Canada's international transactions in securities, October 2024

Foreign investors increased their exposure to Canadian securities by $21.5 billion in October, a second consecutive month marked by significant investment activity. Meanwhile, Canadian investors reduced their holdings of foreign securities by $2.6 billion, the first divestment since January.

As a result, international transactions in securities generated a net inflow of funds of $24.2 billion to the Canadian economy in October.

Chart 1: Canada's international transactions in securities

Source: Table 36-10-0028-01.

Notable foreign investment in Canadian securities continues

Foreign investors acquired $21.5 billion of Canadian securities in October, mainly federal government debt instruments and corporate shares.

Foreign acquisitions of Canadian debt securities totalled $11.8 billion in October, largely bonds. Foreign investors increased their holdings of federal government bonds by $8.1 billion. They also added $8.4 billion of private corporate bonds, mainly newly issued bonds by chartered banks denominated in foreign currencies. On the other hand, foreign investors reduced their holdings of provincial government bonds by $2.0 billion in October due to retirements, the largest divestment since February 2023.

Chart 2: Foreign investment in Canadian bonds, by sector of issuer

Source: Table 36-10-0028-01.

Meanwhile, foreign holdings of Canadian money market instruments were reduced by $2.1 billion in October. The divestment mainly targeted private corporate paper (-$4.4 billion) and was moderated by acquisitions of Government of Canada paper (+$3.4 billion).

In October, the Bank of Canada lowered its policy rate from 4.25% to 3.75%.

Non-resident investors increased their exposure to Canadian shares by $9.8 billion in October, following a significant $14.9 billion investment in September. The acquisitions in October were mainly in shares of the management of companies and enterprises, as well as the trade and transportation industries.

Canadian share prices, as measured by the Standard & Poor's (S&P)/Toronto Stock Exchange composite index, edged up in October.

Chart 3: Foreign investment in Canadian equity and investment fund shares

Source: Table 36-10-0028-01.

Largest Canadian divestment in foreign shares since March 2022

Canadian investors reduced their holdings of foreign securities by $2.6 billion in October, the first divestment since January. Sizable sales of foreign shares were moderated by large acquisitions of foreign debt securities.

Canadian investors sold $15.6 billion of foreign equities in October, the largest divestment since March 2022. On a geographical basis, this divestment was comprised of $11.1 billion of US shares and $4.5 billion of non-US shares. Canadian investors had acquired $43.3 billion of US shares from January to September.

US share prices, as measured by the S&P 500 composite index, were down by 1.0% in October, following five consecutive months of increases.

Chart 4: Canadian investment in foreign equity and investment fund shares

Source: Table 36-10-0028-01.

Meanwhile, Canadian investment in foreign debt securities reached $12.9 billion, led by a $11.2 billion investment in foreign bonds. Canadian investors, mainly pension funds, acquired $10.4 billion of non-US foreign bonds in October, the largest monthly investment on record.

Canadian investors also added $1.8 billion of foreign money market instruments to their holdings, mainly US government paper. The activity in October followed three consecutive months of divestment.

Table 1: Canada's international transactions in securities