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Canada's international transactions in securities, April 2017

Released: 2017-06-16

Foreign investment in Canadian securities totalled $10.6 billion in April, mainly acquisitions of government debt instruments. At the same time, Canadian investors reduced their holdings of foreign securities by $9.9 billion, the largest divestment since January 2016.

As a result, Canada's international transactions in securities generated a net inflow of funds into the Canadian economy of $20.5 billion in April.

Foreign investment in Canadian securities has exceeded Canadian investment in foreign securities by $49.1 billion since the beginning of 2017, following a record annual net inflow of $151.9 billion in 2016. Significant foreign purchases of Canadian private corporate instruments led the inflow of funds during this period.

Foreign investment in Canadian bonds strengthens

Foreign investment in Canadian securities slowed to $10.6 billion in April, from $15.1 billion in March. Overall, foreign investors acquired Canadian bonds but reduced their exposure to equities and money market instruments in April.

Chart 1  Chart 1: Foreign investment in Canadian securities
Foreign investment in Canadian securities

Foreign acquisitions of Canadian bonds amounted to $13.0 billion in April, the largest such investment since July 2016. Foreign investors acquired $6.7 billion of federal government bonds, after reducing their exposure to these instruments for three straight months. They also added $4.3 billion of Canadian private corporate bonds to their holdings, largely new issues denominated in foreign currencies. Canadian long-term interest rates were down by 11 basis points in April, a third consecutive monthly decline.

Non-resident investors reduced their holdings of Canadian money market instruments by $1.1 billion in April, following investments totalling $2.9 billion in March. The reduction was mainly in private corporate paper. Foreign acquisitions of federal government paper moderated the overall divestment in April. Canadian short-term interest rates edged down and the Canadian dollar was down by 1.9 US cents against its US counterpart in the month.

Foreign holdings of Canadian shares were down $1.3 billion in April, following strong investments in the first quarter. This divestment resulted mainly from sales on the secondary market. Canadian stock prices edged up over the month.

Canadian investors reduce their holdings of foreign securities

Canadian investors sold $9.9 billion of foreign securities in April, after four straight months of acquisitions. The divestment was in both foreign debt securities and equities.

Chart 2  Chart 2: Canadian investment in foreign securities
Canadian investment in foreign securities

Canadians reduced their holdings of foreign shares by $5.7 billion in April, following record acquisitions of $26.2 billion in the first quarter. The reduction in April targeted both US and non-US foreign shares, while acquisitions in the first quarter focused on US instruments. US stock prices were up 0.9% in the month and 6.6% since December 2016.

Canadian holdings of foreign debt securities were down $4.1 billion in April, a second consecutive monthly divestment. Significant sales of US Treasury bonds were moderated by acquisitions of US corporate bonds in the month. US long-term interest rates were down by 18 basis points while short-term rates were up by six basis points in the month.


  Note to readers

The data series on international transactions in securities covers 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, which are 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.

Next release

Data on Canada's international transactions in securities for May will be released on July 17.

Products

The Methodological Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-607-X) is available.

The User Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-606-G) is also available. This publication will be regularly updated to maintain its relevance.

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.

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