Canada's international transactions in securities, May 2016

Released: 2016-07-18

Foreign investment in Canadian securities remained high at $14.7 billion in May, led by acquisitions of federal government bonds on the secondary market. At the same time, Canadian investors added $5.1 billion of foreign securities to their holdings, mainly equities.

Foreign investment in Canadian securities focuses on bonds

Foreign investors continued to invest in Canadian securities at a strong pace in May, adding $14.7 billion to their holdings. This activity was on par with the average investment recorded in the previous four months. Foreign investment during the month focused on Canadian bonds. Since the beginning of the year, foreign acquisitions of Canadian securities have totalled $74.6 billion, compared with $66.2 billion for the same period in 2015.

Chart 1 
Foreign investment in Canadian securities

Foreign investment in Canadian bonds totalled $17.3 billion in May, the largest investment since March 2015. Foreign investors acquired $9.8 billion of federal government bonds, mainly secondary market purchases of Canadian dollar denominated instruments. Foreign investors also added $5.4 billion of federal government enterprises bonds to their holdings, principally new issues. In addition, foreign investment in Canadian private corporate bonds amounted to $2.6 billion, a seventh consecutive month of investment in these instruments. Canadian long-term interest rates were down 12 basis points in May.

Foreign investors reduced their holdings of Canadian money market instruments by $3.4 billion in May, following strong acquisitions in April. The reduction was mainly in provincial and corporate paper denominated in foreign currencies. Canadian short-term interest rates edged down, and the Canadian dollar depreciated against its US counterpart by 3.4 US cents in May.

Foreign investment in Canadian equities slowed in May, as foreign investors added $819 million of Canadian shares to their portfolios. Acquisitions on the secondary market were moderated by a divestment resulting from cross-border merger and acquisition activities, as foreign portfolio investors rendered Canadian shares to foreign direct investors during the month. Canadian stock prices were up 0.8% in May.

Canadian investment in foreign equities reaches a high in 2016

Canadian investors acquired $5.1 billion of foreign securities in May, a fourth straight month of investment. The bulk of the investment was in the form of equities and targeted the US stock market.

Canadian acquisitions of foreign shares totalled $4.7 billion, the highest monthly investment recorded so far in 2016. Canadian investment in US equities reached $3.1 billion, the largest investment since November 2015. US stock prices were up 1.5% in May.

Canadian investment in foreign debt securities slowed to $350 million in May, reflecting offsetting movements of funds between US and non-US foreign debt securities. Canadian investors increased their holdings of US bonds by $3.0 billion, led by US Treasury bonds. Meanwhile, they reduced their exposures to non-US foreign bonds by $2.9 billion, the largest such reduction since September 2015.

Chart 2 
Canadian investment in foreign securities

Contact information

For more information, contact us (toll-free 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca).

To enquire about the concepts, methods or data quality of this release, contact Lauren Dong (613-668-3140; lauren.dong@canada.ca), International Accounts and Trade Division.