Canada's international transactions in securities, June 2013
Non-resident investors reduced their holdings of Canadian securities by $15.4 billion in June, the largest reduction since October 2007. The focus was on Canadian bonds. Meanwhile, Canadian investors resumed their acquisition of foreign securities by adding $3.7 billion to their portfolios in June, favouring US debt instruments and non-US foreign equities.
Foreign holdings of Canadian bonds down significantly, led by retirements
Non-resident investors reduced their holdings of Canadian bonds by a record $19.0 billion in June, marking the first divestment in 2013. The decline was largely accounted for by bonds reaching maturity, as well as by secondary market sales.
On a sector basis, the divestment focused on federal government and its business enterprise bonds and, to a lesser extent, provincial government bonds. This occurred against the backdrop of a sharp decline in the overall supply of these instruments over the month. Slightly moderating this activity were foreign acquisitions of $1.0 billion of Canadian private corporate bonds on the secondary market, the 15th straight month of such investment by non-residents.
Non-resident investment in the Canadian money market slowed to $0.4 billion in June from $3.5 billion in May. Acquisitions of provincial paper were partially offset by a reduction in Treasury bills, for which the overall supply slowed in the month.
The differential between Canadian long- and short-term interest rates widened in June as long-term rates were up 43 basis points. The Canadian dollar continued to depreciate against its US counterpart and was down by 1.4 US cents.
Non-resident investment in Canadian equities continues
Foreign investors added $3.2 billion of Canadian equities to their portfolios, making for a third straight monthly investment and the largest inflow since September 2012. This activity was mostly related to new issues of corporate shares. Non-residents also acquired Canadian shares on the secondary market, led by energy and banking shares. The Canadian stock market was down 4.1% in June to reach its lowest level since August 2012.
Canadian investors favour US debt securities and non-US foreign equities
Canadian investors added $3.7 billion of foreign securities to their holdings in June, following a $1.7 billion divestment in May. Canadian investment in foreign bonds strengthened to $2.2 billion and was evenly split between US government and corporate bonds. Canadians acquired $1.5 billion of foreign equities in June as they purchased non-US foreign equities for a fourth consecutive month. They also acquired US stocks, following three months of divestment. Global equity markets were down in June, with US stock prices retreating 1.2%.
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 July will be released on September 16.
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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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