bps below comparable US Treasury yields, said the bank. They also point to some investor confidence in Canada.
"But they won't do much to directly spur capital spending or jobs," added Porter.
At the same time, Canadian investors sold CA$30.6 billion of international securities in July, mainly equities, according to BMO. Despite this, investments abroad remained strong at CA$113.6 billion over the past 12 months, with equities making up almost all of the outflows.