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Canada's international transactions in securities, February 2019

Released: 2019-04-16

Foreign acquisitions of Canadian securities totalled $12.0 billion in February, following a significant investment of $28.6 billion in January. At the same time, Canadian investment in foreign securities increased to $5.3 billion, led by purchases of US corporate bonds.

As a result, international transactions in securities generated a net inflow of funds of $6.7 billion in the Canadian economy in February.

Foreign acquisitions of Canadian corporate bonds resume

Foreign investment in Canadian securities totalled $12.0 billion in February, following two months of fluctuating activity that resulted in a large foreign divestment in December and a large foreign investment in January. Investment in February targeted both the Canadian bond and equity markets.

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

Foreign investors added $6.5 billion of Canadian bonds to their holdings in February, mainly new bonds denominated in foreign currencies. On a sector basis, the activity in the month reflected foreign purchases of corporate bonds, moderated by a reduction in foreign holdings of federal government bonds. The investment in Canadian corporate bonds reached $8.0 billion, marking the largest foreign investment in this type of instrument since June 2018.

Foreign investors reduced their holdings of Canadian money market instruments by $1.0 billion in February. A divestment in provincial paper was moderated by investment in Canadian Treasury bills and private corporate paper. The divestment in provincial paper followed large new issues in the previous month. Canadian short- and long-term interest rates have remained relatively stable since the end of December 2018 and the Canadian dollar depreciated slightly against its US counterpart in February.

Foreign investment in Canadian equities amounted to $6.6 billion in February, the ninth consecutive month of investment. Issuances of new Canadian shares to non-resident investors and purchases on secondary markets almost equally contributed to this activity. Foreign investment mainly targeted shares from the energy and mining sector. Canadian stock prices, as measured by the Standard and Poor's / Toronto Stock Exchange composite index, were up by 3.0% in February.

Canadian acquisitions of foreign securities focus on US corporate bonds

Canadian investors resumed their purchases of foreign securities by adding $5.3 billion worth to their holdings in February, following three months of divestment.

Canadian acquisitions of foreign debt securities totalled $5.0 billion in February, up from a $1.5 billion investment in January. The bulk of the activity was in US corporate bonds. US long-term interest rates increased for a fourth straight month in February.

Canadian investors acquired $278 million of foreign equities in February. Purchases of non-US foreign shares were moderated by sales of US shares in the month. This was the fourth straight month of divestments in US shares. US stock prices were up by 3.0% in February, following a 7.9% increase in January.

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


  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 March will be released on May 16.

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.

The updated Canada and the World Statistics Hub (Catalogue number13-609-X) is available online. This product illustrates the nature and extent of Canada's economic and financial relationship with the world using interactive graphs and tables. This product provides easy access to information on trade, investment, employment and travel between Canada and a number of countries, including the United States, the United Kingdom, Mexico, China and Japan.

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 Éric Simard (613-219-5932; eric.simard@canada.ca), International Accounts and Trade Division.

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