Canada's international transactions in securities, February 2021
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Released: 2021-04-16
Canadian investors acquired $10.5 billion of foreign securities in February, continuing a trend of net purchases that began in May 2020. Meanwhile, foreign investment in Canadian securities reached $8.5 billion, led by strong acquisitions of Canadian shares.
As a result, Canada's international transactions in securities generated a net outflow of funds from the Canadian economy of $2.0 billion in February.
Chart 1
Canada's international transactions in securities
Canadian investment in foreign securities focusses on US shares
In February, Canadian investors increased their holdings of foreign securities by $10.5 billion, led by investment in US shares. February marked the tenth consecutive monthly investment in foreign securities, bringing the total for this period to $99.2 billion.
Canadian investment in US shares amounted to $9.7 billion in February and focussed on shares of large capitalization technology firms and investment fund shares tracking broad market indexes. US share prices, as measured by the S&P500 composite index, reached a record high in February, rising 2.6% in the month. Meanwhile, Canadian investors sold $116 million of non-US shares, compared with an investment of $7.1 billion in January.
Chart 2
Canadian investment in US equity and investment fund shares
Canadian investors increased their holdings of foreign debt securities by $958 million in February. The increase reflected investments in bonds issued by US corporations and non-US foreign entities, and was moderated by a divestment in US Treasury bills.
In February, US short-term interest rates fell to record low levels. Meanwhile, Canadian long-term interest rates exceeded US rates for the first time since March 2020.
Foreign investment in Canadian shares reaches a four-year high
Foreign investment in Canadian securities totalled $8.5 billion in February. The activity in the month reflected strong foreign investment in securities from the corporate sector, moderated by a continued large divestment in securities from the federal government sector.
Foreign acquisitions of Canadian shares reached $9.5 billion in February, the largest investment in four years. The investment in the month was in both new and outstanding shares. On an industry basis, shares of Canadian banks accounted for the bulk of foreign purchases. Canadian stock prices, as measured by the S&P/TSX composite index, reached a record high level at the end of February. The banking sector, as measured by the S&P/TSX banks index, rose 7.2% in the month, outperforming the overall market. At the same time, non-resident investors added $10.0 billion of Canadian corporate debt securities to their holdings, led by instruments denominated in Canadian dollars from federal government enterprises and financial corporations.
Chart 3
Foreign investment in Canadian equity and investment fund shares
On the other hand, foreign investors reduced their exposure to federal government debt securities by $11.2 billion in February, following a divestment of $10.9 billion in January. This activity in 2021 followed unprecedented foreign investments in 2020. In February, both long- and short-term Canadian interest rates were up, with long-term rates rising by 51 basis points.
Chart 4
Foreign investment in federal government debt 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 international accounts.
Equity and investment fund shares include common and preferred equities, as well as units or shares of investment funds. For the sake of brevity, the terms "shares" and "equity and investment fund shares" have the same meaning.
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 March will be released on May 17.
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.
The data visualization product "Securities statistics," part of the series Statistics Canada – Data Visualization Products (71-607-X), is available online.
The Canada and the World Statistics Hub (13-609-X) is available online. This product illustrates the nature and extent of Canada's economic and financial relationship with the world using interactive graphs and tables. This product provides easy access to information on trade, investment, employment and travel between Canada and a number of countries, including the United States, the United Kingdom, Mexico, China and Japan.
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