Canada's international transactions in securities, March 2012

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Foreign investors reduced their holdings of Canadian securities for the second time in three months as they divested $2.1 billion in March, led by debt instruments. Canadian investors acquired the largest amount of foreign securities in nearly five years at $7.8 billion, with investment concentrated in equities.

Non-residents reduce their holdings of Canadian debt securities

Foreign investors removed $1.5 billion from their holdings of Canadian money market instruments in March, marking a third straight month of divestment. This activity was again concentrated in Canadian Treasury bills, with non-residents reducing their holdings by a further $3.1 billion. These reductions were partially offset by foreign acquisitions of federal and provincial government enterprise paper.

Chart 1 
Foreign portfolio investment in Canadian securities
Chart 1: Foreign portfolio investment in Canadian securities

Chart description: Foreign portfolio investment in Canadian securities

CSV version of the chart

In the first quarter of 2012, non-residents reduced their holdings of Canadian short-term paper by $7.7 billion. This reduction was in contrast to investment amounting to $31.2 billion over the previous three quarters.

Non-resident investors also reduced their holdings of Canadian bonds by $897 million in March, following a $13.7 billion acquisition in February. The reduction was focused in federal bonds, reflecting both retirements and sales on the secondary market. Divestments were moderated by non-resident acquisitions of federal government enterprise bonds. Canadian long-term yields rose 14 basis points during the month, while their US equivalent increased by 23 basis points.

Foreign investors acquire Canadian equities at a slower pace

Non-residents acquired $288 million of Canadian stocks in March, down from a $445 million purchase in February. Investment was driven by US purchases of energy shares. Redemptions of Canadian shares as a result of foreign merger and acquisition activity moderated the portfolio inflows over the month. Canadian stock prices were down 2% in March, offsetting the gains in February.

Canadians resume their investment in foreign equities

Canadian investors purchased $6.4 billion of foreign equities in March, led by demand from pension funds. This was the strongest investment since April 2007, and US shares accounted for over 60% of the March investment. US stock prices increased for a fourth straight month in March to their highest level since December 2007.

Chart 2 
Canadian portfolio investment in foreign securities1
Chart 2: Canadian portfolio investment in foreign securities

Chart description: Canadian portfolio investment in foreign securities

CSV version of the chart

Canadian investors acquire foreign bonds

Canadian investors purchased $1.6 billion of foreign bonds in March after divestments in the previous two months. The investment was concentrated in non-US foreign bonds, mainly debt instruments from European countries and Australia. Canadians also invested in US Treasury bonds for the first time in 2012. However, they reduced their holdings of foreign money market instruments by $172 million in March. This was the fifth straight divestment in these instruments with activity in the month concentrated in foreign bank and sovereign paper.

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.

Available without charge in CANSIM: tables CANSIM table376-0018 to 376-0029, CANSIM table376-0042, CANSIM table376-0058 and CANSIM table376-0063.

Definitions, data sources and methods: survey number survey number1535.

The March 2012 issue of Canada's International Transactions in Securities (Catalogue number67-002-X, free) will soon be available.

Data on Canada's international transactions in securities for April will be released on June 18.

For more information, contact Statistics Canada's National Contact Centre (toll-free 1-800-263-1136; 613-951-8116;

To enquire about the concepts, methods or data quality of this release, contact Brian Law (613-951-3835) or Éric Boulay (613-951-1872), Balance of Payments Division.