Canada's international transactions in securities, May 2015
Foreign investors reduced their holdings of Canadian securities by $5.4 billion in May, led by a divestment in equities. Meanwhile, Canadian investors added $5.6 billion of foreign securities to their portfolios, mainly corporate securities. As a result, Canada's international transactions in securities generated a net outflow of funds of $11.0 billion from the Canadian economy in May, following two months of net inflows.
Foreign holdings of Canadian portfolio shares decline
Foreign investors reduced their holdings of Canadian shares by $5.7 billion, the first divestment in 2015. This decline was related to cross-border merger and acquisition activities, as non-resident portfolio investors rendered their Canadian shares to foreign direct investors. Acquisitions of $2.2 billion of Canadian shares by non-resident investors on the secondary market moderated the overall divestment in these instruments. Canadian stock prices were down by 1.4% at the end of the month.
Foreign investment in Canadian debt securities was subdued in the month at $215 million. Investment in Canadian bonds slowed for a second straight month to reach $514 million in May. This activity reflected movements of funds from government bonds to corporate bonds. The divestment in government bonds was $4.6 billion, almost evenly split between federal and provincial instruments. Foreign investment in Canadian corporate bonds was led by a $5.3 billion acquisition of federal government business enterprise bonds, mainly new issues. This was the largest investment since June 2008.
Activity in the Canadian money market resulted in a $299 million reduction in foreign holdings of these instruments. The decline was almost all in private corporate paper as foreign acquisitions of provincial government paper were largely offset by a divestment in federal Treasury bills. Canadian short-term interest rates were down while Canadian long-term interest rates were up in May. The Canadian dollar depreciated against its US counterpart by 2.5 US cents.
Canadian acquisitions of foreign equities continue
Canadian acquisitions of foreign securities reached $5.6 billion in May, led by investment in corporate securities. Canadian investment in foreign equities amounted to $3.9 billion and was almost evenly split between US and non-US foreign shares. US stock prices rose by 1.0% during the month.
Canadian investment in foreign debt securities slowed to $1.7 billion in May. The investment was all in US debt instruments, mainly corporate bonds. A decline in Canadian holdings of non-US foreign debt securities moderated the overall investment in the month. US long-term interest rates were up by 26 basis points in May.
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 June will be released on August 17.
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To enquire about the concepts, methods or data quality of this release, contact Lauren Dong (613-668-3140; firstname.lastname@example.org), International Accounts and Trade Division.
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