Canada's international transactions in securities, October 2013
Foreign investment in Canadian securities amounted to $4.4 billion in October and was focused on instruments from the corporate sector. Canadian holdings of foreign securities edged lower, led by the sale of US equities.
Non-resident investment in Canadian equities continues
Non-resident investors added $4.5 billion of Canadian equities to their portfolios in October, following a $10.7 billion acquisition in September. This marks the sixth month of foreign acquisitions of Canadian shares in the last seven months. Activity in September was led by secondary market purchases for a second month. Canadian stock prices were up 4.5% at the end of October, reaching their highest level since May 2011. The Canadian dollar depreciated further against its US counterpart, down 1.2 US cents.
Non-resident investors acquire bonds but reduce holdings of money market instruments
Foreign holdings of Canadian debt securities edged down $38 million in October, reflecting large offsetting movement of funds between the Canadian bond and money markets.
Foreign investment in Canadian bonds was $6.1 billion in October, mainly new bonds denominated in US dollars. Non-residents continued to favour Canadian corporate bonds over government bonds, although they invested in federal bonds for the first time in three months. The $4.7 billion foreign acquisition of Canadian private corporate bonds marked a ninth month of such investment in 2013. This activity was dampened by a reduction in foreign holdings of provincial government bonds, mainly reflecting retirements. Long-term interest rates in Canada declined for a second month.
At the same time, foreign investors reduced their holdings of Canadian money market instruments by $6.2 billion in October, following six straight months of investment totalling $12.4 billion. The largest such divestment since July 1994 was mainly led by retirements of federal treasury bills, as the overall outstanding debt for these instruments declined sharply at month-end. This decline was moderated by non-resident acquisitions of Canadian private corporate paper. Canadian short-term interest rates were down by eight basis points, the largest drop in over a year.
Canadian investors reduce their holdings of US equities and acquire foreign debt instruments
Canadian holdings of foreign securities edged down $95 million in October, as investors reduced their exposure to foreign equities but purchased foreign debt securities.
Foreign equities held by Canadian investors were down $1.2 billion. This reflected $2.1 billion sales of US shares, the first in three months, partly offset by the acquisition of non-US foreign shares. Since the beginning of 2013, Canadian investment in foreign equities has amounted to $3.3 billion, down from $18.8 billion recorded for the same period in 2012. US stock prices were up 4.5% in October, leading the growth in major global financial markets.
Canadian investment of $1.1 billion in foreign debt securities was almost evenly split between short- and long-term instruments. Canadian investors acquired $0.6 billion of foreign money market instruments, mainly US Treasury bills. The remainder of the activity was spread between US corporate bonds and non-US bonds.
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 November will be released on January 16, 2014.
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