Canada's international transactions in securities, March 2014
Canadian investors acquired $7.9 billion of foreign securities in March, the largest such outflow of funds since November 2012. Meanwhile, foreign investors reduced their holdings of Canadian securities by $1.2 billion, the first monthly divestment this year.
This activity led to a net outflow of funds from the Canadian economy of $9.1 billion in March on portfolio transactions and of $10.4 billion for the first quarter of 2014. Over this period, Canadian investment abroad was led by funds placed in foreign equity markets, while foreign investors continued to reduce their exposure to Canadian debt instruments.
Canadian investment in foreign equities accelerates
Canadian investment in foreign securities increased for a second straight month, reaching $7.9 billion in March. Canadian investment in foreign shares totalled $6.4 billion, the highest recorded since April 2007, and mainly targeted non-US equities. In March, major non-US foreign stock markets generally edged down while the US stock market was up by 0.7%.
Canadian investors also acquired $1.5 billion of foreign debt securities in March, led by US Treasury bonds. This marked the sixth straight month of investment in foreign debt instruments and was moderated by a divestment in US corporate bonds and in foreign paper. US long-term interest rates were almost unchanged during the month.
Foreign investors reduce their holdings of Canadian money market instruments
Foreign investors divested $6.1 billion of the Canadian money market in March, led by retirements. This reduction largely consisted of government paper and, to a lesser extent, corporate paper. Foreign holdings of federal government paper were down by $3.4 billion, reflecting a declining trend in the overall outstanding amount of these instruments. Non-residents also reduced their exposure to private corporate paper in the month, divesting $2.4 billion.
Foreign investment in the Canadian bond market amounted to $1.8 billion in March. Inflows were led by a $5.2 billion acquisition of private corporate bonds, mainly new bonds denominated in US dollars. This activity was moderated by divestments in federal government and federal government business enterprise bonds. In March, Canadian long-term interest rates edged up by one basis point, while short-term rates increased by four basis points. The Canadian dollar appreciated against its US counterpart by 0.2 US cents.
Non-resident investment in Canadian equities continues
Foreign investors acquired $3.0 billion of Canadian equities in March, marking a seventh straight month and a fourth straight quarter of such investment. This largely reflected secondary market activity, in the form of acquisitions of outstanding Canadian shares. Canadian stock prices were up 0.9% in March, closing the month at their highest levels since June 2008.
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 April will be released on June 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 Trade Division.
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