Canada's international transactions in securities, June 2019
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Released: 2019-08-16
Foreign investors reduced their holdings of Canadian securities by $4.0 billion in June, the third divestment in four months. At the same time, Canadian investment in foreign securities increased to $6.6 billion, the largest investment since October 2018.
As a result, international transactions in securities generated a net outflow of funds of $10.6 billion from the Canadian economy in June, for a total of $17.0 billion in the second quarter.
Foreign investors reduce their holdings of Canadian bonds and shares
Foreign investors reduced their holdings of Canadian securities by $4.0 billion in June, following a $10.3 billion investment in May. Foreign investors reduced their exposure to Canadian bonds and shares in June, but acquired Canadian money market instruments in the month. For the first half of the year, foreign purchases of Canadian securities totalled $32.5 billion, compared with $49.4 billion for the same period in 2018 and well below the levels of investments recorded in 2016 and 2017.
Chart 1
Foreign investment in Canadian securities
Foreign holdings of Canadian bonds were down $5.1 billion in June, as non-residents reduced their holdings of government bonds. This decline followed investment of $12.9 billion in May. The reduction in holdings of government bonds was entirely in federal bonds (-$5.4 billion), mainly sales on the secondary market. Meanwhile, non-residents slightly increased their holdings of corporate bonds. New issues abroad of private corporate bonds were offset by retirements of government business enterprise bonds.
Foreign investment in the Canadian money market was $2.3 billion in June. Foreign acquisitions of private corporate paper were moderated by a divestment in Canadian Treasury bills during the month.
Canadian short-term interest rates edged down, while long-term interest rates decreased by seven basis points in June. Meanwhile, the Canadian dollar appreciated against the US dollar by 2.5 US cents.
Foreign investors reduced their exposure to Canadian equities by $1.1 billion in June, mainly through sales on the secondary market. This was the fourth straight monthly divestment by foreign investors. Canadian stock prices, as measured by the Standard and Poor's / Toronto Stock Exchange composite index, were up 2.2% in June.
Canadian investment in foreign securities increases
Canadian investment in foreign securities increased to $6.6 billion in June, the largest investment since October 2018. Investors purchased foreign bonds and foreign shares during the month. For the first half of the year, Canadian investment in foreign securities totalled $8.4 billion, compared with $29.4 billion for the same period in 2018. Investors purchased foreign bonds and sold US shares in the first half of 2019.
Canadian investment in foreign debt securities totalled $3.0 billion in June, down from $6.0 billion in May. Acquisitions of US Treasury bonds and non-US foreign bonds were the main contributors to the investment activity. US short- and long-term interest rates were down in June.
Canadian investment in foreign equities resumed in June, to reach $3.6 billion, following a $1.9 billion divestment in May. This was the largest investment in eight months. Canadian investors targeted both US and non-US shares in the month. US stock prices were up 6.9% in June, offsetting the 6.6% decline of the previous month.
Chart 2
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 July will be released on September 16.
Products
The Methodological Guide: Canadian System of Macroeconomic Accounts (13-607-X) is available.
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