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Canada's international transactions in securities, January 2017

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Released: 2017-03-16

Foreign investment in Canadian securities slowed to $6.2 billion in January, down from $10.2 billion in December. At the same time, Canadian investors increased their holdings of foreign securities by $8.6 billion, led by purchases of US instruments.

As a result, international transactions in securities generated a net outflow of funds of $2.4 billion from the Canadian economy in the month, the first outflow since December 2015.

Foreign investment in Canadian securities slows

Foreign investment in Canadian securities slowed to $6.2 billion in January. Overall, foreign investors acquired Canadian debt securities but sold equities in the month.

Chart 1  Chart 1: Foreign investment in Canadian securities
Foreign investment in Canadian securities

Foreign acquisitions of Canadian bonds amounted to $10.0 billion in January. Investment activity was mainly in corporate bonds, as foreign investors reduced their exposure to federal government bonds in the month. Foreign investors acquired $12.7 billion of corporate bonds, largely new issues denominated in foreign currencies. Meanwhile, they reduced their holdings of federal government bonds by $5.6 billion, the largest divestment since June 2016. Canadian long-term interest rates were up by 9 basis points in January, after an increase of 15 basis points in December.

Foreign investors reduced their holdings of Canadian money market instruments by $2.7 billion in January, a third consecutive month of divestment. The reduction was in paper issued by all levels of government. Foreign acquisitions of corporate paper moderated the overall divestment in the month. Canadian short-term interest rates were down by three basis points and the Canadian dollar was up 2.4 cents in the month.

Foreign holdings of Canadian shares were down by $1.0 billion in January, the first divestment since August 2015. This divestment resulted from sales on the secondary market and followed an investment of $9.7 billion in December. Canadian stock prices edged up in the month.

Canadian investors buy US securities

Canadian investors increased their holdings of foreign securities by $8.6 billion in January, the largest investment since December 2015. The activity in January was led by purchases of US instruments.

Chart 2  Chart 2: Canadian investment in foreign securities
Canadian investment in foreign securities

Canadian investment in foreign debt securities rebounded in January to reach $4.9 billion, after two consecutive months of divestment. This was the highest investment since February 2016. Most of the activity in January was in US government instruments. Acquisitions of US corporate bonds and non-US foreign bonds also contributed to this increase. US long-term interest rates were down by six basis points in the month.

Canadian investment in foreign equities amounted to $3.8 billion in January, down from a significant investment of $11.7 billion recorded in December. Canadian investors acquired $3.9 billion of US shares, and reduced their holdings of non-US shares by $104 million in January. The divestment in non-US shares followed an investment of $8.0 billion in December. US stock prices were up by 1.9% in January.


  Note to readers

The data series on international transactions in securities covers 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, which are 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.

Next release

Data on Canada's international transactions in securities for February will be released on April 18.

Products

The Methodological Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-607-X) is available.

The User Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-606-G) is also available. This publication will be regularly updated to maintain its relevance.

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 Seher Zubair (613-863-7581; seher.zubair@canada.ca), International Accounts and Trade Division.

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