Canada's international transactions in securities, May 2014
Foreign investors acquired $21.4 billion of Canadian securities in May, mainly government bonds. Canadian investors added $2.0 billion of foreign securities to their holdings in the month, largely non-US instruments. As a result, security transactions generated a net inflow of funds to the Canadian economy over the first two months of the second quarter.
Foreign investment in Canadian securities reaches its highest level in two years
Foreign acquisitions of Canadian securities amounted to $21.4 billion in May, making for the largest such inflow of funds in two years. Foreign investment was focused on longer-term debt instruments during the month. This activity occurred against the backdrop of large increases in the net supply of bonds by the federal and provincial governments. Canadian long-term interest rates were down by 18 basis points during the month.
Foreign investment in Canadian bonds was $15.9 billion in May, mainly governments bonds. Non-residents acquired $6.9 billion of federal government bonds, following a divestment of $15.4 billion over the previous five months. Foreign investment in provincial government bonds amounted to $6.3 billion in May, the highest such investment since April 2009. In addition, foreign investors added federal government business enterprises bonds to their portfolios, but reduced their holdings of private corporate bonds in May.
Non-residents added $2.9 billion to the Canadian money market in May, mostly on acquisitions of corporate paper. Investment in private corporate paper was $3.0 billion in the month, the largest since January 2013. Canadian short-term interest rates edged down by two basis points while the Canadian dollar reached its highest level in five months against its US counterpart at the end of May.
Foreign investment in Canadian shares was $2.6 billion in May, the ninth straight month of such activity. Canadian stock prices were down by 0.3% in May, the first decline in 11 months.
Canadian investment in foreign securities moderates further
Canadians continued to invest in foreign securities in May, adding $2.0 billion of such instruments to their holdings. This was a second consecutive month of lower activity, on the heels of a strong first quarter of Canadian portfolio investment abroad. Acquisitions of foreign equities totalled $3.3 billion in May, all non-US shares. Major global stock markets were up in the month.
Canadian investors reduced their holdings of foreign debt securities by $1.3 billion in May. For a second consecutive month, this activity was led by large sales of US Treasury securities in the secondary markets. At the same time, Canadian investors acquired US corporate and non-US foreign debt securities, which moderated the overall divestment. US long-term interest rates were down by 15 basis points in May.
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 June will be released on August 18.
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To enquire about the concepts, methods or data quality of this release, contact Yiling Zhang (613-951-2057; firstname.lastname@example.org), International Accounts and Trade Division.
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