Canada's international transactions in securities, January 2015
Canadian investors reduced their holdings of foreign securities by a monthly record $10.8 billion in January, following a $13.9 billion investment in December. Meanwhile, foreign investors resumed their acquisitions of Canadian securities by adding $5.7 billion worth to their portfolios.
Canada's international transactions in securities reflected relatively volatile investment patterns in recent months, with investors facing changes in oil and stock prices as well as a lower currency exchange rate. Transactions in January resulted in a net inflow of funds of $16.5 billion into the Canadian economy, in contrast to a net outflow of funds of $27.4 billion in December. The overall volume of activity (purchases and sales) in cross-border portfolio investment also increased in the last few months.
Canadians reduce their holdings of foreign securities, led by equities
Canadian investors sold $10.8 billion of foreign securities in January. This activity was concentrated in equities and marked the first monthly divestment in foreign securities since September 2013.
Canadian investors reduced their holdings of foreign shares by a record $10.2 billion in January. The reduction targeted both US and non-US foreign shares. US stock prices were down 2.9% in the month, following a 5.6% gain in the fourth quarter of 2014. The Canadian dollar continued to depreciate against its US counterpart, posting in January its largest monthly decline since October 2008.
Canadian holdings of foreign debt securities were down by $588 million in January, compared with a $9.9 billion investment in the previous month. The activity in January mainly reflected a reduction in US Treasury bonds, following large acquisitions in December. US long-term interest rates were down by 33 basis points in January, the largest reduction in over three years.
Foreign investment in Canadian securities resumes
Non-resident investors acquired $5.7 billion of Canadian securities in January, following a $13.5 billion divestment in December. The acquisition activity in the month was mostly in the Canadian bond market.
Foreign investment in Canadian bonds reached $10.5 billion in January, led by record acquisitions of provincial government bonds. The investment in Canadian bonds was almost evenly split between new instruments denominated in foreign currencies and acquisitions on the secondary market. In addition, foreign investors added Canadian private corporate bonds to their holdings, mainly denominated in foreign currencies. The investment activity in federal government bonds was subdued in the month. Canadian long-term interest rates were down by 44 basis points, the largest decline in six years.
Non-resident investors withdrew $5.8 billion of funds from the Canadian money market in January, marking the highest decline in 10 months. The reduction in foreign holdings of federal Treasury bills and private corporate paper accounted for most of the divestment. Canadian short-term interest rates were also down significantly in the month, declining by 31 basis points.
Foreign investors added $1.0 billion of Canadian shares to their holdings in January, following a $7.0 billion divestment the previous month. Canadian stock prices edged up by 0.3% in the month after a 0.8% loss in December.
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 February will be released on April 17.
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