Canada's international transactions in securities, July 2015
Foreign investors reduced their holdings of Canadian securities by $10.1 billion in July, mainly in the form of equity instruments. At the same time, Canadian holdings of foreign securities edged down as sales of equity securities were almost completely offset by purchases of debt securities.
Foreign holdings of Canadian portfolio equities decline
Non-resident investors reduced their holdings of Canadian securities by $10.1 billion in July, the largest monthly decline since December 2014. The divestment in the month was largely in Canadian equities, as activity in Canadian debt securities mainly reflected offsetting movements of funds between short- and long-term debt instruments.
Foreign holdings of Canadian equities were down by $9.7 billion in July. The reduction was related to cross-border merger and acquisition activities, as foreign portfolio investors rendered Canadian shares to foreign direct investors during the month. Foreign acquisitions of $3.1 billion of Canadian shares on the secondary market moderated the overall divestment in these instruments. The Canadian stock market edged down 0.6% in July.
Foreign investors reduced their holdings of Canadian debt securities by $406 million in July, the first divestment in 2015. Non-resident investors withdrew $3.9 billion of funds from the Canadian money market during the month, mainly in provincial and federal government paper. Relatively strong foreign acquisitions of private corporate paper for a second straight month partially offset the overall divestment.
Foreign investors resumed their investment in Canadian bonds by adding $3.5 billion to their holdings in July. This activity was led by acquisitions of Canadian dollar-denominated bonds issued by the federal government and by government business enterprises. On the other hand, foreign investors reduced their exposure to provincial government bonds for a sixth straight month in July. Canadian short- and long-term interest rates were down significantly, while the Canadian dollar depreciated against its US counterpart by 3.6 US cents in July.
Canadian investors adjust their portfolio of foreign securities
Canadian holdings of foreign securities edged down by $236 million in July, following three months of strong investment activities. Transactions in the month reflected movements of funds from foreign equities to foreign debt securities.
Canadian acquisitions of foreign debt securities amounted to $4.0 billion in July, exclusively US instruments. Investors acquired $4.0 billion of US Treasury bonds, the highest such investment in five months. They also purchased US corporate bonds for a 13th straight month, but sold non-US foreign debt securities. US long-term interest rates edged down in the month.
Canadian holdings of foreign equities were down by $4.2 billion in July as Canadian investors reduced their exposure to both US and non-US foreign equities. The divestment in July followed five straight months of acquisitions of foreign equities, predominantly non-US foreign instruments. US stock prices rose by 2.0% in the month.
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 August will be released on October 16.
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