Canada's international transactions in securities, August 2021
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Released: 2021-10-18
Foreign investors acquired $26.3 billion of Canadian securities in August, mainly in the form of debt securities. At the same time, Canadian investors resumed their purchases of foreign securities, adding $15.2 billion worth to their portfolios in August.
As a result, international transactions in securities generated a net inflow of funds of $11.1 billion in the Canadian economy in August, following a net inflow of $18.7 billion in July.
Chart 1
Canada's international transactions in securities
Foreign investment in Canadian securities focuses on debt instruments
Foreign acquisitions of Canadian securities totalled $26.3 billion in August, the largest investment since April 2020, when a record investment was observed at the outset of the first wave of the COVID-19 pandemic in Canada. August activity reflected foreign investment in debt securities issued by the federal government and chartered banks. Moreover, non-residents added $3.3 billion of Canadian equity securities to their portfolios, the largest investment in five months.
Non-resident investors acquired $23.0 billion of Canadian government and corporate debt securities in August, a fifth consecutive month of investment for a total of $90.2 billion. Over the month, foreign investors added $12.6 billion of federal government bonds to their portfolios, the largest investment since April 2020. In addition, they added $13.1 billion of private corporate debt securities to their portfolios, almost equally split between bonds and money market instruments. This investment activity was mainly in US dollar-denominated debt securities issued by Canadian chartered banks.
Chart 2
Foreign investment in Canadian debt securities, by sector of issuer
In August, Canadian long-term interest rates rose for the first time since March. Meanwhile, the Canadian dollar depreciated against the US dollar for a third consecutive month.
Foreign investors acquired $3.3 billion of Canadian equity securities in August, after a divestment of $1.2 billion in July. The activity in both months was driven by shares of chartered banks. Canadian share prices, as measured by Standard and Poor's/Toronto Stock Exchange composite index, rose 1.5% to record-high levels by the end of August.
Canadian investment in foreign securities resumes
Canadian investors acquired $15.2 billion of foreign securities in August, following a divestment of $4.7 billion in July. The investment activity in August was almost equally attributable to foreign bonds and foreign equities.
Canadian investors resumed their purchases of US shares by adding $9.4 billion worth to their holdings in August. This activity was mainly in shares of large capitalization technology firms. US stock prices, as measured by the Standard and Poor's 500 composite index, were up by the end of August to record levels. On the other hand, Canadian investors continued to reduce their exposure to non-US foreign shares, selling $1.4 billion in August after a divestment of $1.6 billion in July.
Chart 3
Canadian investment in foreign equity and investment fund shares
Canadian investment in foreign debt securities amounted to $7.1 billion in August, a seventh straight month of purchases, for a total of $33.6 billion. Investors acquired $3.5 billion of non-US foreign bonds, mainly government securities. This was the largest investment since September 2020. In addition, Canadian investment in US government bonds resumed to reach $2.6 billion. In August, US long-term interest rates fell to their lowest levels since February.
Chart 4
Canadian investment in foreign bonds
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 September will be released on November 18, 2021.
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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