Canada's international transactions in securities, July 2021
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Released: 2021-09-16
Foreign investors acquired $14.2 billion of Canadian securities in July, led by purchases of government debt securities. At the same time, Canadian investors reduced their holdings of foreign securities by $4.7 billion, following a record investment of $28.0 billion in June.
As a result, international transactions in securities generated a net inflow of funds of $18.9 billion in the Canadian economy in July.
Chart 1
Canada's international transactions in securities
Foreign investment in Canadian securities focuses on government debt instruments
Non-resident investors acquired $14.2 billion of Canadian securities in July, a 12th consecutive month of investment in these instruments, for a total of $118.1 billion. Foreign investment targeted government debt securities. A foreign divestment in Canadian equities moderated the overall acquisition activity in the month.
Foreign investors added $13.5 billion of government debt securities to their portfolios in July. This activity largely reflected acquisitions of federal government debt instruments ($8.1 billion) and provincial government bonds ($5.4 billion). In addition, non-resident investors added $6.0 billion of Canadian private corporate bonds to their holdings, mainly foreign currency-denominated instruments of Canadian chartered banks.
Chart 2
Foreign investment in Canadian debt securities, by sector of issuer
In July, Canadian long-term interest rates fell by 14 basis points, the largest decline since April 2020. Meanwhile, the Canadian dollar depreciated against its US counterpart by 0.4 US cents.
Non-resident investors reduced their holdings of Canadian equity securities by $1.1 billion in July, a second divestment in three months. This activity was driven by sales of shares on the secondary market, moderated by new issuances resulting primarily from cross-border mergers and acquisitions. On an industry basis, the reduction targeted shares of Canadian chartered banks. Canadian equity prices, as measured by the Standard and Poor's/TSX composite index, rose 0.6% in July, the lowest increase in six months.
Chart 3
Foreign investment in Canadian equity and investment fund shares, by type of transaction
Canadian investors reduce their exposure to foreign equities
Canadian investors reduced their holdings of foreign securities by $4.7 billion in July, following a record investment of $28.0 billion in June. The divestment activity in the month was mainly in foreign equities, moderated by investment in foreign debt securities.
Canadian investors reduced their exposure to foreign equities by $5.2 billion in July, their first divestment since March 2020, at the onset of the pandemic. Investors sold $3.6 billion of US shares and $1.6 billion of non-US shares in the month. US stock prices, as measured by the Standard and Poor's 500 composite index, were up to record levels by the end of July.
Chart 4
Canadian investment in foreign equity and investment fund shares
On the other hand, Canadian investors acquired $1.1 billion of foreign bonds in July, a sixth consecutive monthly investment. The activity was led by purchases of non-US foreign bonds ($1.9 billion) and US corporate bonds ($1.3 billion). This investment was moderated by sales of $2.1 billion of US government bonds. In July, US long-term interest rates fell to their lowest levels since February.
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.
Next release
Data on Canada's international transactions in securities for August will be released on October 18, 2021.
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.
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