Canada's international transactions in securities, October 2020
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Released: 2020-12-16
Non-residents added $6.9 billion of Canadian securities to their portfolios in October, with the bulk of the investment in government bonds. Meanwhile, Canadian investors acquired $8.0 billion of foreign securities, largely foreign government bonds.
As a result, international transactions in securities generated a net outflow of funds from the Canadian economy of $1.0 billion in October.
Chart 1
Canada's international transactions in securities
Non-residents acquire Canadian government bonds
Foreign investment in Canadian securities totalled $6.9 billion in October. The activity in the month mainly reflected foreign acquisitions of government bonds moderated by a divestment in private corporate bonds. Foreign investment in the Canadian stock market slowed in the month.
Non-residents added $7.1 billion of provincial government bonds to their portfolios in October, their largest investment since May 2017. Canadian provinces resumed their borrowing activities on international markets in October, with net issuances amounting to $5.1 billion, largely bonds denominated in euro, and to a lesser extent, in US dollar. This activity followed two months of net retirements totalling $5.1 billion.
Non-residents acquired $4.6 billion of federal government bonds in October, following a $6.4 billion divestment in September. Overall, the federal government issued a record amount ($55.5 billion) of new bonds on financial markets in October. At the same time, non-residents reduced their holdings of private corporate bonds by $5.5 billion, their largest divestment since July. This activity was driven by net retirements of Canadian chartered bank bonds denominated in US dollar.
Chart 2
Foreign investment in Canadian government bonds
Foreign investment in Canadian equity securities was $571 million in October, down from a $4.2 billion investment in September. This was the lowest foreign investment in the Canadian equity market in four months. Canadian stock prices, as measured by the S&P/TSX composite index, fell by 4.4% in October overwriting the gain of the third quarter.
Canadian investment in foreign securities continues
Canadian investment in foreign securities totalled $8.0 billion in October, marking a sixth consecutive month of net purchases. Investment activity in the month was led by acquisitions of foreign government bonds.
Canadian investors bought $3.1 billion of non-US foreign bonds in October, adding to their purchases of $4.9 billion in September. Investors focussed on European and Asian government bonds in October. In addition, they acquired $1.9 billion of US government bonds, their largest investment since June 2019. Long-term interest rate differentials widened in October, with US rates exceeding Canadian rates by the highest value since February.
Chart 3
Canadian investment in foreign bonds
Meanwhile, Canadian investors added $1.5 billion of foreign shares to their portfolios, a seventh straight month of net purchases. Investments in foreign shares have totalled $39.2 billion over that period. Canadian investors bought US shares and sold non-US foreign shares in October. US stocks prices, as measured by the S&P500 composite index, fell by 2.8% in the month.
Chart 4
Canadian investment in foreign equity and investment fund shares
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 will be released on January 18.
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.
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.
Contact information
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