Canada's international transactions in securities, September 2021
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Released: 2021-11-18
Foreign investment in Canadian securities totalled $20.0 billion in September, led by acquisitions of Canadian corporate debt securities. Meanwhile, Canadian investment in foreign securities reached $17.2 billion, mainly purchases of US shares.
As a result, international transactions in securities generated a net inflow of funds of $2.8 billion in the Canadian economy in the month, for a total of $29.3 billion in the third quarter. This was the largest amount since the second quarter of 2020.
Chart 1
Canada's international transactions in securities
Largest foreign investment in Canadian corporate bonds since April 2020
Foreign acquisitions of Canadian securities totalled $20.0 billion in September, a 14th consecutive month of investment in these instruments. Foreign investment targeted private corporation debt securities. A foreign divestment in government debt securities moderated the overall acquisition activity in the month. From January to September 2021, foreign investment in Canadian securities totalled $126.0 billion, compared with $108.7 billion for the same period in 2020.
Non-resident investors added $16.6 billion of Canadian debt securities to their portfolio in September. Foreign acquisitions of corporate bonds reached $26.4 billion, the largest investment since April 2020. New bonds issued by Canadian chartered banks and denominated in foreign currencies accounted for most of the activity. At the same time, foreign investors reduced their holdings of government debt securities by $14.0 billion, their largest divestment on record. The reduction was mainly in federal debt instruments and followed five straight months of significant investments in these instruments. In September, Canadian long-term interest rates continued an upward trend.
Chart 2
Foreign investment in Canadian debt securities, by sector of issuer
Foreign investors purchased $3.5 billion of Canadian equity securities in September, following a $668 million divestment in August. Investors mainly targeted shares of the manufacturing, trade and transportation industries in the month. Canadian share prices, as measured by Standard and Poor's/Toronto Stock Exchange composite index, were down by 2.5% in September, a first monthly decline since January.
Chart 3
Foreign investment in Canadian equity and investment fund shares
Canadian investment in foreign securities accelerates
Canadian acquisitions of foreign securities increased to reach $17.2 billion in September, up from $15.2 billion in August. From January to September 2021, Canadian investment in foreign securities totalled $121.6 billion, compared with a divestment of $1.2 billion for the same period in 2020.
The investment in September mainly targeted foreign shares. Canadian investors added $13.2 billion of US shares to their holdings in the month, following an investment of $9.5 billion in August. Investment activity focused on shares of large capitalization technology firms. US share prices, as measured by the Standard and Poor's 500 composite index, decreased by 4.8%, a first decline since January. In addition, Canadian investors purchased $3.4 billion of non-US foreign shares in the month.
Chart 4
Canadian investment in foreign equity and investment fund shares
Meanwhile, Canadian investors increased their holdings of foreign debt securities by $533 million. This activity was led by acquisitions of non-US foreign debt securities and was moderated by a $2.9 billion divestment in US government debt securities. In September, the Canadian dollar appreciated against most major foreign currencies, while it depreciated against its US counterpart by 0.8 US cent. US long-term interest rates increased in September, after posting continuous declines since May.
Note to readers
Revisions
This release incorporates statistical revisions back to 2018 as part of the regular annual revision cycle of the Canadian System of Macroeconomic Accounts. Revisions reflect the integration of new data sources and benchmark survey data as well as enhanced methodologies. Specifically, updates to federal government debt securities data result from the integration of additional details related to the geographical distribution of investors.
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 October will be released on December 17, 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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