Canadian portfolio investment abroad, 2016
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Released: 2017-06-08
Canadian holdings of foreign securities increased by 4.2% to $1,741.4 billion at the end of 2016. However, this growth was well below the strong gains recorded in each of the previous four years. Canadian portfolio investment abroad accounted for 40% of Canada's total international assets at the end of 2016, compared with a 25% share 20 years ago.
Higher foreign stock prices and, to a lesser extent, acquisitions of $13.8 billion of foreign securities by Canadian investors in 2016 contributed to the increase. The downward revaluation effect of an appreciating Canadian dollar against most major foreign currencies moderated the overall growth in the value of these assets.
The Canadian dollar appreciated by 3.1% against the US dollar, 6.1% against the euro, 23.2% against the British pound and 0.1% against the Japanese yen in 2016.
On an instrument basis, holdings of foreign equities were up $67.3 billion to $1,358.3 billion, accounting for 78% of total holdings of foreign securities at the end of 2016. This share has been relatively stable since 2009. At the same time, Canadian holdings of foreign debt instruments edged up by $2.5 billion to $383.1 billion in 2016, following a $90.2 billion increase in 2015.
The majority of portfolio investment assets were denominated in US dollars at the end of 2016. More precisely, 63% of Canadian investors' holdings were in securities denominated in US dollars, while 9% were in euros and 6% in British pounds. Canada's portfolio assets are therefore strongly influenced by changes in the value of the Canadian dollar against foreign currencies, mainly the US dollar.
Canadian portfolio investment abroad led by holdings of US securities
On a geographical basis, the United States remains the top investment destination for Canadian portfolio investors. Canadian holdings of US securities increased by 6.3% to $1,065.3 billion at the end 2016. Most of this gain was in the form of equities and mainly resulted from higher stock prices. US stock prices were up by 9.4% in the year. Canadian investors had 61% of their portfolio invested in US securities at the end of 2016, compared with a 50% share in 2007 just prior the financial crisis.
Holdings of European securities edged down to $362.7 billion at the end of 2016. The downward revaluation effect of an appreciating Canadian dollar against the British pound resulted in a 3.8% decline to $103.4 billion in holdings of UK securities in 2016. Portfolio assets in other major European countries rose in 2016, notably Germany (+8.8%).
At the same time, holdings of securities from Asia and Oceania edged up to $213.1 billion. Growth in the value of Canadian investors' holdings in most major countries in this region was moderated by a decline in holdings of Chinese securities in the year, mainly from lower equity prices.
Canadian portfolio investment abroad was spread over more than 100 countries at the end of 2016. However, the top three destinations (United States, United Kingdom and Japan) represented over 70% of total Canadian portfolio assets abroad.
Note to readers
Data in this release are based on an annual survey of Canadian investors of securities that is used, along with other sources, to generate a detailed geographical breakdown for holdings of foreign securities.
Foreign securities cover equity and debt instruments issued by non-residents. Securities denominated in foreign currency are converted to Canadian dollars at year end. The survey collects information on Canadian holdings of foreign securities at year-end, at market value and broken down by country of issue. In this context, portfolio investment can be seen as investment undertaken primarily for the sake of investment income or capital gains. This investment excludes cross-border direct investment and reserve assets, which are other components of the international accounts.
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 Francis Salifu (613-797-0651; francis.salifu@canada.ca), International Accounts and Trade Division.
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