Canada's international transactions in securities, November 2018
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Foreign investors acquired $9.5 billion of Canadian securities in November, mainly bonds. Meanwhile, Canadian investors reduced their holdings of foreign securities by $4.1 billion as they sold US shares. The divestment in foreign securities was the largest in a year and followed two strong months of acquisitions.
As a result, international transactions in securities generated a net inflow of funds of $13.5 billion in the Canadian economy in November, the largest inflow since November 2017.
Foreign investors continue to add federal government debt securities to their holdings
Foreign acquisitions of Canadian debt securities increased to $7.4 billion in November. The bulk of the investment was in government debt securities, mainly federal government instruments.
Non-resident investors added $7.8 billion of Canadian bonds to their portfolio in November. Foreign investment in federal government bonds reached $3.0 billion. This was the second straight month of foreign investment in these instruments, following a general divestment trend totalling $35.1 billion from January to September.
Foreign investors also acquired private corporate bonds ($3.0 billion) and provincial government bonds ($2.3 billion) in November, mainly new bonds placed abroad and denominated in foreign currencies. In November, the Canadian dollar depreciated against all major foreign currencies, while Canadian long-term interest rates were unchanged at 2.5% to remain at their highest level since December 2013.
Activity in the Canadian money market in November resulted in a foreign divestment of $409 million. A reduction in foreign holdings of Canadian corporate paper, mainly those issued by government business enterprises, was moderated by an increase in federal government paper. Non-residents have now invested in federal government paper for four consecutive months. In November, Canadian short-term interest rates reached their highest levels in a decade.
Non-resident investors acquired Canadian equities for a sixth consecutive month, buying $2.1 billion in November. This activity was led by secondary market purchases. Canadian energy and mining shares accounted for just over half of foreign investment in November. Canadian stock prices increased in November following three consecutive months of decline.
Canadian investors reduce their holdings of US equities
Canadian investors reduced their holdings of foreign securities by $4.1 billion in November, following two consecutive months of investment. A significant divestment in US equities was the main contributor to the decrease in the month.
Canadian investors reduced their exposure to foreign equities by $5.4 billion in November. They sold $6.4 billion of US equities, almost completely offsetting acquisitions of the previous two months. Since the beginning of the year, the divestment in US equities has totalled $12.0 billion, compared with purchases of $45.3 billion for the same period in 2017. US stock prices increased 1.8% in November, following a 6.9% decrease in October.
Canadian investment in foreign debt securities was $1.3 billion in November, the lowest investment in a year. Canadian investors added non-US foreign debt securities to their portfolio but reduced their holdings of US debt instruments, mainly US government bonds. US long-term rates were down by 29 basis points in November to reach their lowest level since January 2018.
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.
Data on Canada's international transactions in securities for December 2018 will be released on February 15, 2019.
The Methodological Guide: Canadian System of Macroeconomic Accounts (13-607-X) is available.
The User Guide: Canadian System of Macroeconomic Accounts (13-606-G) is also available. This publication will be regularly updated to maintain its relevance.
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