Statistics Canada
www.statcan.gc.ca
Common menu bar links
Canada's international transactions in securities
Archived Content
Information identified as archived on the Web is for reference, research or recordkeeping purposes. It has not been altered or updated after the date of archiving. Web pages that are archived on the Web are not subject to the Government of Canada Web Standards. As per the Communications Policy of the Government of Canada, you can request alternate formats on the "Contact Us" page.
Foreign interest in Canadian securities continued to grow in March. Foreign acquisitions of Canadian securities reached $5.3 billion in March, the highest level since March 2007, fuelled by substantial issuance of new Canadian shares to foreign portfolio investors.
At the same time, Canadian investors divested some foreign securities, all in debt instruments. March saw a $3.3 billion decline in Canadian holdings of foreign securities, on the heels of three straight months of investments.
Foreign purchases of Canadian equities reach a two-year high
Non-residents increased their holdings of Canadian shares appreciably in March, as sizeable new share issues purchased by foreign investors more than offset sales of outstanding shares. Overall, non-resident investors added a net $5.9 billion of Canadian equities to their portfolios in March, the largest such outlay since May 2006.
Purchases of new Canadian equity were focused in the banking sector. Sales of outstanding corporate shares reversed robust acquisitions over the last three months, and were concentrated in non-bank financial, energy and mining firms. Canadian stock prices continued to show volatility in 2008, losing 1.7% in March after a 3.3% gain in February.
Substantial foreign acquisition of bonds more than offset by retirements
March saw foreign holdings of Canadian bonds reduced by $401 million, as a result of a near-record amount of debt maturing over the month. Retirements of Canadian bonds were spread across nearly all sectors except for the federal government sector.
Related market informationCanadian short-term interest rates tumbled 152 basis points to 1.72%, a record low, while US rates fell to 1.26%, a decrease of 86 basis points. Still favouring investment in Canada, the short-term interest rate differential between Canada and the US narrowed to 46 basis points. Canadian and US long-term rates fell by 35 and 34 basis points respectively in March. With Canadian rates at 3.46% and US rates at 3.51%, the resulting differential increased slightly to 0.05%. Canadian stock prices fell 1.7% in March with the Standard and Poor's / Toronto Stock Exchange Composite Index closing the month at 13,350.1. Meanwhile, US stock prices, measured by the Standard and Poor's Composite Index, fell 0.6% to 1,322.7. The Canadian dollar dropped 4.17 US cents, sitting at 97.42 US cents at March month end. Definitions The data series on international security transactions cover portfolio transactions in stocks, bonds and money market instruments for both Canadian and foreign issues. Stocks include common and preferred equities, as well as warrants. Debt securities include bonds and money market instruments. Bonds have an original term to maturity of more than one year. Money market instruments have an original term to maturity of one year or less. Government of Canada paper includes treasury bills and US-dollar Canada bills. |
Foreign acquisitions of outstanding Canadian bonds remained robust at $5.7 billion in March, closing the quarter with a new high. Investments were limited to bonds issued by the federal government and its enterprises with minimal credit and liquidity risks, almost all denominated in Canadian dollars.
Non-residents slightly reduced their holdings of Canadian money market instruments ($239 million) in March, following substantial sell-offs over the previous two months totalling $3.3 billion. In March, short-term interest rates dropped substantially and the interest rate differential between Canadian long- and short-term rates widened to 174 basis points, the highest in three years, favouring investments in bonds.
Residents divest a significant amount of foreign debt
Canadian investors sold $4.3 billion of foreign debt in March, almost equally split between bonds and money market instruments. The divestment in foreign money market paper was sizable at $2.4 billion, nearly all in the non-bank financial sector. Since August 2007, when the global credit market tightened, Canadian investors have disposed of $13.0 billion of foreign short-term debt.
Sales of foreign bonds by Canadian investors of $1.9 billion were focused in longer term-to-maturity US Government bonds. US long-term rates fell in March, in the context of a higher inflation reading in the US economy. The remainder of March's reduction was in non-US foreign bonds, driven by retirements of Maple bonds (Canadian dollar-denominated foreign instruments).
Canadian investors diversify foreign equity investments
Residents invested $982 million in foreign stocks in March, mainly US shares. While equity transactions were sector focused over the past few months, investments in March were comprised of a well-diversified portfolio of US shares to minimise market risks and uncertainties. US stock prices were down for a fifth consecutive month in March.
Available on CANSIM: tables 376-0018 to 376-0029, 376-0042, 376-0058 and 376-0063.
Definitions, data sources and methods: survey number 1535.
The March 2008 issue of Canada's International Transactions in Securities (67-002-XWE, free) will soon be available.
Data on Canada's international transactions in securities for April will be released on June 17.
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 Yiling Zhang (613-951-2057), Balance of Payments Division.
Table(s).
