Canada's international transactions in securities, March 2015
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Foreign investment in Canadian securities was up significantly in March to $22.5 billion. Foreign acquisitions of Canadian private corporate securities accounted for the bulk of this activity. At the same time, Canadian investors reduced their holdings of foreign securities by $3.2 billion, all debt instruments. As a result, Canada's international transactions in securities generated a net inflow of funds into the economy of $25.7 billion in March, and a record net inflow of $42.9 billion in the first quarter.
Foreign investment in Canadian securities accelerates
Foreign investment in Canadian securities totalled $22.5 billion in March, marking the largest such inflow of funds since May 2012. This activity mainly reflected investment in Canadian private corporate securities, both bonds and shares.
Foreign acquisitions of Canadian bonds reached $21.0 billion and reflected strong new issue activity, mainly instruments denominated in foreign currencies. On a sector basis, non-resident investors purchased $17.0 billion of Canadian private corporate bonds, the highest such investment since October 2001. Foreign investment in federal government bonds was $5.1 billion in March, leading to a total of $16.0 billion for the first quarter of 2015. This activity contrasted with the general divestment pattern observed in these instruments in the previous two years. Canadian long-term interest rates edged up in March after five straight months of decline, while the Canadian dollar depreciated against its US counterpart by one US cent.
Foreign investors withdrew $5.3 billion of funds from the Canadian money market in March, a third consecutive month of divestment. The reduction in foreign holdings of Canadian money market instruments was observed in both government and corporate paper. For the quarter, the foreign divestment in these instruments totalled $13.3 billion against the backdrop of a significant decline in Canadian short-term interest rates, which were down 37 basis points during this period.
Foreign investment in Canadian equities increased to $6.8 billion in March, the highest level of investment observed in 18 months. Secondary market purchases by non-residents accounted for two-thirds of this activity.
Canadian investors reduce their holdings of foreign securities
Canadian investors reduced their portfolio of foreign securities by $3.2 billion in March. This reduction, combined with the significant divestment in January, resulted in the first quarterly divestment in more than five years.
In March, Canadian investors reduced their holdings of foreign debt securities by $7.3 billion. Holdings of US Treasury instruments were down by $6.0 billion in March, nearly offsetting the acquisitions in February. US long-term interest rates edged up in the month.
Canadian investment in foreign equities strengthened to $4.1 billion in March, up from $2.4 billion in February. Acquisitions were almost evenly split between US and non-US shares. Despite the investment activity in February and March, Canadian investment in foreign equities for the quarter was down as a result of a large divestment in January.
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 April will be released on June 16.
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