Canada's international transactions in securities, February 2015
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Foreign investment in Canadian securities strengthened to $9.3 billion in February led by foreign purchases of federal government bonds. Meanwhile, Canadian investors resumed their investment in foreign securities by adding $9.4 billion to their holdings, mainly US instruments. As a result, the net cross-border flows on portfolio investment produced a $0.1 billion outflow of funds from the Canadian economy.
Foreign investment in Canadian securities increases
Foreign investment in Canadian securities reached $9.3 billion in February, the largest such activity in four months. As in January, acquisitions in February were concentrated in the Canadian bond market.
Foreign investment in Canadian bonds amounted to $9.9 billion. Foreign investors acquired $10.5 billion of federal government bonds, mainly secondary market purchases. This activity was the highest recorded since May 2010. Foreign acquisitions of $5.1 billion of federal government business enterprise bonds were almost completely offset by a reduction in foreign holdings of provincial government bonds, principally retirements. The divestment in provincial bonds in February followed a large acquisition of these instruments in January.
Foreign investors withdrew $2.2 billion of funds from the Canadian money market in February, consisting largely of federal Treasury bills and provincial paper. Foreign investors have reduced their exposure to Canadian money market instruments by $8.0 billion over the past two months, led by federal Treasury bills. Canadian long- and short-term interest rates both edged down in the month. The Canadian dollar appreciated against its US counterpart by 1.3 US cents after a sharp decline in January.
Non-resident investors acquired $1.6 billion worth of Canadian shares in February, with Canadian stock prices up by 3.8% in the month.
Canadian investment in foreign securities resumes
Canadian acquisitions of foreign securities resumed in February as investors added $9.4 billion worth of these instruments to their holdings. This activity followed a significant divestment of $10.8 billion in January.
Canadian investors purchased $6.8 billion of foreign debt securities, with acquisitions of US Treasury debt instruments accounting for the bulk of the investment. US long-term interest rates were up by 10 basis points while US short-term interest rates edged down in February.
Canadians also added $2.6 billion of foreign shares to their holdings in February, following a record divestment the previous month. US stock prices were up by 4.1% in the month.
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 March will be released on May 15.
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