Canada's international transactions in securities, May 2023
Foreign investment in Canadian securities totalled $11.2 billion in May, led by strong foreign purchases of federal government debt securities. Meanwhile, Canadian investors reduced their holdings of foreign securities by $2.8 billion, led by sales of US government debt securities. As a result, international transactions in securities generated a net inflow of funds of $13.9 billion into the Canadian economy in May.
Foreign investment in Canadian securities focuses on federal government debt securities
Foreign acquisitions of Canadian securities continued in May as non-resident investors purchased $11.2 billion worth, after investing $12.8 billion in April. In May, foreign investment targeted federal government debt securities and was moderated by a reduction in foreign holdings of Canadian private corporate instruments.
More precisely, foreign investors increased their exposure to federal government debt securities by $16.9 billion in May, led by a record-high $11.8 billion investment in government of Canada paper. A reduction in foreign holdings of private corporate paper moderated the investment activity in the month. In May, Canadian short-term interest rates were up to reach the highest levels since February 2001.
Foreign investors reduced their holdings of Canadian shares by $4.9 billion in May, a sixth consecutive monthly divestment. Canadian share prices, as measured by the Standard and Poor's/Toronto Stock Exchange composite index, were down by 5.2% in May.
Canadian investors reduce their exposure to US government debt securities
Canadian investors reduced their holdings of foreign securities by $2.8 billion in May, after acquiring $2.4 billion worth in April. In May, the divestment in US government debt securities totalled $5.6 billion, the largest amount since April 2020. This activity was moderated by investments in US corporate bonds ($1.8 billion) and non-US foreign bonds ($1.1 billion) in May 2023. Meanwhile, Canadian investment in foreign shares slowed to $231 million in May compared with $3.5 billion in April.
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. These 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 June will be released on August 17.
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.
As a complement to this release, the data visualization product "Securities statistics," part of the series Statistics Canada – Data Visualization Products (71-607-X), is available online.
The User Guide: Canadian System of Macroeconomic Accounts (13-606-G) is also available.
The Methodological Guide: Canadian System of Macroeconomic Accounts (13-607-X) is available.
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