Canada's international transactions in securities, March 2016

Released: 2016-05-18

Foreign investment in Canadian securities strengthened for a third straight month to reach $17.2 billion in March. Foreign acquisitions were mainly composed of securities issued by Canadian private corporations. Meanwhile, Canadian investment in foreign securities amounted to $2.3 billion and was led by US corporate instruments.

As a result, Canada's international transactions in securities generated a net inflow of funds into the economy of $14.9 billion in March. For the first quarter, a record net inflow of $52.8 billion was recorded, led by sustained foreign investment in Canadian securities in all three months of the quarter.

Chart 1 
Canada's international transactions in securities, quarterly

Foreign investment in Canadian securities focuses on private corporate instruments

Non-resident investment in Canadian securities reached $17.2 billion in March, the largest monthly investment since April 2015. The activity was mainly concentrated in Canadian private corporate instruments, both debt securities and equities.

Foreign acquisitions of Canadian bonds amounted to $8.1 billion in March. Investment activity occurred entirely in corporate bonds, as investors reduced their exposure to federal and provincial government bonds in the month. Foreign investors acquired $10.0 billion of private corporate bonds, largely new issues denominated in foreign currencies. They reduced their holdings of federal government bonds by $2.1 billion, mainly through secondary market activity, after adding $10.4 billion in January and February. Canadian long-term interest rates increased by seven basis points in March, following three months of significant declines.

Non-resident investors resumed their acquisitions in the Canadian money market by adding $2.3 billion to their holdings in March. Strong foreign acquisitions of corporate paper were moderated by a reduction of $4.1 billion in foreign holdings of federal government paper. The divestment in federal paper occurred against the backdrop of a decline in the total outstanding amount of these instruments. Canadian short-term interest rates edged down in the month.

Foreign investors acquired $6.8 billion of Canadian equities in March, the highest level of investment observed since March 2015. Purchases on the secondary market accounted for the bulk of this activity. Canadian stock prices were up 4.9% and the Canadian dollar appreciated against its US counterpart by 3.1 US cents in the month.

Chart 2 
Foreign investment in Canadian securities

Canadian investment in foreign securities slows

Canadian investment in foreign securities was $2.3 billion in March, down from $4.4 billion in February. Investment activity in March was in US corporate securities. For the first quarter, the significant divestment in January outweighed the investments in February and March, resulting in the highest quarterly divestment of foreign securities since the end of 2008.

Canadian investment in foreign debt securities was $2.1 billion in March. Canadian acquisitions of US corporate bonds were moderated by a reduction in Canadian holdings of US Treasury instruments. US long-term interest rates were up 11 basis points in the month.

Canadian investors acquired a moderate $140 million of foreign equities in March, following two straight months of divestment. Purchases of $2.1 billion in US stocks were almost completely offset by a divestment of $1.9 billion in non-US foreign stocks in the month. For the first quarter, Canadian holdings of foreign equities were down by a record $14.7 billion. US stock prices were up 6.6% in March and 0.8% in the quarter.

Chart 3 
Canadian investment in foreign securities

Contact information

For more information, contact us (toll-free 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca).

To enquire about the concepts, methods or data quality of this release, contact Lauren Dong (613-668-3140; lauren.dong@canada.ca), International Accounts and Trade Division.