Canada's international transactions in securities, April 2021
Canadian investment in foreign securities totalled $18.6 billion in April, mainly in purchases of US securities. Meanwhile, foreign investment in Canadian securities totalled $10.0 billion, led by acquisitions of Canadian bonds. As a result, international transactions in securities generated a net outflow of funds from the Canadian economy of $8.7 billion.
Canadian investors continue to acquire foreign securities
Canadian investors acquired $18.6 billion in foreign securities in April, a twelfth consecutive month of investment, for a total of $140.9 billion since May 2020. Investment activity in April was led by acquisitions of US securities.
Canadian investment in foreign bonds was $9.7 billion in April. Acquisitions of US corporate bonds amounted to an unprecedented $5.0 billion, led by purchases of Canadian dollar denominated instruments issued by American financial corporations. In addition, Canadian investors bought $2.0 billion in US government bonds and $2.8 billion in non-US foreign bonds, mainly government bonds. In April, US long-term interest rates reached their highest levels since January 2020.
Canadian investors acquired $8.5 billion of foreign shares in April, continuing a string of investment that started in April 2020. The activity over the month targeted US shares, with purchases of $5.4 billion, mainly shares issued by large capitalization technology firms. US share prices, as measured by the Standard and Poor's 500 composite index, rose 5.2% to reach an all-time high by the end of April. Meanwhile, Canadian investors purchased $3.1 billion of non-US foreign shares in April, after buying $3.8 billion in March.
Foreign investment in Canadian securities focuses on government bonds
Foreign investors acquired $10.0 billion in Canadian securities in April, their ninth consecutive monthly net purchase for a total of $63.9 billion. Foreign investment over the month targeted government bonds, moderated by retirements of private corporate bonds. By comparison, acquisitions of equity securities accounted for the bulk of the foreign investment in the previous four months.
Overall, non-resident investors added $5.5 billion in Canadian bonds to their holdings in April, following a $7.9 billion divestment in March. Foreign investment in federal government bonds amounted to $8.4 billion, the largest investment in one year. This followed four consecutive months of divestment totalling $12.8 billion. In addition, foreign investors purchased $3.9 billion of provincial government bonds, led by new issues of US dollar denominated instruments. By contrast, foreign holdings of private corporate bonds were down by $5.8 billion in April, following a decline of $6.6 billion in March. Retirements of bonds from the banking sector led the activity in both months.
Canadian long-term interest rates fell slightly in April, after an upward trend that began in October 2020. The Canadian dollar exchanged for 81.4 US cents at the end of April, its highest level in six years.
Foreign investment in Canadian equity securities totalled $2.8 billion in April, the lowest amount since October 2020. This activity was down considerably from an average monthly investment of $7.5 billion observed in the previous five months. Foreign investment in April focused on shares in the industry of management of companies and enterprises, and to a lesser extent, on shares of the manufacturing industry. Canadian share prices, as measured by the Standard and Poor's/Toronto Stock Exchange composite index, rose 2.2% to end April with record high levels.
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 international accounts.
Equity and investment fund shares include common and preferred equities, as well as units or shares of investment funds. For the sake of brevity, the terms "shares" and "equity and investment fund shares" have the same meaning.
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.
Data on Canada's international transactions in securities for May will be released on July 16, 2021.
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.
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