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Canada's international transactions in securities, August 2019

Released: 2019-10-16

Foreign investors acquired $5.0 billion of Canadian securities in August, following two months of divestment. At the same time, Canadian investors reduced their holdings of foreign securities by $4.7 billion, the largest divestment since January.

As a result, international transactions in securities generated a net inflow of funds in the Canadian economy of $9.7 billion, the first net inflow of funds since May.

Foreign investment in Canadian securities resumes

Foreign investment in Canadian securities totalled $5.0 billion in August, offsetting the divestment of the previous two months. Foreign investors acquired Canadian debt instruments, but reduced their exposure to Canadian shares in August.

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

Non-resident investors added $1.7 billion of Canadian bonds to their portfolio in August. Foreign investment in government bonds totalled $2.1 billion, led by secondary market purchases of Canadian dollar-denominated instruments. Meanwhile, foreign investors reduced their holdings of corporate bonds in August, the first divestment since January.

Foreign investors resumed their acquisitions of Canadian money market instruments by adding $4.2 billion to their holdings in August, following a $4.6 billion divestment in July. Foreign investment in provincial government paper reached $2.6 billion, the highest monthly investment since January. Acquisitions of private corporate instruments also contributed to the investment activity.

Canadian short-term interest rates edged down, while long-term interest rates decreased by 36 basis points in August. Since March, short-term rates have exceeded long-term rates.

Foreign investors reduced their exposure to Canadian equities by $1.0 billion in August, the fifth monthly decline in six months. The divestment mainly resulted from foreign sales of Canadian shares from the manufacturing industry. Canadian stock prices, as measured by the Standard and Poor's / Toronto Stock Exchange composite index, edged up in August, while the Canadian dollar depreciated slightly against the US dollar.

Canadian investors reduce their holdings of foreign equities

Canadian investors reduced their holdings of foreign securities by $4.7 billion in August, the highest divestment since January. This followed three months of acquisitions totalling $23.2 billion.

Following two months of investments, Canadian investors reduced their exposure to foreign equities by $5.1 billion in August. The divestment was spread across US and non-US foreign shares. US stock prices were down 1.8% in August.

Canadian investment in foreign debt securities totalled $384 million in August. Investors added US corporate bonds and non-US foreign bonds to their portfolio, but reduced their holdings of US Treasury bonds by $3.2 billion, the highest divestment since November 2018. From January to August, Canadian investors reduced their holdings of US Treasury bonds by $5.4 billion compared with acquisitions of $18.2 billion for the same period in 2018. In the United States, short-term interest rates declined by 16 basis points and long-term interest rates by 43 basis points in August.

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 September will be released on November 15.

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," part of the series 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, 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) or Media Relations (613-951-4636; STATCAN.mediahotline-ligneinfomedias.STATCAN@canada.ca).

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