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Canada's international transactions in securities, March 2018

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Released: 2018-05-17

Foreign investment in Canadian securities amounted to $6.1 billion in March, led by acquisitions of money market instruments. At the same time, Canadian investors reduced their holdings of foreign securities by $1.9 billion, the first divestment in four months.

In the first quarter of 2018, Canada's international transactions in securities generated a net outflow of funds from the economy of $1.7 billion, following eight consecutive quarters of net inflows of funds.

Chart 1  Chart 1: Canada's international transactions in securities, quarterly
Canada's international transactions in securities, quarterly

Foreign investors continue to reduce their holdings of federal government bonds

Foreign investment in Canadian securities amounted to $6.1 billion in March, led by acquisitions of money market instruments. For the first quarter, foreign purchases totalled $18.3 billion, the lowest quarterly investment since the third quarter of 2015.

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

Foreign investors reduced their holdings of Canadian bonds for a fourth straight month, divesting $690 million in March. Non-resident investors reduced their holdings of federal government bonds by a record $13.6 billion in March, following a divestment of $12.5 billion in February. Sales of short-term bonds on the secondary market and retirements contributed to the decline. This divestment occurred against the backdrop of a decline in the total outstanding amount of federal government bonds. Foreign investment of $11.3 billion in private corporate bonds, mainly new bonds denominated in euro, moderated the overall reduction in the month.

Chart 3  Chart 3: Foreign investment in federal government bonds
Foreign investment in federal government bonds

Foreign investors strengthened their acquisitions in the Canadian money market by adding $6.3 billion worth to their holdings in March, following an investment of $2.2 billion in February. Foreign acquisitions of private corporate and provincial government paper accounted for the bulk of the investment. The Canadian dollar depreciated slightly against its US counterpart in the month.

Foreign investment in Canadian equities totalled $562 million in March, down from $2.8 billion in the previous month. Foreign purchases of Canadian shares from the management companies as well as the manufacturing industries accounted for most of the activity. Canadian stock prices edged down in the month.

Canadian investors reduce their holdings of foreign equities

Canadian investors sold $1.9 billion of foreign securities in March. A significant divestment in foreign equities was moderated by purchases of foreign debt securities. For the first quarter as a whole, Canadian investment in foreign securities reached $20.0 billion, led by strong purchases of foreign shares in January.

Canadians reduced their holdings of foreign shares by $10.5 billion in March, following acquisitions of $38.4 billion in the previous three months. The reduction targeted both US and non-US foreign shares in March. The divestment in US shares marked a record, while the reduction in holdings of non-US shares was the largest since April 2017. US stock prices were down 2.7% in the month.

Canadian investment in foreign debt securities reached $8.6 billion in March, the highest investment since December 2014. Acquisitions of non-US foreign bonds and US corporate bonds were the main contributors to the increase.

US long-term interest rates declined slightly, while US short-term rates increased by 14 basis points in March. In comparison, short and long-term interest rates were down in Canada. As a result, the differential between US and Canadian rates widened in favour of investments in the United States.

Chart 4  Chart 4: 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 April will be released on June 15.

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 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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