Canada's international transactions in securities, May 2013
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Foreign investment in Canadian securities slowed to $6.7 billion in May on lower investment for all types of securities, mainly bonds. For their part, Canadian investors repatriated $1.6 billion in funds from international financial markets in May, led by the sale of US securities.
Foreign investment in Canadian debt securities moderates
Foreign investment in Canadian debt securities was $5.5 billion in May, down from $12.8 billion in April. Reduced inflows mostly resulted from lower acquisitions of Canadian bonds.
Foreign investment of $2.0 billion in Canadian bonds marked a fifth straight month of acquisition of these instruments by non-residents, but this was the lowest such activity so far in 2013. Non-resident investors favoured private corporate bonds for a second month as they added $4.1 billion worth to their portfolio, led by new issues. These inflows were moderated by divestments, mainly foreign sales of federal government bonds and retirements of provincial government bonds.
Non-resident investors added $3.5 billion of Canadian money market instruments to their holdings in May, following a $5.0 billion acquisition in April. Purchases mainly targeted paper issued by provincial governments and federal government business enterprises. Canadian long-term interest rates were up by 35 basis points in May, leading to a widening of the spread between long- and short-term interest rates.
Non-residents invest in Canadian equities for a second straight month
Foreign investors purchased $1.2 billion of Canadian equities in May, adding to April's $2.2 billion acquisitions. This activity was widespread across sectors, notably gold, energy, bank, communication and transportation. The Canadian stock market was up by 1.6% in May. The Canadian dollar depreciated against its US counterpart by 2.8 cents US.
Canadians reduce their holdings of US securities
Canadian investors reduced their holdings of foreign securities by $1.6 billion in May, the largest divestment since August 2012, led by sales of US securities.
Canadians sold $2.2 billion of foreign stocks in May, all US instruments. This marked the third consecutive month of divestment in US equities. The net sale of $2.5 billion of these instruments was the largest since October 2008, when US stock prices declined significantly. The US stock market was up by 2.1%, closing the month at an all-time high.
Canadian investment in foreign bonds slowed to $0.4 billion in May, following three straight months of sizable investment. Investors adjusted their holdings of foreign bonds over the month by selling US government bonds and adding non-US foreign bonds, mostly in the government sector. In May, US long-term interest rates rose to their highest levels since March 2012.
Note to readers
The data series on international transactions in securities cover 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, classified as foreign direct investment in the international accounts.
Equity and investment fund shares include common and preferred equities as well as units/shares of investment funds.
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.
Data on Canada's international transactions in securities for June will be released on August 16.
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