Canada's International Transactions in Securities

Although foreign investors continued to increase their holdings of Canadian securities, acquiring $815 million in June, it was half of May's investment. June's investment was the result of purchases of Canadian money market paper as non-residents reduced holdings of both Canadian stocks and bonds.

Meanwhile, for the first time since January, Canadian investors sold off some of their holdings of foreign securities ($1.2 billion).

Investment in Canadian money market paper continues as bonds slide

After heavy buying in May, foreign investors added a further $1.6 billion to their holdings of Canadian money market paper in June, the largest increase since November 2002. June's foreign investment was in issues of government and government enterprises as corporate paper experienced a slight decrease. Investors out of Asia were by far the biggest purchasers in June, buying $1.3 billion. Over the second quarter of 2004, foreign investors purchased $1.8 billion of Canadian money market paper—largely offsetting the $2.8 billion divested during the first quarter.

For only the second time this year, foreign investors decreased their holdings of Canadian bonds, which fell by $299 million in June. This was in contrast to the $1.7 billion purchased in May. Much of the reversal was because of $2.6 billion in net retirements, the largest amount since January 2003. Retirements of provincial government issues made up the bulk of this figure. In the second quarter of 2004, foreign investors purchased $2.3 billion in Canadian bonds compared with $2.0 billion for the previous quarter and $6.2 billion over the same quarter of last year.

Holdings of Canadian stocks down for a second straight month

Foreign holdings of Canadian stocks fell for the second straight month in June as foreign investors sold off $523 million worth. As in May, the decline was wholly concentrated in outstanding issues. Much of the decline in June was attributable to European investors shedding some of their holdings of outstanding Canadian shares. Following a robust $5.6 billion increase in the first quarter, non-residents' holdings of outstanding Canadian shares remained virtually unchanged in the second quarter of 2004. Including other transactions however, the second quarter investment by foreign investors was $18.7 billion, which included the largest Canadian takeover ever of a foreign company.

Canadians unload foreign securities

For the first time since January of this year, Canadian investors sold off some of their holdings of foreign securities ($1.2 billion). After purchasing $1.3 billion of foreign stocks in May, Canadian investors sold $782 million in June. While Canadian investors continued to invest in US equities, they shied away from overseas stocks, selling off $1.8 billion, the biggest divestment of overseas equities since October 2002.

Following six consecutive months of purchases totalling $8.3 billion in foreign bonds, Canadians turned around and sold off $413 million in June. US treasuries, which were a favored investment for Canadians over the six months of accumulation, were the hardest hit in June with $581 million in sales.

Available on CANSIM: tables 376-0018 to 376-0029 and 376-0058.

Definitions, data sources and methods: survey numbers, including related surveys, 1532, 1534, 1535 and 1537.

The June 2004 issue of Canada's International Transactions in Securities (67-002-XIE, $15/$142) will soon be available.

Data on Canada's international transactions in securities for July 2004 will be released on September 16.

For more information or to order data, contact Client Services (613-951-1855; infobalance@statcan.gc.ca) To enquire about the concepts, methods or data quality of this release, contact David Filiplic (613-951-1864), Balance of Payments Division.