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Canada's international transactions in securities, April 2019

Released: 2019-06-17

Foreign investors reduced their holdings of Canadian securities by $12.8 billion in April, mainly in the form of equities. At the same time, Canadian investors marginally reduced their holdings of foreign securities.

As a result, international transactions in securities generated a net outflow of funds of $12.6 billion from the Canadian economy in April. Cross-border mergers and acquisitions activity in Canada contributed significantly to this movement of funds.

When a Canadian firm is acquired by a foreign firm and the transaction involves the issuance of new shares by the acquiring firm, the geographical composition of investors' portfolios changes. In the context of this release, Canadian investors' holdings of foreign shares increase as they receive new shares and foreign investors' holdings of Canadian shares decline as they render shares.

Foreign holdings of Canadian equities decline

Non-resident investors reduced their holdings of Canadian securities by $12.8 billion in April, the largest decline since December 2018. The reduction was in Canadian equities and, to a lesser extent, debt securities.

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

Foreign holdings of Canadian portfolio equities were down by $8.6 billion in April, the largest reduction since July 2015. The decline was mainly related to cross-border mergers and acquisitions activity in Canada. Sales on the secondary market also contributed to the decline. On a sector basis, the reduction was mainly in energy and mining shares, after significant foreign investment totalling $15.0 billion in the first quarter. Canadian stock prices were up by 3.0% in April, the fourth straight monthly rise.

Non-resident investors reduced their holdings of Canadian debt securities by $4.2 billion in April. The activity reflected offsetting movements of funds between short- and long-term debt instruments. In the federal government subsector, investors sold $3.7 billion of bonds, the third consecutive monthly divestment. At the same time, they acquired $3.3 billion of short-term instruments. In the private corporate sector, foreign acquisitions of bonds, mainly denominated in US dollars, were more than offset by a $5.4 billion divestment in short-term instruments.

Canadian short-term interest rates (+2 basis points) and long-term interest rates (+13 basis points) were up, and the Canadian dollar depreciated slightly against its US counterpart in April.

Canadian investors reduce their holdings of foreign securities

Canadian investors reduced their holdings of foreign securities by $194 million in April, following a $1.3 billion investment in March.

Canadian holdings of foreign debt securities were down by $337 million in April, after three months of investment. Acquisitions of US corporate bonds were moderated by sales of US treasury instruments. US short- and long-term interest rates edged down in the month.

Canadian investment in foreign equities was $143 million in April. The activity reflected significant issuances of new US shares to Canadian investors resulting from cross-border mergers and acquisitions in Canada. Meanwhile, sales of US shares on the secondary market almost completely offset this activity. April marked the sixth consecutive month for which Canadian investors reduced their exposure to US shares. The US stock market increased by 3.9% in April.

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 May will be released on July 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 data visualization product "Securities statistics," which is part of Statistics Canada – Data Visualization Products (Catalogue number71-607-X), is available online.

The 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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