Canada's international transactions in securities, July 2019
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Released: 2019-09-16
Foreign investors reduced their holdings of Canadian securities by $1.2 billion in July, the fourth decline in five months. At the same time, Canadian investment in foreign securities increased to $12.5 billion, the largest investment since October 2018.
As a result, international transactions in securities generated a net outflow of funds of $13.6 billion from the Canadian economy in July, the largest net monthly outflow of funds to date in 2019.
Foreign investors continue to reduce their holdings of federal government bonds
Foreign investors reduced their holdings of Canadian securities by $1.2 billion in July, the fourth decline in five months. They reduced their exposure to Canadian money market instruments, but acquired Canadian bonds and shares in the month.
Chart 1
Foreign investment in Canadian securities
Non-resident investors purchased $1.5 billion in Canadian bonds in July. The activity in the month reflected strong foreign acquisitions of corporate bonds moderated by a divestment in government bonds. New issues of Canadian private corporate bonds denominated in foreign currencies led the investment activity. Meanwhile, the foreign divestment in government bonds was led by strong secondary market sales of federal bonds. From January to July, foreign investors reduced their holdings of federal government bonds by $7.8 billion.
In the Canadian money market, foreign investors reduced their holdings of short-term paper by $4.6 billion in July. A divestment of corporate paper accounted for the bulk of the reduction in the month. This activity followed two strong months of foreign investment in these instruments.
Canadian short- and long-term interest rates edged down in the month. From March to July, short-term rates surpassed long-term rates.
Foreign investment in Canadian equities amounted to $1.9 billion in July, the first investment in five months. The activity was widespread across industries in July. Canadian stock prices, as measured by the Standard and Poor's / Toronto Stock Exchange composite index, edged up in July, while the Canadian dollar depreciated slightly against the US dollar.
Canadian investment in foreign securities accelerates
Canadian investment in foreign securities accelerated to reach $12.5 billion in July, the third consecutive monthly increase. This was the largest investment since October 2018. Investors purchased an equivalent amount of foreign bonds and foreign shares in the month.
Canadian investment in foreign debt securities totalled $6.6 billion in July. Acquisitions of non-US foreign bonds and US corporate bonds were the main contributors to the increase. From January to July, Canadian investors have increased their holdings of US corporate bonds by $18.8 billion, while reducing their exposure to US Treasury bonds by $2.2 billion. US short- and long-term interest rates were down in the month but remained higher than the Canadian rates.
Canadian investment in foreign equities increased to $5.9 billion in July, following a $3.6 billion investment in June. This was the highest investment since October 2018. Acquisitions in the month targeted both US and non-US shares. US stock prices were up by 1.3% in July.
Chart 2
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 August will be released on October 16.
Products
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.
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To enquire about the concepts, methods or data quality of this release, contact Yiling Zhang (613-286-1684; yiling.zhang@canada.ca), International Accounts and Trade Division.
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