Canada's international transactions in securities, August 2016

Released: 2016-10-17

Foreign investment in Canadian securities totalled $12.7 billion in August, led by acquisitions of Canadian bonds on the secondary market. At the same time, Canadian investment in foreign securities slowed to $1.6 billion. This resulted in a net inflow of funds of $11.1 billion into the Canadian economy in the month.

This activity marked the eight straight month of net inflow of funds in Canada's international transactions in securities. Since the beginning of the year, foreign investment in Canadian securities has exceeded Canadian investment in foreign securities by $96.9 billion.

Chart 1 
Canada's international transactions in securities

Foreign investment in Canadian securities focuses on bonds

Foreign investment in Canadian securities was $12.7 billion in August, led by acquisitions of Canadian bonds. Foreign investors acquired Canadian securities in each of the first eight months of 2016.

Chart 2 
Foreign investment in Canadian securities

Foreign acquisitions of Canadian bonds totalled $9.0 billion in August and were mainly secondary market purchases. On a sector basis, foreign acquisitions of corporate bonds were $6.9 billion, almost evenly split between government business enterprise bonds and private corporate bonds. Foreign investors also acquired $1.7 billion of provincial government bonds during the month, largely new issues denominated in foreign currencies. Foreign investment in federal government bonds was moderate at $254 million in August, as strong secondary market purchases were partially offset by large retirements. Canadian long-term interest rates were down by five basis points and the Canadian dollar depreciated by less than one US cent against its US counterpart in the month.

Non-resident investors resumed their acquisitions of Canadian money market instruments by adding $1.2 billion to their holdings in August, following three consecutive months of divestment. Acquisitions of federal government paper by non-residents were the main contributor, totalling $947 million, the largest investment in four months. Canadian short-term interest rates edged down in the month.

Foreign investment in Canadian equities was $2.6 billion in August, up slightly from the previous month. This was the 12th consecutive month of foreign acquisitions of Canadian shares. Canadian stock prices edged up 0.1% in the month.

Canadian acquisitions of foreign securities slow

Canadian investors acquired $1.6 billion of foreign securities in August, down from $4.6 billion in July. Canadian investment in foreign equities was $3.3 billion and included both US and non-US foreign shares. US stock prices edged down 0.1% in the month.

Canadian investors reduced their holdings of foreign debt securities by $1.7 billion in August. The reduction was mainly in non-US foreign bonds, as Canadian investors sold $2.3 billion of these instruments. This was the fourth consecutive monthly divestment in non-US foreign bonds, with holdings declining $7.6 billion over that period. Canadian acquisitions of US corporate bonds moderated the overall divestment in August. US long-term interest rates were up by six basis points in the month.

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.