Canada's international transactions in securities, August 2012

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Non-resident investors acquired $6.9 billion of Canadian securities in August, as they favoured debt instruments over equity in contrast to July. Canadian investors reduced their holdings of foreign securities by $1.7 billion, following three straight months of acquisition.

Foreign investment in the Canadian debt market focuses on corporate securities

Foreign investors purchased $7.5 billion of Canadian debt securities in August, up from the $2.0 billion acquired in July. Non-residents added bonds and money market instruments to their holdings, led by Canadian corporate securities.

Foreign investment in Canadian bonds was $4.7 billion and targeted new bonds issued by corporations, both private and public. Non-residents reduced their holdings of Canadian government bonds for the second time in three months, mainly federal bonds with short-term maturities. Nonetheless, foreign investors accumulated $19.5 billion of federal government bonds between January and August of 2012, nearly fourfold the investment recorded during the same period in 2011.

Non-resident investment in the Canadian money market reached $2.8 billion in August, following a large divestment in July. Foreign acquisitions of paper issued by Canadian private corporations posted the second largest inflow on record. This, combined with investment in provincial government paper, accounted for most of the activity over the month.

Chart description: Foreign portfolio investment in Canadian securities

CSV version of the chart

Non-residents reduce their holdings of Canadian equities

Foreign investors removed $0.6 billion from their holdings of Canadian equities in August, after a $4.7 billion investment in July. The divestment was in a wide variety of Canadian equities transacted on the secondary market. Canadian stock prices increased further in August, posting the largest monthly gain since January.

Canadian investors sell foreign debt securities after two months of acquisitions

Canadian investors reduced their holdings of foreign debt securities by $1.1 billion in August, following two straight months of investment totalling $6.4 billion. US government bonds and, to a lesser extent, non-US foreign bonds accounted for most of the reduction. Acquisitions of US corporate bonds and government T-bills moderated the overall divestment over the month. On a year-to-date basis, the level of divestment in foreign debt securities has decreased considerably compared with 2011.

Chart description: Canadian portfolio investment in foreign securities

CSV version of the chart

Canadian holdings of foreign equities down

Resident investors, led by pension funds, reduced their holdings of foreign equities by $0.5 billion in August. Transactions in the month reflected certain portfolio adjustments, Canadians adding $2.1 billion of US shares and removing $2.6 billion of non-US foreign shares from their holdings. Most major world equity markets posted gains in August.