Canada's international transactions in securities, January 2013
Non-residents acquired $13.3 billion of Canadian securities in January, led by corporate debt instruments. Meanwhile, Canadian investors reduced their holdings of foreign securities by $1.2 billion, following four straight months of investments.
As a result, net inflows of funds from cross-border transactions in securities resumed in January, after two consecutive months of net outflows. This was a return to the general trend observed since 2009, with foreign investment in Canadian securities exceeding Canadian investment in foreign securities.
Non-resident investors focus on Canadian corporate debt securities
Non-resident investment in Canadian debt securities strengthened to $11.7 billion in January, as the investment focus shifted from government to corporate debt securities. Acquisitions of Canadian private corporate debt instruments reached $10.3 billion in January, the largest inflow since October 2001. This was led by new issues of US dollar-denominated instruments in the US market. In addition, foreign investors added $2.6 billion of federal government enterprise bonds to their holdings, their largest investment since May 2012.
Non-resident investors reduced their holdings of federal government debt securities by $4.3 billion in January, the largest outflow since March 2012. Activity in Canadian Treasury bills accounted for the entire reduction through retirements, after two months of sizable foreign investment in these instruments. The supply of new federal debt instruments was limited to bonds in January; however, acquisitions of federal bonds by non-residents slowed for a fourth straight month.
In January, Canadian long-term interest rates reached their highest level since April 2012, while short-term rates were stable. The Canadian dollar depreciated against the US dollar for a second month.
Foreign investment in Canadian shares resumes
Foreign investment in Canadian shares was $1.7 billion in January, after a $6.7 billion merger- and acquisition-related reduction in December. The largest inflow since September 2012 was led by secondary market purchases. Canadian share prices were up 2.0% in January, ending the month at their highest level since August 2011.
Canadian holdings of foreign bonds down
Canadians reduced their holdings of foreign bonds by $3.3 billion in January on secondary market sales. Investors sold $6.0 billion of US government bonds on the secondary market over the month, partially offsetting an acquisition of $10.4 billion in the previous three months. Sales activity largely involved bonds with short-term maturities. Acquisitions of maple bonds moderated the divestment over the month.
Canadian acquisition of US stocks remains robust
Canadians purchased $2.2 billion of foreign equities in January, marking a fifth straight month of acquisitions. Investment was all in US instruments and was focused on investment funds tracking broad US stock market indices. US stock prices rose 5.0% in January to reach their highest level in over five years.
Note to readers
The data series on international transactions in securities cover portfolio transactions in equity and investment fund shares, bonds and money market instruments for both Canadian and foreign issues.
Equity and investment fund shares include common and preferred equities as well as units/shares of investment funds.
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.
All values in this release are net transactions unless otherwise stated.
Data on Canada's international transactions in securities for February will be released on April 16.
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To enquire about the concepts, methods or data quality of this release, contact Yiling Zhang (613-951-2057; firstname.lastname@example.org), Balance of Payments Division.
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