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Canada's international transactions in securities

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September 2010 (Previous release)

Strong foreign investment in Canadian securities was sustained in September as non-residents added a further $12.3 billion to their portfolios, for a cumulative total of $87.2 billion over the first three quarters of 2010. Meanwhile, Canadian acquisitions of foreign securities strengthened to $4.6 billion in September, the largest outflow since March.

Foreign portfolio investment in Canadian securities

Provincial and private corporate bonds dominate foreign acquisitions

September extended the trend to substantial foreign purchases of Canadian bonds observed since January 2009. Non-residents acquired $8.8 billion of these instruments in September, focusing on US dollar and Euro denominated private corporate and provincial bonds.

Non-resident investors purchased $3.6 billion of Canadian private corporate bonds in September, following acquisitions of $5.3 billion in August. This activity was dominated by new bonds issued by resource and financial firms. In addition, foreign demand for Canadian provincial bonds rebounded, comprised of both new issues and secondary market activity.

Foreign investment in federal government bonds levelled off in September, accounting for a $1.9 billion inflow of funds from abroad. Federal bonds have attracted sizeable foreign investments since January 2009, with foreign holdings of these instruments more than doubling since then.

Note to readers

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.

Foreign investors adjusted their holdings of Canadian money market instruments in September. Foreign investors acquired $923 million of federal government paper, as yields reached their highest level since November 2008 and the Canadian dollar rose 3.4 US cents. However, foreign holdings of paper issued by provincial governments continued to decline, down a full two-thirds since December 2009.

Foreign investors increase holdings of Canadian equities, from mergers and acquisitions

Non-residents added $3.3 billion to their holdings of Canadian equities in September, the largest inflow since May. This was due to Canadian direct investment acquisitions of foreign firms and the resulting new issues of Canadian shares to foreign shareholders of acquired firms. However, secondary market transactions in Canadian stocks resulted in a small reduction in foreign holdings, following sizeable foreign purchases in August. Foreign acquisitions of shares of chemical and fertilizer producers were more than offset by divestment of shares of banks, gold, and oil and gas sectors, as Canadian stock prices increased for a third consecutive month, rising 3.8% in September.

Canadian acquisitions of foreign stocks reach six-month high

Canadian investors added $2.7 billion of foreign stocks to their holdings in September, the largest investment since March. Acquisitions of US stocks, which have strengthened over a four month period, accounted for most of the outflows. In September, US equity prices were up 8.8%, the largest monthly increase since April 2009. Canadian investors also continued to buy moderate amounts of non-US foreign shares in September, as major global equity markets posted gains over the month.

Canadian investors add US government bonds for the first time since March

Canadians purchased $1.0 billion of foreign bonds in September. The majority of the outflows were channelled to US government bonds, up $845 million for the first such investment in six months. The bulk of this activity was secondary market purchases of US government bonds sold by Asian investors. Canadian holdings of non-US foreign bonds were largely unchanged in September, with sizeable purchases of long-term asset-backed securities issued by European financial institutions offset by retirements of maple bonds.

At the short-end of the spectrum, Canadians acquired foreign money market instruments for a third straight month, adding $809 million to their holdings in September. Activity was comprised of US Treasury bills, and, to a lesser extent, Treasury bills issued by European countries.

Canadian portfolio investment in foreign securities

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 September 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 October will be released on December 16.

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.

Table 1

Canada's international transactions in securities
  July 2010 August 2010 September 2010 January to September 2009 January to September 2010
        Cumulative transactions
  $ millions
Foreign investment in Canadian securities 5,436 10,370 12,253 82,787 87,211
Bonds (net) 5,199 10,801 8,811 55,020 76,159
Outstanding 4,627 5,190 6,822 23,036 58,320
New issues 2,782 5,808 9,405 64,765 48,922
Retirements -2,893 -1,437 -7,407 -34,061 -32,786
Change in interest payable1 684 1,241 -9 1,280 1,702
Money market paper (net) 966 -705 158 3,619 777
Government of Canada 1,575 404 923 5,728 4,324
Other -609 -1,110 -765 -2,109 -3,547
Stocks (net) -728 274 3,284 24,149 10,275
Outstanding -609 1,098 -284 13,823 5,753
Other transactions -119 -823 3,569 10,325 4,522
Canadian investment in foreign securities 2,971 -3,404 -4,563 -10,011 -11,439
Bonds (net) 2,961 116 -1,025 8,652 7,049
Money market paper (net) -519 -1,013 -809 -1,497 -2,792
Stocks (net) 529 -2,507 -2,730 -17,166 -15,696
Interest accrued less interest paid.
Note(s):
A minus sign indicates an outflow of money from Canada, that is, a withdrawal of foreign investment from Canada or an increase in Canadian investment abroad.