Canada's international transactions in securities

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Non-residents resumed their substantial acquisitions of Canadian securities in April, adding $12.4 billion to their holdings, mainly in the form of government bonds. Meanwhile, Canadian acquisitions of foreign securities slowed to $1.4 billion, focused on equities.

Foreign investment in federal and provincial government bonds picks up strongly

Foreign acquisitions of Canadian bonds rebounded in April to $10.0 billion, following a large reduction in purchases of these instruments in March. Investment activity in April focused on federal and provincial government bonds, as non-residents acquired an unprecedented $6.2 billion of Canadian dollar-denominated federal bonds on secondary markets. Foreign purchases of provincial bonds were the largest in a year at $3.5 billion, mainly new issues denominated in US dollars.

Foreign investors' net acquisitions of private corporate bonds slowed to $479 million in April. While they acquired $2.5 billion of these bonds on secondary markets, fuelled by Canadian mortgage bonds, this was largely offset by retirements. Most of the retirements reflected early redemptions of US dollar-denominated bonds and European currency-denominated bonds.

Foreign divestment in the Canadian money market slowed to $436 million in April. Non-resident holdings of federal government paper fell by $1.5 billion, largely due to retirements. However, they added $1.1 billion of Canadian corporate paper to their portfolios, mainly bank issues.

Foreign acquisitions of Canadian equities also accelerate

Canadian stocks drew $2.8 billion of funds from abroad, marking the largest investment inflow since September 2009. Most of this was secondary market activity, and covered a diverse basket of equities. Over the month, Canadian stock prices continued to trend up, reaching their highest level since August 2008.

Canadian investment in foreign debt instruments stalls

Canadian holdings of foreign bonds were unchanged in April, following two months of increases, as moderate sales of US government bonds were offset by acquisitions of maple bonds (the Canadian dollar-denominated foreign bonds). Canadian investment in maple bonds in April amounted to the largest investment outflow since November 2007. At the same time, Canadian investors withdrew funds from their foreign money market portfolios for the first time in 2010. The $412 million divestment was in US government and financial sector paper.

Investment activity in foreign equities slows

Canadian investors curtailed their acquisitions of foreign stocks to $1.8 billion in April, from $4.8 billion in March. Investment activity was down for both US and non-US stocks, though primarily focused on non-US shares for a third consecutive month, led by demand from the Canadian pension fund sector. Stock prices in major world markets were relatively unsettled in April, following a year of generally upward trends.

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 April 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 May will be released on July 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.