Canada's international transactions in securities

Foreign investors bought $2.2 billion of Canadian securities in October, down from $7.6 billion in September. Purchases of Canadian stocks and long-term debt were down while purchases of Canadian money market paper were up.

Canadian investors also slowed their purchases of foreign securities in October, acquiring $1.5 billion worth following an investment of $4.2 billion in September.

Foreign investors continue buying Canadian stocks

After an exceptionally strong September, sales of Canadian stocks to foreign investors were relatively modest in October. Foreign investors purchased $589 million worth of Canadian stocks during October, down from the $5.2 billion acquired the month before. September's large increase was driven by two special events: the largest share offering in Canadian history and a major corporate restructuring. All of the investment in October originated from the United States as other foreign investors reduced their holdings of Canadian stocks.

For the year thus far, non-resident investors have purchased $30.2 billion in Canadian equities, an amount not seen since the same 10 month period of 2000, a time of record highs for Canadian stock prices.

Holdings of Canadian debt rise

Foreign holdings of Canadian bonds rose $682 million in October, a marked decrease from the $2.0 billion advance in September. While the $1.5 billion in net new issues (new issues less retirements) maintained the September pace, non-resident investors offloaded outstanding issues, the bulk of these were federal government and federal enterprise issues.

On a currency basis, foreign investors reduced their holdings of Canadian dollar denominated bonds by $1.2 billion but bought $2.1 billion in US dollar issues. Holdings of Canadian bonds issued in other foreign currencies were down.

While slowing their acquisitions of Canadian equity and long-term debt in October, foreign investors increased their purchases of Canadian money market paper. Non-resident investors purchased $970 million in October compared with $375 million in September. Corporate paper accounted for four-fifths of the total.

For the year as a whole however, foreign investors have reduced their holdings of Canadian money market paper by $2.1 billion, almost identical to their divestment over the same period in 2003. While the differential between Canadian and US short-term interest rates still favours investment in Canada, it has fallen 86 basis points since last December.

Canadian investors increase their holdings of foreign securities

Canadian investors continued buying foreign securities in October. The $1.5 billion of purchases represented a much slower pace than the $4.2 billion acquired in September. Over half of October's purchases ($833 million) were in foreign stocks with most of that going into US equities. Canadian investors purchased $635 million of foreign bonds with two-thirds invested in US corporate bonds, the biggest investment in that sector since May of this year.

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 October 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 November 2004 will be released on January 19, 2005.

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.