CANADA EQUITIES: BMO On First of Six Factors Driving The Local Stock Market - Foreign Investor Interest

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Bank of Montreal (BMO.TO, BMO) notes non-residents have poured almost $40 billion into Canadian equities over the past 12 months (data up to May 2014). This net inflow is the second largest on record, topped only by the 1999/2000 tech frenzy. BMO says foreign buying of Canadian stocks tends to move in sync with TSX performance, although sometimes acts as a leading indicator. Yet, it adds, this massive inflow has not driven the Canadian dollar higher because non-resident purchases of Canadian bonds have nearly dried up in the past year, after running at nearly $100 billion annually in the wake of the financial crisis.

Sustainability factor? BMO says "relatively low." It adds Canadian equities don't look especially cheap relative to other major markets, so continued broader investor appetite for equities.




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