Canada's international transactions in securities, May 2022
Archived Content
Information identified as archived is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please "contact us" to request a format other than those available.
Released: 2022-07-15
Cross-border transactions in Canadian and foreign securities slowed considerably in May. Foreign investors acquired $2.3 billion of Canadian securities, the lowest investment since January 2021. Meanwhile, Canadian investors added $573 million of foreign securities to their holdings, after a record-high $29.2 billion investment in April 2022.
As a result, international transactions in securities generated a net inflow of funds of $1.8 billion into the Canadian economy in May, after a net outflow of funds of $7.0 billion in April.
Chart 1
Canada's international transactions in securities
Significant slowdown in new issues abroad of Canadian corporate bonds
Foreign acquisitions of Canadian securities amounted to $2.3 billion in May, following investments totalling $96.2 billion from January to April. The activity in May mainly targeted debt securities of government business enterprises and was moderated by a reduction in foreign holdings of government short-term debt instruments.
Foreign investment in Canadian corporate bonds totalled $4.5 billion in May, led by acquisitions of bonds issued by Canadian public corporations. The level of investment recorded in May was the lowest since the beginning of 2022. The slowdown was mainly due to a reduction in new issues of bonds by Canadian private corporations as retirements exceeded new issues abroad for the first time in 2022. From January to April, new issues abroad surpassed retirements by $86.0 billion.
Chart 2
Foreign investment in Canadian bonds, by sector of issuer
On the other hand, non-resident investors reduced their exposure to federal and provincial money market instruments by $5.4 billion and $1.3 billion, respectively. In May, Canadian short-term interest rates rose to their highest levels since February 2020, while long-term interest rates fell for the first time since December 2021.
Investors from abroad reduced their exposure to Canadian equity securities by $1.2 billion in May 2022, after divesting $570 million in the previous month. Canadian companies buying back shares from their foreign investors contributed to the overall reduction in May. Canadian share prices, as measured by the Standard and Poor's/Toronto Stock Exchange composite index, edged down in May, after a 5.2% decline in the previous month.
Canadian investment in foreign securities slows considerably
Canadian investment in foreign securities totalled $573 million in May, as purchases of US government bonds were moderated by a divestment in US corporate securities. The overall acquisition activity in the month slowed considerably from an unprecedented high of $29.2 billion investment in April.
Canadian investors increased their holdings of foreign debt securities by $1.4 million in May, posting uninterrupted monthly investments since February 2021. Purchases of US Treasury bonds amounted to $3.3 billion in May, a third monthly investment for a total of $8.7 billion. On the other hand, Canadian investors reduced their holdings of non-US foreign bonds by $879 million, after a record-high $9.6 billion investment in April. In May, US long-term interest rates continued to increase to reach their highest levels since November 2018.
Chart 3
Canadian investment in foreign bonds
Canadian investors sold $837 million of foreign shares in May, a fourth monthly divestment so far in 2022. Over the month, Canadians reduced their exposure to US shares by $1.7 billion, after buying $5.0 billion in April and divesting a total of $48.2 billion in the first quarter of the year. US stock prices, as measured by the S&P 500 composite index, edged up in May, after an 8.8% decline in April.
Chart 4
Canadian investment in foreign equity and investment fund shares
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. These 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 June will be released on August 16.
Products
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.
As a complement to this release, the data visualization product "Securities statistics," part of the series Statistics Canada – Data Visualization Products (71-607-X), is available online.
The User Guide: Canadian System of Macroeconomic Accounts (13-606-G) is also available.
The Methodological Guide: Canadian System of Macroeconomic Accounts (13-607-X) is available.
Contact information
For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; infostats@statcan.gc.ca) or Media Relations (statcan.mediahotline-ligneinfomedias.statcan@statcan.gc.ca).
- Date modified: