Canada's international transactions in securities, August 2014
Foreign investment in Canadian securities was $10.3 billion in August and included both debt and equity instruments. Canadian investment in foreign securities decelerated from July, with holdings largely unchanged as acquisitions of non-US foreign instruments were offset by a divestment in US instruments.
Foreign investment in Canadian debt securities increase
Foreign investment in Canadian debt securities totalled $8.0 billion in August, almost evenly split between bonds and money market instruments. This marked the largest such activity in three months.
Foreign acquisitions of Canadian bonds amounted to $4.3 billion, mainly federal government business enterprise bonds and provincial government bonds. Foreign investment in federal government bonds totalled $482 million, as acquisitions on the secondary market were partly offset by retirements. A $572 million reduction in foreign holdings of Canadian private corporate bonds, all retirements, moderated the overall inflows in the month. Canadian long-term interest rates were down by 16 basis points in August.
Foreign investors resumed their investment in the Canadian money market by acquiring $3.7 billion worth of these instruments in August, the highest such investment in four months. Foreign acquisitions of government paper were $2.7 billion, with $1.5 billion in the provincial government sector. Foreign investment in corporate paper reached $977 million. Canadian short-term interest rates edged down two basis points in August.
Non-resident investors continue to add Canadian shares to their holdings
Foreign investors acquired $2.3 billion of Canadian shares in August, marking 12 consecutive months of investment totalling $46.4 billion. Canadian stock prices were up 1.9% in the month, and 23.5% higher over the last 12 months. The Canadian dollar depreciated against its US counterpart by less than one cent in August.
Canadian investors adjust their portfolio of foreign securities
Overall Canadian investment in foreign securities was minimal in August, compared with $9.7 billion of acquisitions in July. August activity reflected offsetting movement of funds between US and non-US foreign securities as well as between debt and equity instruments.
Canadian investors reduced their holdings of foreign debt securities by $605 million in August. The divestment was largely composed of US government securities, both long- and short-term instruments. This activity mainly reflected retirements for short-term instruments and sales for longer-term instruments. Acquisitions of US corporate bonds and non-US foreign bonds moderated the overall divestment in these instruments.
Canadian investors acquired $638 million of foreign equities in August, the lowest such investment to date in 2014. Investors added $1.6 billion of non-US foreign equities to their holdings and reduced their exposure to US equities by $924 million. The sales of US equities were the largest observed since October 2013.
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 September will be released on November 17.
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