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Canada's international transactions in securities, October 2017

Released: 2017-12-18

Foreign investment in Canadian securities totalled $20.8 billion in October, led by record acquisitions of Canadian bonds. At the same time, Canadian investors increased their holdings of foreign securities by $16.5 billion, mainly purchases of US shares.

Since the beginning of the year, foreign acquisitions of Canadian securities have totalled $171.0 billion. Nearly three-quarters of this was in instruments issued by Canadian private corporations; mainly bonds denominated in foreign currencies. Foreign investment in Canadian private corporate bonds has been significant in recent years, as these firms were actively raising funds abroad through the issuance of bonds, in the context of continued low interest rates.

Chart 1  Chart 1: Foreign investment in Canadian bonds, by currency of issue
Foreign investment in Canadian bonds, by currency of issue

Record foreign investment in Canadian bonds

Foreign investment in Canadian securities reached $20.8 billion in October, up from $16.7 billion in September. Overall, foreign investors acquired Canadian bonds and, to a lesser extent, equities but reduced their exposure to money market instruments.

Chart 2  Chart 2: Foreign investment in Canadian securities
Foreign investment in Canadian securities

Non-resident investment in Canadian bonds reached a record $27.9 billion in October. New issues of Canadian private corporate bonds placed in foreign markets, largely denominated in foreign currencies, accounted for $17.7 billion of the investment activity. More than half of these new bonds were issued by Canadian banks.

In addition, non-resident investors purchased $6.0 billion of federal government bonds, a fourth consecutive month of significant investment. Since July, foreign investors have increased their holdings of federal government bonds by $27.8 billion. Canadian long-term interest rates were down by nine basis points in October, after a strong increase in September.

Foreign investors withdrew a record $8.8 billion of funds from the Canadian money market in October. A reduction in foreign holdings of private corporate paper accounted for most of the divestment in the month, continuing the movement of funds from shorter to longer term debt instruments observed in the previous month. Canadian short-term interest rates decreased by seven basis points in the month and the Canadian dollar depreciated against its US counterpart by 2.6 US cents.

Foreign investment in Canadian equities slowed to $1.7 billion in October, following a $3.9 billion investment in September. Foreign purchases of Canadian shares from the management of companies as well as the trade and transportation industries accounted for most of this activity. This was moderated by a $2.9 billion reduction in foreign holdings of Canadian equities from the finance and insurance industry. Canadian stock prices were up by 2.5% in the month.

Canadian investors buy US shares

Canadian investment in foreign securities reached $16.5 billion in October, the highest investment since December 2015. Canadian investors acquired $14.2 billion of foreign equities, following acquisitions of $1.1 billion in September. The bulk of the investment was in US shares. US stock prices were up by 2.2% in the month.

Canadian acquisitions of foreign debt securities reached $2.2 billion in October, the fourth consecutive month of investment. The bulk of the activity in the month was in US corporate bonds. US long-term interest rates were up by 16 basis points and short-term interest rates were up by four basis points in the month.

Since the beginning of the year, Canadian investors have acquired $67.5 billion in foreign securities, with over three-quarters in US equities. This compared with acquisitions totalling $15.1 billion for the same period in 2016. US stock prices rose by 15.1% from December 2016 to October 2017.

Chart 3  Chart 3: 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 November 2017 will be released on January 19, 2018.

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 available online. This product illustrates the nature and the extent of Canada's economic and financial relationship with the United States using interactive graphs and tables. This product provides an 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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