Canada's international transactions in securities, November 2013
Foreign investors added $8.7 billion of Canadian securities to their holdings in November. The fifth straight month of foreign investment in these instruments was largely composed of corporate securities. Meanwhile, Canadian investors acquired $6.6 billion of foreign securities, all bonds.
Foreign investment in Canadian bonds reaches a 10-month high
Foreign investors acquired $3.4 billion of Canadian debt securities in November. This reflected a second straight month of large adjustments to their portfolios, with funds moving out of Canadian money market instruments and into Canadian bonds.
Foreign investment in Canadian bonds reached $10.6 billion in November, the second largest monthly inflow in 2013. Foreign investors continued to favour corporate bonds during the month, adding $7.9 billion worth of these instruments to their portfolios, evenly split between private corporate and federal government business enterprise bonds. This marked the eighth straight month of foreign investment in private corporate bonds, and was the largest investment in federal government business enterprise bonds by non-residents since May 2009.
The remainder of the activity in the Canadian bond market was mainly in federal government bonds with foreign purchases of $2.5 billion. This was the largest investment in eight months, despite a decline in the overall outstanding debt of these instruments in November. Canadian long-term interest rates edged up 12 basis points after two consecutive months of reduction.
At the same time, non-residents reduced their holdings of Canadian money market instruments by $7.1 billion in November, following a $6.1 billion divestment in October. The reduction in November was widespread across money market instruments, but led by provincial government securities. This activity mainly reflected large retirements for a second straight month. Canadian short-term interest rates were up in November but by less than long-term rates. As a result, the spread between short- and long-term interest rates widened in November.
Foreign investment in Canadian equities strengthens
Foreign investment in Canadian equities reached $5.2 billion in November. This marked a third straight month of acquisitions, totalling $20.4 billion. The Canadian stock market edged up 0.3% in November to reach its highest level since May 2011. The Canadian dollar depreciated further against its US counterpart, down 1.7 US cents by month-end.
Canadian investment in foreign securities resumes
Investment in foreign securities resumed in November as Canadian investors acquired $6.6 billion. This was the largest investment in a year.
Canadian acquisition of foreign bonds reached $7.5 billion in November, the highest such outflow since March 2007. This activity was led by US Treasury bonds and, to a lesser extent, Canadian dollar-denominated corporate foreign bonds. US long-term interest rates were up by 10 basis points during the month.
Canadian investors reduced their holdings of foreign equities for a third straight month, down by $0.4 billion in November. This drop was in US securities and followed a $2.1 billion divestment in these instruments in October. US stock prices were up 2.8% while other major global stock markets generally increased over the month.
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 December 2013 will be released on February 18.
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