Canadian portfolio investment abroad, 2018
Canadians are strongly exposed to global financial markets. They had portfolio investment in over 120 countries at the end of 2018, with the United States being by far the top investment destination. This form of international investment has grown rapidly in recent years, doubling its share of total financial assets of Canadian investors in the last decade.
Overall, Canadian holdings of foreign securities increased by $52.0 billion to $2,182.2 billion at the end 2018. The growth was entirely in debt securities, as holdings of foreign equities declined for the first time in 10 years in 2018.
Holdings of foreign debt instruments were up by 18.9% to $544.2 billion. Strong acquisitions totalling $50.4 billion during the year contributed the most to the increase. Such investment activity had not been seen since 2006, a year marked by the rise of the maple bond market. By sector, Canadian investors held $198.6 billion of foreign government debt instruments at the end of 2018, up 22.0% from 2017. Meanwhile, debt instruments represented 24.9% of all holdings of foreign securities, the highest share since 2008.
The value of foreign equities held by Canadian investors was down 2.1% to $1,638 billion, following an increase of 23.0% in 2017. Holdings decreased mainly on the weakness of foreign stock markets. The decline was moderated by the revaluation effect resulting from the depreciation of the Canadian dollar against most major foreign currencies. US stock prices, as measured by the Standard and Poor's 500, were down by 6.8% and the Canadian dollar depreciated by 8.7% against the US dollar in 2018.
The vast majority (over 98%) of the total value of foreign securities held by Canadians were denominated in foreign currencies at the end of 2018, primarily in US dollars (63%) and followed by the euro (8%) and the British pound (5%). These assets are therefore very sensitive to exchange rate fluctuations.
Assets in the United States increase, but decline in most other major economies
On a geographical basis, Canadian holdings of US securities were up 4.9% in 2018, following a 19.3% increase in 2017. The United States remains the main destination for Canadian portfolio investors, accounting for over 60% of all holdings at the end of 2018, followed by the United Kingdom (5%), Japan (4%) and France (2%). In comparison, Japan and United Kingdom have about one-third of their portfolio investment abroad in US securities. This share is even lower for other advanced economies such as Germany and France.
Canadian holdings of securities in most other major economies were down at the end of 2018. They declined by 10.6% in Germany, 4.8% in Japan, 2.4% in United Kingdom and 2.2% in France, all mainly from lower equity prices.
Overall, the value of portfolio holdings in Europe, Africa, as well as Asia and Oceania all decreased over the year. Notably, the main contributor to the decrease in the Asia and Oceania region was China, for which holdings declined $10.4 billion, largely on lower equity assets. This ended an upward trend observed for this country since 2008.
Note to readers
Data in this release are based on an annual survey of Canadian investors of securities that is used, along with other sources, to generate a detailed geographical breakdown for holdings of foreign securities.
Foreign securities cover equity and debt instruments issued by non-residents. Securities denominated in foreign currency are converted to Canadian dollars at year-end. The survey collects information on Canadian holdings of foreign securities at year-end, at market value and broken down by country of issue. In this context, portfolio investment can be seen as investment undertaken primarily for the sake of investment income or capital gains. This investment excludes cross-border direct investment and reserve assets, which are other components of the international accounts.
The Canada and the World Statistics Hub (13-609-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.
For more information, or to enquire about the concepts, methods or data quality of this release, 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 Francis Salifu (613-797-0651; firstname.lastname@example.org), International Accounts and Trade Division.
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