Canada's international transactions in securities, November 2014
Foreign investment in Canadian securities slowed to $4.3 billion in November. Acquisitions were mainly in Canadian corporate bonds as non-residents reduced their exposure to Canadian stocks for the first time in 15 months. Meanwhile, Canadian investors added $1.8 billion of foreign securities to their holdings, all in bonds.
Foreign investment in Canadian securities slows
Foreign investment in Canadian securities slowed from $9.5 billion in October to $4.3 billion in November. Non-resident investors added Canadian debt securities to their portfolios but reduced their holdings of equities during the month.
Foreign investment in Canadian bonds was $4.8 billion, mainly instruments from the corporate sector. Government business enterprise bonds and, to a lesser extent, private corporate bonds accounted for the bulk of the foreign acquisitions in November. Foreign investment in federal government bonds was $423 million, as acquisitions on the secondary market were moderated by retirements. Canadian long-term interest rates were down in the month, a general trend observed since the beginning of the year.
Activity in the Canadian money market was subdued in November, with foreign investors acquiring $121 million worth of these instruments. Non-resident investors readjusted their portfolios in the month, as they reduced their holdings of Canadian Treasury bills and increased their holdings of provincial government paper, the highest such investment since April. Canadian short-term interest rates edged up and the Canadian dollar continued to depreciate against its US counterpart in the month.
Foreign investors withdrew $580 million of funds from the Canadian equity market in November, the first monthly divestment since August 2013. From September 2013 to October 2014, foreign acquisitions of Canadian equities totalled $55.5 billion while Canadian stock prices were up by 15.5% over this period.
Canadian investment in foreign securities focuses on US bonds
Canadian acquisitions of foreign securities were $1.8 billion in November, marking a 14th straight month of investment. Activity in the month targeted US debt instruments, led by a $1.4 billion purchase of US Treasury bonds. These acquisitions followed a significant divestment in these instruments in October.
Canadian holdings of foreign equities were almost unchanged in November, following 12 straight months of investment totalling $32.6 billion. However, activity in the month reflected offsetting movements of funds between US and non-US foreign shares. Canadian investors acquired $2.2 billion of non-US foreign shares while they reduced their holdings of US shares by a similar amount. Major foreign equity markets were up in November.
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 December 2014 will be released on February 17, 2015.
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