Canada's international investment position, first quarter 2017
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Released: 2017-06-13
$247.9 billion
First quarter 2017
Canada's net foreign asset position rose by $75.6 billion in the first quarter to $247.9 billion. The increase in the net asset position reflected the stronger performance of foreign stock markets relative to the Canadian stock market, which pushed the value of Canada's international assets up by more than liabilities. Over the quarter, the US stock market (as measured by the Standard and Poor's 500) rose 5.6% while the Canadian stock market (as measured by the Standard and Poor's / Toronto Stock Exchange composite index) increased 1.7%.
Chart 1
Canada's net international investment position
On a geographical basis, Canada continued to post a net foreign asset position with non-US countries as a whole and a net foreign debt position with the United States. The net foreign debt position with the United States was reduced from $116.4 billion to $89.0 billion at the end of the first quarter. Canada's financial assets held in the United States rose by $85.4 billion, while Canada's international liabilities with the United States increased by $58.0 billion in the first quarter. Historically, Canada's net international investment position with the United States has been negative, with the exception of the fourth quarter of 2015.
Chart 2
Net international investment position by geographic region
Large cross-border transactions and higher foreign stock prices push Canada's international assets up
Total international assets were up by $141.1 billion to $4,438.2 billion at the end of the first quarter. The increase was mainly attributable to the strong performance of foreign stock markets and significant cross-border investments in equity instruments.
Canadian investors increased their holdings of foreign equity instruments by $165.4 billion to $3,092.2 billion in the first quarter, led by record cross-border acquisitions and higher equity prices. Meanwhile, Canadian holdings of foreign debt instruments were down by $24.3 billion to $1,346.0 billion. This mainly reflected a $32.7 billion decline in currency and deposits held by Canadians abroad, moderated by an increase in loan assets.
The growth in international assets was moderated by the overall downward revaluation effect related to the fluctuations of the Canadian dollar against foreign currencies. Over the quarter, the Canadian dollar gained 1.0% against the US dollar but lost 0.1% against the euro, 0.6% against the British pound and 3.8% against the Japanese yen. Since most of Canada's international assets are denominated in US dollars, the downward effect of the appreciating Canadian dollar against the US dollar more than offset the upward effect resulting from its depreciation against other foreign currencies.
Chart 3
International assets and liabilities
Canada's international liabilities up on strong foreign investment in Canadian securities
Canada's international liabilities rose by $65.5 billion to $4,190.3 billion in the first quarter. Strong foreign portfolio investment in Canadian securities largely contributed to this increase.
Foreign holdings of Canadian equity instruments rose by $53.2 billion to $1,820.3 billion in the first quarter. Large foreign acquisitions of portfolio equity securities and, to a lesser extent, the revaluation effect of higher Canadian equity prices contributed to the increase in the quarter.
Canadian debt instruments held by foreign investors, also referred to as Canada's gross external debt, grew by $12.3 billion to $2,370.0 billion at the end of the quarter. The increase was mainly driven by higher foreign holdings of Canadian bonds, but moderated by declines in money market instruments and deposits held by non-residents in Canada. On a sector basis, Canadian government debt held by foreign investors totalled $443.1 billion and represented 19% of Canada's total gross external debt at the end of the first quarter. This share has declined progressively from a high of 28% reached in 2012.
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Estimates on Canada's international investment position by region are available from 1926. Traditionally, Canada has been a net debtor to the United States and United Kingdom. In 1926, 43% of Canada's international liabilities were held by the United Kingdom and 53% by the United States. By 2016, the share of Canadian international liabilities with the United Kingdom had fallen to 10%, while the share of Canada's liabilities with the United States had risen to 59%.
Note to readers
Currency valuation
The value of assets and liabilities denominated in foreign currency is converted to Canadian dollars at the end of each period for which a balance sheet is calculated. Most of Canada's foreign assets are denominated in foreign currencies, while less than half of Canada's international liabilities are in foreign currencies. When the Canadian dollar is appreciating in value, the restatement of the value of these assets and liabilities in Canadian dollars lowers the recorded value. The opposite is true when the Canadian dollar is depreciating.
Definitions
The international investment position presents the value and composition of Canada's assets and liabilities to the rest of the world.
Canada's net international investment position is the difference between Canada's assets and liabilities to the rest of the world. An excess of international liabilities over assets can be referred to as Canada's net foreign debt. An excess of international assets over liabilities can be referred to as Canada's net foreign assets.
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 updated to maintain its relevance.
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 Vicky Gélinas (613-716-2828; vicky.gelinas@canada.ca), International Accounts and Trade Division.
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