Canada's international transactions in securities, December 2017
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Released: 2018-02-16
Canadian investors acquired a record $22.0 billion of foreign securities in December, mainly foreign shares. Meanwhile, foreign investors reduced their holdings of Canadian securities by $2.0 billion, led by a divestment in Canadian bonds.
As a result, international transactions in securities generated a net outflow of funds of $24.0 billion in December. For 2017 as a whole, portfolio investment generated a net inflow of funds in the Canadian economy of $103.9 billion.
Canadian investors buy foreign shares at unprecedented levels
Canadian investors resumed their acquisitions of foreign securities by adding a record $22.0 billion to their holdings in December. This followed a divestment of $4.6 billion in November.
Canadian investment in December was mainly in foreign equities, with acquisitions totalling a record $19.8 billion. On a geographical basis, acquisitions were diversified, with $11.4 billion directed to the US market and $8.4 billion to other foreign markets. US stock prices edged up in December, a ninth consecutive month of increase.
In 2017, Canadian investment in foreign securities reached $84.7 billion compared with $13.8 billion in 2016. Acquisitions in the year mainly targeted US shares. This activity coincided with the strongest annual growth observed in US stock prices since 2013.
Chart 1
Canadian investment in foreign securities
Foreign investors reduce their holdings of Canadian bonds
Foreign investors reduced their holdings of Canadian securities by $2.0 billion in December, the first divestment in six months. Overall, foreign investors reduced their exposure to Canadian debt securities but acquired equities in the month. Despite the divestment in December, foreign investment in Canadian securities reached $188.5 billion in 2017, led by strong acquisitions of Canadian bonds. In comparison, foreign investment in Canadian securities totalled $171.8 billion in 2016.
Foreign holdings of Canadian bonds were down by $4.0 billion in December. The divestment activity was in government bonds, mainly provincial and, to a lesser extent, federal government bonds. The divestment in federal government bonds in December followed strong and sustained foreign acquisitions totalling $36.6 billion in the previous five months. Foreign acquisitions of Canadian private corporate bonds, mainly new bonds, moderated the overall divestment in the month. Canadian long-term interest rates were up by 10 basis points in the month.
Foreign investment in Canadian money market instruments was $401 million in December, led by acquisitions of provincial government paper. Canadian short-term interest rates were up by 17 basis points and the Canadian dollar appreciated against its US counterpart by 2.1 US cents in the month.
Activity in the Canadian equity market resulted in a foreign investment of $1.7 billion in December, following a $377 million divestment in November. Foreign purchases of Canadian shares from the trade and transportation industry accounted for about half of this activity. Canadian stock prices edged up in December.
Chart 2
Foreign investment in Canadian 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 January will be released on March 16.
Products
The Methodological Guide: Canadian System of Macroeconomic Accounts (13-607-X) is available.
The User Guide: Canadian System of Macroeconomic Accounts (13-606-G) is also available. This publication will be regularly updated to maintain its relevance.
The updated Canada and the World Statistics Hub – United States (13-609-X) is available online. This 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 Lauren Dong (613-668-3140; lauren.dong@canada.ca), International Accounts and Trade Division.
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