Canada's international transactions in securities, February 2013
Non-resident investors reduced their holdings of Canadian securities by $6.3 billion in February, reflecting declines in holdings of equities and, to a lesser extent, money market instruments. Meanwhile, Canadian investors resumed their investment in foreign securities with an acquisition of $4.4 billion, largely bonds. Canadian investment in foreign securities has exceeded foreign investment in Canadian securities in three of the last four months.
Merger and acquisition activity leads to a decrease in non-residents' holdings of Canadian portfolio shares
Non-residents reduced their holdings of Canadian equities by $11.6 billion in February, the largest divestment since October 2007. Cross-border mergers and acquisitions accounted for most of the reduction, as non-resident portfolio investors rendered their Canadian shares to foreign direct investors. Foreign investors' acquisitions of $1.8 billion of Canadian shares on the secondary market moderated the overall divestment. Canadian stock prices were up 1.1% in February to reach their highest level since July 2011.
Non-residents add federal government and its enterprise bonds to their holdings
Non-residents purchased $8.0 billion of Canadian bonds in February, down from $11.9 billion in January. This activity mainly targeted Canadian dollar-denominated short-term bonds issued by the federal government and its enterprises, and was led by investors from the United States and Japan. Foreign investment in Canadian private corporate bonds was down significantly in the month, reflecting lower new issues of these securities.
Foreign investors reduced their holdings of Canadian money market instruments by $2.8 billion in February. Federal Treasury bills and private corporate paper accounted for most of the reduction despite the first increase in the overall supply of federal instruments in three months. The Canadian dollar depreciated 3.3 cents against its US counterpart to end the month below parity for the first time since July 2012.
Canadian acquisitions of foreign bonds focus on US government instruments
Canadian investors resumed investment in foreign bonds, adding $3.8 billion worth to their portfolios in February. Canadian investments in US government bonds and non-US foreign bonds were the largest contributors to the outflows over the month. This followed a $3.4 billion divestment led by US government bonds in January. In February, US long-term interest rates exceeded their Canadian equivalent for a second straight month.
Canadians continue to acquire foreign equities, but at a slower pace
Canadian investment in foreign equities was $0.4 billion in February, down from $2.2 billion in January. Activity was led by further acquisitions of US stocks by Canadian pension funds, moderated by a divestment in non-US foreign stocks. US stock prices were up 1.1% in February. Stock prices also increased in Japan and the United Kingdom, but were largely lower in Europe.
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. This activity excludes transactions in equity and debt instruments between affiliated enterprises, classified as foreign direct investment in the international accounts.
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 March will be released on May 16.
For more information, contact us (toll-free 1-800-263-1136; email@example.com).
To enquire about the concepts, methods or data quality of this release, contact Lauren Dong (613-951-3282; firstname.lastname@example.org), International Accounts and Statistics Division.
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