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Canada's international transactions in securities

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February 2009 (Previous release)

Increased government borrowing in Canada and in the United States, along with declining global equity prices, maintained cross-border portfolio investment activity in February. Foreign investors added $6.1 billion of Canadian securities to their portfolios, investing in both bonds and equities. For their part, Canadian investors acquired $2.9 billion of foreign securities with acquisitions comprised of equity and money market instruments.

Foreign portfolio investment in Canadian securities

Non-resident investors demand for Canadian bonds extends into February

Acquisitions of Canadian bonds carried over into February, as non-residents picked up a further $4.2 billion to add to the $6.5 billion acquired in January. Nearly two-thirds were federal government enterprise bonds, with the remainder almost equally split between federal government and private corporate bonds.

Note to readers

All values in this release are net transactions unless otherwise stated.

The data series on international security transactions cover portfolio transactions in stocks, bonds and money market instruments for both Canadian and foreign issues.

Stocks include common and preferred equities, as well as warrants.

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.

The overall supply of Canadian federal government debt remained high, in line with the previous four months, but was mainly comprised of long-term instruments in February. As a result, non-residents acquired $1.1 billion of federal government bonds, mainly 5-year and 10-year benchmark bonds. Foreign investment in Canadian corporate debt also focused on long-term instruments. Non-residents picked up $2.0 billion of new government business enterprise bonds as well as $1.4 billion of new issues of private corporations.

In contrast, non-residents reduced their holdings of Canadian money market instruments by $482 million in February, the first divestment in nearly a year. Foreign divestment was driven by activity in government business enterprise and private corporate short-term paper, mainly bank paper. Foreign acquisitions of Canadian Treasury bills were also down sharply from January, reflecting much lower net new issues in February.

Non-resident investors focus on Canadian gold and oil company equities

Foreign investors acquired $2.4 billion of Canadian equities in February, favouring gold and oil companies. On the other hand, non-residents reduced holdings of shares of information technology and financial firms, which were among the worst performing sectors of the Standard and Poor's / Toronto Stock Exchange index in February. By month-end, Canadian stock prices reached their lowest level since November 2003.

Canadian investors turn to US government debt instruments

Demand for short-term foreign assets was evident again in February as Canadian investors purchased $1.1 billion of foreign money market instruments, almost all US government debt. In contrast, they reduced their overall holdings of foreign long-term debt instruments for a 10th straight month. This was a result of retirements of maple bonds (the Canadian dollar-denominated foreign bonds), a market that has stagnated since the outset of global credit turmoil in 2007.

Canadian investors acquired $1.2 billion of US Treasury bills in February, and invested in US government bonds for the first time since April 2008. US government borrowing increased significantly, pushing up yields on US government debt instruments.

Canadian investment in foreign corporate shares continues

Canadians invested a further $2.5 billion in foreign equities in February. Non-US foreign stocks gained popularity over the month, with acquisitions of $1.6 billion, mainly shares of European oil and gas exploration firms.

Canadian investors also added a further $880 million of US equities to their portfolios, as stock prices continued to decline. This activity was again composed of a well-diversified basket of US securities. By the end of February, US stock prices, as measured by the Standard and Poor's 500 index, fell to their lowest level since October 1996.

Canadian portfolio investment in foreign securities

Available on CANSIM: tables 376-0018 to 376-0029, 376-0042, 376-0058 and 376-0063.

Definitions, data sources and methods: survey number 1535.

The February 2009 issue of Canada's International Transactions in Securities (67-002-XWE, free) will soon be available.

Data on Canada's international transactions in securities for March will be released on May 21.

For more information, or to order data, contact Client Services (613-951-1855; To enquire about the concepts, methods or data quality of this release, contact Yiling Zhang (613-951-2057), Balance of Payments Division.

Table 1

Canada's international transactions in securities
  December 2008 January 2009 February 2009 January to February 2008 January to February 2009
        Cumulative transactions
  $ millions
Foreign investment in Canadian securities -2,422 10,435 6,107 4,809 16,542
Bonds (net) -8,398 6,524 4,152 10,249 10,676
Outstanding -819 2,378 1,388 7,752 3,766
New issues 4,069 6,541 4,507 5,562 11,048
Retirements -10,411 -3,129 -1,769 -4,063 -4,898
Change in interest payable1 -1,237 734 26 998 760
Money market paper (net) 4,944 4,224 -482 -3,220 3,742
Government of Canada 2,821 4,377 342 -2,178 4,719
Other 2,123 -153 -824 -1,042 -977
Stocks (net) 1,032 -313 2,437 -2,220 2,124
Outstanding 688 -406 1,627 4,214 1,221
Other transactions 345 93 811 -6,434 903
Canadian investment in foreign securities 6,342 -4,178 -2,924 -6,685 -7,102
Bonds (net) 3,754 1,121 682 -2,641 1,802
Stocks (net) 924 -4,095 -2,528 -1,806 -6,623
Money market paper (net) 1,664 -1,204 -1,078 -2,238 -2,282
Interest accrued less interest paid.
A minus sign indicates an outflow of money from Canada, that is, a withdrawal of foreign investment from Canada or an increase in Canadian investment abroad.