Canada's international transactions in securities, September 2014
Canadian acquisitions of foreign securities resumed in September as investors added $8.6 billion worth of these instruments to their holdings. Meanwhile, foreign investment in Canadian securities slowed to $4.4 billion and mainly focused on instruments from the private corporate sector.
Canadian investment in foreign securities resumes
Canadian investors added $8.6 billion of foreign securities to their holdings in September after a minimal investment in these instruments in August. Outflows in the month targeted both foreign debt and equity instruments.
Canadian acquisitions of foreign debt securities amounted to $5.1 billion, led by both US government and corporate bonds. Purchases of US government bonds in September more than offset the divestment in August, while the investment in US corporate bonds was the highest observed since March 2007. A third straight monthly reduction in Canadian holdings of foreign money market instruments, mainly US instruments, moderated the overall acquisitions in September. US long-term interest rates were up by 11 basis points in September.
Canadian purchases of foreign stocks amounted to $3.6 billion in September. Investors added $3.8 billion of non-US foreign shares to their portfolios but reduced their exposure to US shares for a second straight month. Major global stock markets were down in September.
Foreign investment in Canada focuses on private corporate securities
Foreign acquisitions of Canadian securities slowed to $4.4 billion in September from $10.3 billion in August. The investment in the month was all in Canadian equities, as activity in Canadian debt securities largely reflected offsetting movements of funds between short- and long-term instruments.
Foreign investment in Canadian equities was $4.7 billion, the highest such investment this year. Non-residents' acquisitions of Canadian equities have totalled $28.5 billion for the first three quarters of 2014, compared with a $6.9 billion investment for the same period in 2013. Canadian stock prices retreated in September, the second monthly decline in 2014. The Canadian dollar depreciated against its US counterpart by 2.7 US cents.
Non-resident investment in Canadian bonds was $4.6 billion, all foreign currency denominated instruments. On a sector basis, foreign acquisitions of private corporate bonds, mainly new issues, were moderated by a divestment in federal government business enterprise bonds, mostly retirements. Foreign investment in federal government bonds was minimal as acquisitions on the secondary market slightly offset retirements in the month.
Non-resident investors withdrew $5.0 billion of funds from the Canadian money market in September. Canadian private corporate paper accounted for most of the foreign divestment over the month. A reduction in foreign holdings of government paper, both federal and provincial, also added to the divestment. Canadian long-term interest rates were up by 20 basis points while short-term rates edged down in September.
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 October will be released on December 16.
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