Canada's international transactions in securities, August 2020
Non-resident investors acquired $15.5 billion of Canadian securities in August, largely purchases of debt securities. At the same time, Canadian investors increased their holdings of foreign securities by $5.7 billion, led by acquisitions of US shares.
As a result, international transactions in securities generated a net inflow of funds of $9.8 billion in the Canadian economy in August, for a total of $112.6 billion so far in 2020.
Foreign investment in Canadian debt securities resumes
Foreign investors acquired $13.3 billion of Canadian debt securities in August, following two months of divestment totalling $17.5 billion.
The foreign investment activity reflected a strong demand on the secondary market for long-term debt securities issued by government entities. Non-resident investors acquired $7.6 billion of federal government outstanding bonds following two months of divestment. Foreign acquisitions on the secondary market of these instruments totalled $40.6 billion from February to May. In addition, non-residents bought $2.5 billion of provincial bonds and $1.8 billion of federal government enterprise bonds on the secondary market, largely Canadian dollar denominated instruments.
Foreign investors increased their holdings of Canadian short-term debt securities for a second straight month in August. The investment activity was mostly in money market instruments issued by Canadian private corporations as non-residents added $3.7 billion worth in their portfolios, mainly banking sector instruments.
In August, Canadian long-term interest rates rose for the first time since December 2019. Meanwhile, Canadian short-term interest rates fell to a record low. Long-term interest rates in the US and major European markets rose in August, with the rates in Canada and the US generally above those of European countries. The Canadian dollar posted gains against most major foreign currencies in August.
Foreign investment in Canadian shares accelerates
Non-resident investors bought $2.3 billion of Canadian shares in August, their largest investment since February 2019. Purchases of shares from the banking sector accounted for the bulk of the foreign investment activity in the month. Canadian equity prices continued their upward trend for a fifth consecutive month, rising 2.1% in August. The banking sector outperformed the overall market with a 4.2% increase in share prices, as measured by the S&P/TSX Banks index.
Strong investment in US shares continues
Canadian investors added $7.7 billion of US shares to their portfolio in August, their fifth consecutive month of acquisitions totalling $29.9 billion. US equity prices, as measured by the S&P 500 composite index, rose 7.0% in August. Investment focussed on shares issued by large capitalization technology firms. Meanwhile, Canadian investors reduced their exposure to non-US foreign equities by $4.1 billion, the largest divestment since January. Investors mainly targeted shares of Japanese firms.
In addition, Canadian investors acquired $2.1 billion of foreign debt securities in August. The activity in the month reflected purchases of US corporate bonds and US Treasury 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.
Customized data tables with additional details are available upon request, subject to the availability of the information.
Data on Canada's international transactions in securities for September will be released on November 17.
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.
The data visualization product "Securities statistics," part of the series Statistics Canada – Data Visualization Products (71-607-X), is available online.
The Canada and the World Statistics Hub (13-609-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.
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).