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Canada's international transactions in securities, July 2017

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Released: 2017-09-18

Foreign investment in Canadian securities amounted to $24.0 billion in July, led by record acquisitions of Canadian bonds. At the same time, Canadian investors reduced their holdings of foreign securities by $1.8 billion, following strong acquisitions in June.

As a result, Canada's international transactions in securities generated a net inflow of funds into the Canadian economy of $25.8 billion in July. Foreign investment in Canadian securities has exceeded Canadian investment in foreign securities by $86.2 billion since the beginning of 2017, led by foreign acquisitions of Canadian private corporate instruments.

Record foreign investment in Canadian bonds

Foreign investors acquired $24.0 billion of Canadian securities in July, following a divestment of $858 million in June. The bulk of the inflows targeted the Canadian bond market in the month. Since the beginning of the year, foreign acquisitions of Canadian securities have totalled $124.0 billion, with $97.3 billion in securities issued by private corporations.

Non-resident investment in Canadian bonds reached a record $23.8 billion in July. New issues of private corporate bonds in foreign markets of $11.4 billion, largely denominated in foreign currencies, contributed the most to the investment activity. Nearly half of these new bonds were issued by Canadian banks. In addition, non-resident investors purchased $8.0 billion of federal government bonds and $2.9 billion of provincial government bonds in the month. The foreign investment in federal government bonds followed a large divestment of $9.8 billion in June.

Canadian long-term interest rates were up by 35 basis points in July. The Bank of Canada raised its benchmark overnight interest rate by 25 basis points in July, the first increase since 2010. Meanwhile, the Canadian dollar appreciated against its US counterpart by three US cents.

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

Non-resident investors reduced their holdings of Canadian money market instruments by $1.5 billion in July. Foreign acquisitions of corporate paper were more than offset by a divestment in government paper. Canadian short-term interest rates increased by eight basis points in July.

Foreign investment in Canadian equities amounted to $1.6 billion in July. Issuance of new Canadian shares to non-resident portfolio investors, resulting from cross-border mergers and acquisitions, led the activity during the month. Canadian stock prices edged down in July.

Canadian investors reduce their holdings of foreign equities

Canadian investors sold $1.8 billion of foreign securities in July. Divestment in foreign equities was moderated by purchases of foreign debt securities in the month.

Canadians reduced their holdings of foreign shares by $2.9 billion in July, divesting in both US and non-US foreign shares. Nevertheless, Canadian investors have acquired $31.3 billion in foreign equities in 2017, in contrast to a divestment of $243 million over the same period in 2016. US stock prices were up by 1.9% in the month and 10.4% since December 2016.

Canadian investors acquired $1.1 billion of foreign debt securities in July, mainly acquisitions of US Treasury bonds. US long-term interest rates were up by 13 basis points, while short-term rates were up by 9 basis points in the month.

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


  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 August will be released on October 16.

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.

The updated Canada and the World Statistics Hub – United States (Catalogue number13-609-X) is now available from the home page of the Statistics Canada website. This new product illustrates the nature and extent of Canada's economic and financial relationship with the United States, using interactive graphs and tables. This product provides easy access to information on trade, investment, employment and travel, including merchandise trade by Canadian provinces and US states.

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 Jamie Burns (613-302-4989; jamie.burns@canada.ca), International Accounts and Trade Division.

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