Canada's international transactions in securities, September 2016

Released: 2016-11-17

Foreign investment in Canadian securities amounted to $11.8 billion in September. New issues of bonds placed abroad by Canadian private corporations accounted for the bulk of this activity. At the same time, Canadian investment in foreign securities was $1.8 billion, led by acquisitions of non-US foreign shares.

As a result, international transactions in securities generated a net inflow of funds of $10.0 billion into the Canadian economy in September for a total of $25.6 billion in the third quarter. This followed a $27.8 billion inflow of funds in the second quarter. As was the case in the first two quarters of the year, inflows in the third quarter mostly resulted from foreign acquisitions of new bonds issued by Canadian corporations.

Chart 1 
Canada's international transactions in securities, quarterly

Foreign investment in Canadian securities focuses on corporate instruments

Foreign investment in Canadian securities remained strong in September with foreign investors adding $11.8 billion worth to their holdings. From January to September, foreign investment in Canadian securities totalled $119.9 billion, compared with $82.4 billion for the same period in 2015. Most of this increase reflected higher foreign investment in Canadian equities, mainly resulting from cross-border mergers and acquisitions activity.

Chart 2 
Foreign investment in Canadian securities

Foreign acquisitions of Canadian bonds reached $11.5 billion in September, following a $9.0 billion investment in August. Foreign investors added $13.2 billion of corporate bonds to their holdings in the month, mainly new issues of private corporate bonds denominated in foreign currencies. A foreign divestment of $1.7 billion in Canadian government bonds moderated the overall investment activity in the month. Canadian long-term interest rates were down by four basis points in September, while the value of the Canadian dollar was almost unchanged compared with the US dollar.

Non-resident investors withdrew $5.4 billion of funds from the Canadian money market in September, the largest decline since January 2015. A reduction in foreign holdings of private corporate paper and federal government business enterprises paper accounted for most of the divestment. Canadian short-term interest rates were unchanged in the month.

Foreign investors acquired $5.7 billion of Canadian equities in September, marking a 13th straight month of investment activity. Purchases on the secondary market accounted for the bulk of this activity. Canadian stock prices edged up in September, and overall have increased by 13.2% since the end of December 2015.

Canadian investors purchase foreign shares, but sell foreign debt securities

Canadian investment in foreign securities edged up to reach $1.8 billion in September. Investors adjusted their portfolios, acquiring equities but reducing their holdings of debt securities.

Canadian investors acquired $6.8 billion of foreign equities in September. Canadian acquisitions of non-US foreign shares reached $8.6 billion, while Canadian holdings of US shares were down in the month. The investment in non-US shares was the largest recorded since December 2000. Most major foreign equity markets declined in September.

On the other hand, Canadian investors reduced their holdings of foreign debt securities by $5.0 billion in September, following a $1.7 billion divestment in August. Sales of both US government bonds and non-US foreign bonds contributed to the decline in these holdings. US long-term interest rates were up by seven basis points in September.

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.