Canada's international transactions in securities, July 2016

Released: 2016-09-16

Foreign investment in Canadian securities slowed for a fourth straight month to $5.2 billion in July. At the same time, Canadian investors continued to invest in foreign securities by adding $4.6 billion to their holdings.

Foreign investment in Canadian securities slows

Foreign investment in Canadian securities slowed for a fourth straight month to $5.2 billion in July. Non-resident investors resumed their acquisitions of Canadian debt securities, but purchased equities at a much slower pace. Despite the lower activity in July, foreign investment in Canadian securities from January to July was strong, totalling $85.7 billion, compared with $65.9 billion for the same period in 2015.

Chart 1 
Foreign investment in Canadian securities

Foreign investors acquired $6.2 billion of Canadian bonds in July, mainly secondary market purchases of government instruments denominated in Canadian dollars. Foreign investment was led by a $4.8 billion acquisition of federal government bonds, following a divestment of $8.1 billion in June. On the other hand, non-resident investors reduced their exposure to private corporate bonds for the first time since October 2015, as retirements exceeded new issues. In July, Canadian long-term interest rates were down by five basis points and the Canadian dollar depreciated by 0.8 US cent against its US counterpart.

Non-resident investors reduced their holdings of Canadian money market instruments by $2.9 billion in July, a third straight month of divestment in these instruments. The reduction was in government paper, both provincial and federal government instruments. Canadian short-term interest rates were up by four basis points in July.

Foreign investment in Canadian equities was down significantly to $1.9 billion in July, following a $13.4 billion investment in June. Overall, foreign acquisitions from January to July totalled $28.1 billion, up considerably from the $4.7 billion investment recorded for the same period in 2015. Canadian stock prices were up 3.7% in July and up 12.1% since December 2015.

Canadian acquisitions of foreign securities focus on US instruments

Canadian investors continued to invest in foreign securities by adding $4.6 billion to their holdings in July, a sixth straight month of acquisitions. Investors purchased US debt and equity instruments during the month. Canadian acquisitions of US bonds totalled $3.3 billion and targeted both Treasury and corporate bonds. A third straight monthly divestment in non-US foreign bonds moderated the overall acquisitions in the month. US long-term interest rates were down by 14 basis points in July.

Canadian purchases of foreign stocks slowed in July, as investors added $1.6 billion to their portfolios, compared with acquisitions of over $5.0 billion in each of the previous two months. An investment of $3.0 billion in US equities was moderated by a divestment in non-US foreign shares in July. US stock prices were up 3.6% during the month.

Chart 2 
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.