Canada's international transactions in securities, June 2014
Foreign investors reduced their holdings of Canadian securities by $1.1 billion in June, following investment totalling $31.6 billion over the previous two months. Canadian investors continued their moderate investment in foreign securities by adding $2.0 billion to their portfolios in June. This activity led to a large inflow of funds on portfolio investment for the second quarter of 2014.
Foreign investors adjust their portfolios in favour of corporate securities
Foreign investors reduced their holdings of Canadian bonds by $3.9 billion in June, the first such divestment since January of this year. The reduction focused on Canadian government bonds, both federal and provincial bonds. The divestment in federal government bonds reached a high of $9.4 billion and was composed of sales on secondary markets and bonds reaching maturity. Provincial government bonds were down $2.6 billion, all retirements.
Foreign investment in Canadian corporate bonds remained strong at $8.0 billion in June. Foreign investors favoured bonds from the private corporate sector with acquisitions of $5.8 billion during the month, the highest since April 2013. Foreign investment in corporate bonds since the beginning of the year total $23.6 billion.
Foreign investment in the Canadian money market moderated to $224 million, with foreign investors moving funds from corporate paper to government paper. Both Canadian long- and short-term interest rates were up in June, while the Canadian dollar appreciated against its US counterpart by 1.5 US cents at the end of the month.
Non-residents acquire Canadian equities for a tenth straight month
Non-resident investment in Canadian equities was $2.6 billion in June, mainly focused in the energy sector. Acquisitions of Canadian equities since the beginning of the year total $16.3 billion, compared with a divestment of $3.1 billion for the six first months of 2013. The Canadian stock market, as measured by the Standard and Poor's / Toronto Stock Exchange composite index was up by 3.7% at the end of the month, reaching a record level.
Canadian investment in foreign securities continues
Canadian investment in foreign securities was $2.0 billion in June, marking a ninth consecutive month of such activity. Acquisitions were concentrated in foreign equities, with $2.1 billion evenly split between US and non-US foreign shares. The US stock market was up by 1.9% at the end of June.
Canadian investors reduced their holdings of foreign debt securities for a third straight month, led by divestments in US bonds and US commercial paper. Meanwhile, Canadians purchased $1.3 billion in US Treasury bills, marking the highest such investment since October 2010. Canadians also invested $1.5 billion in non-US foreign bonds in June.
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 July will be released on September 18.
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To enquire about the concepts, methods or data quality of this release, contact Lauren Dong (613-951-3282; email@example.com), International Accounts and Trade Division.
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