Canada's international transactions in securities

Foreign investment in Canadian securities swelled by $7.4 billion in September, most of which was in purchases of Canadian stock.

Meanwhile, Canadians invested $4.1 billion in foreign securities, their biggest investment since November 2002, with over three-quarters going to foreign bonds.

Foreign investors acquire sizable amount of Canadian equities

Foreign holdings of Canadian stocks surged by $5.2 billion in September, due in part to special events surrounding two large Canadian businesses. The single largest share offering in Canadian history and a corporate restructuring helped push foreign investment in Canadian stocks to its highest level since April of this year.

US investors were the dominant purchasers as they bought $4.0 billion worth. Of the $5.2 billion, $3.6 billion was in purchases of outstanding shares, the largest investment in the secondary market since March 2000. The remainder ($1.6 billion) was invested in other transactions, mostly new issues.

Foreign investors increase their holdings of Canadian debt

Non-residents purchased $1.9 billion in Canadian bonds in September, virtually unchanged from their investment in August. Purchases came entirely out of Europe where investors there picked up $3.2 billion worth as the rest of the world divested some $1.3 billion of their holdings of Canadian bonds. The bulk of September's investment was in net new issues ($1.4 billion) with issues of federal government enterprises leading the way.

On a quarterly basis, non-resident investors have purchased $6.6 billion worth of Canadian bonds over the third quarter of 2004, the largest since the first quarter of 2003. Purchases of corporate bonds accounted for much of the quarter with investments totalling $4.7 billion.

After two months of selling off their holdings, foreign investors returned to purchasing Canadian money market paper. Investment in September totalled $375 million, coming solely from issues of federal government enterprises. British investors were the primary purchasers, investing $324 million over the month.

For the first nine months of 2004, investors reduced their holdings of money market paper by $3.1 billion, similar to their divestment of $2.4 billion over the same period in 2003.

Canadian investors substantially increase their holdings of foreign securities

Canadian investors regained their appetite for foreign securities in September as they purchased $4.1 billion after offloading $1.2 billion in August. September's total was the highest since November 2002. Bonds made up the majority of September's purchases with Canadian investors buying $3.2 billion worth, with two-thirds of that going into US treasuries. The remaining one-third went to overseas bonds. Meanwhile purchases of foreign stocks totalled $905 million for the month.

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 September 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 October 2004 will be released on December 16.

For general 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.