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Foreign investment in Canadian securities continued to increase, reaching $11.8 billion in January, with debt instruments continuing to attract the bulk of the inflow of funds. In contrast, Canadians removed $5.8 billion from their holdings of foreign securities in January, the largest reduction since December 2008.
Foreign investment in Canadian bonds was again robust at $10.0 billion in January. Canadian federal government bonds accounted for two-thirds of this activity, both new issues abroad and secondary market purchases. Canadian corporate bonds made up the balance, led by foreign acquisitions on secondary markets, largely mortgage-backed instruments. For the corporate sector, new issues of bonds were subdued in January, after having nearly equalled the value of all foreign investment in 2009.
Foreign funds of $2.5 billion were channelled to Canadian money market instruments in January, mostly three-month Federal Treasury bills. This contrasted with the trend observed since April 2009, when non-residents moved significant funds from Canadian paper to Canadian bonds and equities as the supply of Federal paper was reduced and equity prices rebounded.
Non-residents disposed of $649 million of Canadian stocks in January, the second monthly divestment in 12 months. Foreign investors sold $1.1 billion of Canadian equities on secondary markets, and new issues slowed in the month. In January, Canadian stock prices fell 5.5%, the sharpest decline since February 2009. While price declines were widespread, foreign divestment was concentrated in shares in the resource and financial sectors.
Canadian investors sold $5.6 billion of foreign bonds in January, the largest divestment since October 2008 at the height of the financial crisis. Similar to that period, US government bonds accounted for most of the decline. In contrast to October 2008, divestment was focused on shorter term-to-maturity bonds.
All values in this release are net transactions unless otherwise stated.
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.
The remainder of the divestment activity in January was in non-US foreign bonds as Canadian investors removed $1.9 billion from their holdings, largely reflecting retirements of maple bonds. This followed three months of moderate investment in non-US foreign bonds.
Canadians added $373 million of foreign money market paper to their portfolios in January, all US government paper. Canadians sold US corporate paper for the first time since July 2009, largely instruments of non-bank financial institutions.
After a brief pause in December 2009, Canadians further reduced their exposure to foreign stocks in January. They removed $647 million from their holdings, all in non-US foreign stocks and mainly in banking shares. This was partially moderated by investment in US stocks by Canadian mutual funds, despite a decline in US market indexes.
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 January 2010 issue of Canada's International Transactions in Securities (67-002-X, free) will soon be available.
Data on Canada's international transactions in securities for February will be released on April 19.
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 Yiling Zhang (613-951-2057; yiling.zhang@statcan.gc.ca), Balance of Payments Division.
November 2009 | December 2009 | January 2010 | 2008 | 2009 | |
---|---|---|---|---|---|
Cumulative transactions | |||||
$ millions | |||||
Foreign investment in Canadian securities | 10,551 | 11,114 | 11,832 | 29,057 | 109,787 |
Bonds (net) | 12,876 | 9,352 | 10,020 | 15,179 | 82,877 |
Outstanding | 2,277 | 7,890 | 6,543 | 20,082 | 37,773 |
New issues | 12,461 | 6,235 | 4,533 | 49,495 | 87,312 |
Retirements | -1,769 | -3,436 | -1,893 | -54,580 | -42,743 |
Change in interest payable1 | -93 | -1,337 | 836 | 182 | 534 |
Money market paper (net) | -1,902 | 519 | 2,461 | 11,132 | 665 |
Government of Canada | -2,383 | -1,032 | 2,865 | 8,254 | 420 |
Other | 481 | 1,550 | -404 | 2,877 | 244 |
Stocks (net) | -423 | 1,244 | -649 | 2,746 | 26,246 |
Outstanding | -771 | -636 | -1,077 | -2,385 | 13,411 |
Other transactions | 348 | 1,880 | 429 | 5,131 | 12,835 |
Canadian investment in foreign securities | -2,029 | -663 | 5,830 | 13,652 | -8,667 |
Bonds (net) | -1,098 | -337 | 5,555 | 16,354 | 9,030 |
Money market paper (net) | -1,514 | 801 | -373 | 5,212 | -1,847 |
Stocks (net) | 583 | -1,127 | 647 | -7,914 | -15,850 |