Canada's international transactions in securities, August 2013
Non-resident investment in Canadian securities slowed to $2.1 billion in August and was focused on corporate debt instruments. Meanwhile, Canadian investment in foreign securities rose to $5.7 billion, the largest investment since November 2012.
Non-resident investment in the Canadian debt market focuses on corporate securities
Non-resident investment in Canadian bonds was $2.0 billion in August, down from $3.6 billion in July. Investment was in corporate bonds, as non-residents reduced their holdings of government bonds for the third time in four months.
Foreign acquisition of corporate bonds stood at $3.3 billion in August and included both private and government business enterprise bonds. This activity was moderated by a $1.2 billion reduction in foreign holdings of government bonds, mainly sales of federal bonds with short-term maturities. Between January and August of 2013, foreign investors reduced their holdings of Canadian government bonds by $2.4 billion, compared with an acquisition of $28.7 billion for the same period in 2012. Reduced purchases of these bonds by non-residents on the secondary market accounted for the bulk of this change in activity.
Non-resident investment in the Canadian money market strengthened to $2.2 billion in August from $0.9 billion in July. Acquisitions in the month focused on private corporate paper denominated in foreign currency, and was the largest such investment since January 2013. Canadian short-term interest rates edged down in August, while long-term rates increased 18 basis points to reach their highest level in more than two years. The Canadian dollar depreciated 2.4 US cents against its US counterpart.
Foreign investors sell Canadian equities for the first time in five months
Foreign investors sold $2.2 billion of Canadian equities in August, following four straight months of purchases totalling $8.2 billion. On a sector basis, pharmaceutical as well as energy, gold and resource shares accounted for the bulk of the divestment. The Canadian stock market was up for a second month, advancing 1.3% in August.
Canadian investment in foreign securities accelerates
Canadian investment in foreign financial markets reached $5.7 billion in August, the largest investment since November 2012. Canadian acquisitions targeted both foreign debt and equity instruments.
Canadian investors, led by pension funds, resumed their investment in foreign equities by adding $3.4 billion to their portfolios in August. The largest such acquisition in almost a year was largely comprised of non-US foreign shares, with purchases of $2.3 billion. Canadian investors also acquired US equities following a divestment in July. Major global equity markets posted declines in August, including the United States, Japan and Germany.
Canadian investors also acquired foreign bonds for a seventh straight month, adding $2.2 billion to their holdings. On a year-to-date basis, acquisitions of these instruments by Canadians amounted to $10.9 billion, up from the $1.4 billion divestment for the same period in 2012.
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 September will be released on November 18.
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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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