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Canada's international transactions in securities, October 2019

Released: 2019-12-16

Foreign investors acquired $11.3 billion of Canadian securities in October, mainly bonds. Meanwhile, Canadian investors increased their holdings of foreign securities by $2.0 billion, also mainly in the form of bonds.

As a result, international transactions in securities generated a net inflow of funds in the Canadian economy of $9.3 billion in October, the largest inflow of funds since January.

Foreign investors add provincial government debt securities to their holdings

Non-resident investors acquired $11.3 billion of Canadian securities in October, the highest amount since February. This marked the third consecutive month of foreign investment in these instruments. In October, foreign investment was in debt securities, led by provincial government instruments, while foreign investors reduced their holdings of Canadian equities.

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

On a geographical basis, investors from European Union countries led the investment activity with purchases totalling $10.8 billion in October. At the same time, investors from the United States reduced their holdings of Canadian securities.

Foreign investors added $11.8 billion of Canadian bonds to their portfolio in October. Foreign investment in Canadian private corporate bonds ($5.8 billion) and provincial government bonds ($3.6 billion) accounted for most of the activity, mainly due to new bonds issued on international markets.

Foreign acquisitions of Canadian money market instruments amounted to $1.7 billion in October. Acquisitions of provincial government instruments ($3.5 billion) were moderated by a divestment in private corporate paper. Canadian short-term and long-term interest rates edged up in October. Since March, short-term interest rates have exceeded long-term rates.

Foreign investors reduced their holdings of Canadian equities by $2.1 billion in October, mainly through the sale of shares from the finance and insurance industry. This was the second consecutive monthly divestment in Canadian shares from this industry, for a total divestment of $4.3 billion since January. In October, Canadian stock prices, as measured by the Standard and Poor's / Toronto Stock Exchange composite index, declined by 1.1%.

Canadian acquisitions of foreign securities resume

Canadian investors resumed their purchases of foreign securities by adding $2.0 billion worth to their holdings in October, following two months of divestment. Overall, they added foreign debt securities and sold equities.

Canadian investment in foreign debt securities was $3.7 billion in October. The activity in the month reflected purchases of bonds, which were moderated by a slight divestment in money market instruments, mainly US government paper.

For the third consecutive month, Canadian investors reduced their exposure to foreign equities, selling $1.6 billion in October. The reduction was all in non-US shares, while Canadian investors resumed their acquisitions of US shares. From January to October, Canadian holdings of foreign equities declined by $13.5 billion, largely in the form of US shares.

In October, US stock prices, as measured by the Standard and Poor's 500 index, increased by 2.0%. US long-term interest rates edged up, while US short-term interest rates decreased by 25 basis points. As a result, the differential between short- and long-term US rates narrowed significantly in October. The Canadian dollar appreciated slightly against the US dollar.

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 November 2019 will be released on January 17, 2020.

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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