Canada's international transactions in securities, November 2019
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Released: 2020-01-17
Canadian investment in foreign securities increased to $5.5 billion in November as Canadian investors resumed their purchases of foreign equities. At the same time, foreign investors reduced their holdings of Canadian securities by $1.8 billion, the first decline in four months.
As a result, international transactions in securities generated a net outflow of funds of $7.3 billion from the Canadian economy in November, following three consecutive months of net inflows.
Canadian investors resume their purchases of foreign equities
Canadian investors increased their holdings of foreign securities by $5.5 billion in November. Acquisitions of foreign equities led the investment activity.
Chart 1
Canadian investment in foreign securities
Canadian investment in foreign equities resumed in November to reach $4.2 billion, following three consecutive months of divestment totalling $9.0 billion. Canadian acquisitions of US stocks were moderated by sales of non-US stocks. US stock prices were up 3.4% in November.
Canadian investment in foreign debt securities was $1.4 billion in November. The activity in the month reflected acquisitions of bonds, moderated by a divestment in money market instruments.
Canadian acquisitions of foreign bonds targeted US corporate and non-US bonds, while investors sold US Treasury bonds. From January to November, Canadian investors reduced their exposure to US Treasury bonds by $9.5 billion, while they increased their holdings of US corporate bonds by $23.5 billion.
Foreign investors reduce their exposure to Canadian private corporate securities
Foreign investors reduced their holdings of Canadian securities by $1.8 billion in November. On a sector basis, the reduction was in Canadian private corporate instruments (-$10.8 billion), as non-resident investors added instruments issued by governments and their enterprises (+$9.1 billion) in the month.
The foreign divestment in Canadian private corporate securities was in all types of instruments, led by bonds. Foreign holdings of Canadian private corporate bonds were down by $6.4 billion, mainly on net retirements of instruments denominated in UK pound sterling. This activity followed net new issues denominated in this currency in the previous months.
Non-resident investors also reduced their holdings of Canadian equities by $1.2 billion in November. The divestment was widespread across all sectors except the finance and insurance industry, for which foreign purchases amounted to $1.6 billion in the month. In November, Canadian stock prices, as measured by the Standard and Poor's / Toronto Stock Exchange composite index, increased 3.4%.
Foreign acquisitions of Canadian government debt securities moderated the overall divestment in Canadian securities in November, notably in the federal government sector. Non-resident investors added $3.3 billion of federal government bonds and $1.5 billion of federal government paper in the month, almost all in instruments denominated in Canadian dollars. Canadian short-term interest rates were unchanged in November, while long-term interest rates edged up. Since March, short-term rates have exceeded long-term rates.
Chart 2
Foreign investment in Canadian 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 December 2019 will be released on February 17, 2020.
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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