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Canada's international transactions in securities, September 2019

Released: 2019-11-15

Foreign investors acquired $4.8 billion of Canadian securities in September, all corporate securities. At the same time, Canadian investors reduced their holdings of foreign securities by $2.4 billion, led by a divestment in US instruments.

As a result, international transactions in securities generated a net inflow of funds in the Canadian economy of $7.2 billion in September.

Foreign investment in Canadian corporate bonds resumes

Foreign investment in Canadian securities totalled $4.8 billion in September. The activity in the month reflected foreign acquisitions of securities from the corporate sector, moderated by a divestment in securities from the government sector.

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

Non-resident investors added $6.0 billion of Canadian bonds to their portfolio in September. Foreign investment in private corporate bonds reached $10.4 billion, the highest investment since June 2018. New bonds issued by banks and denominated in foreign currencies, led by the UK pound sterling, accounted for most of the activity. Meanwhile, foreign investors reduced their holdings of both federal and provincial government bonds by a total of $2.8 billion. September closed a strong quarter of foreign acquisitions of Canadian private corporate bonds totalling $18.8 billion.

In the Canadian money market, non-resident investors reduced their holdings of short-term paper by $2.4 billion. On a sector basis, a divestment in government paper, mainly provincial, was moderated by acquisitions of private corporate paper.

Canadian short-term interest rates edged up, while long-term interest rates increased by 26 basis points in September. As a result, the differential between short- and long-term rates narrowed following a significant increase in August. Since March, short-term rates have exceeded long-term rates.

Foreign investment in Canadian equities amounted to $1.1 billion in September. Issuances of new Canadian shares to non-resident portfolio investors, resulting from cross-border mergers and acquisitions, led the activity. Foreign sales of Canadian shares on the secondary market moderated the overall investment activity. Canadian stock prices, as measured by the Standard and Poor's / Toronto Stock Exchange composite index, were up 1.3% in September.

Canadian holdings of US securities decline

Canadian investors reduced their holdings of foreign securities by $2.4 billion in September. The decline was in US securities as investment in non-US securities totalled $617 million.

The decrease in holdings of US securities in September reflected sales of shares and Treasury bonds, partially offset by acquisitions of corporate bonds. A similar investment pattern was observed in August.

From January to September 2019, Canadian investors reduced their exposure to US shares and US Treasury bonds by $21.3 billion. At the same time, they increased their holdings of US corporate bonds by $20.4 billion.

In September, US stock prices increased by 1.7%. US long-term interest rates were up and short-term rates were down slightly. From July to October, the Federal Reserve has reduced the US federal funds rate three times, in July, September and October.

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 October will be released on December 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," 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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