Canada's international transactions in securities, July 2024
Released: 2024-09-18
Foreign investors increased their exposure to Canadian securities by $11.0 billion in July. Meanwhile, Canadian acquisitions of foreign securities slowed to $4.5 billion, down from a $16.4 billion investment in June.
As a result, international transactions in securities generated a net inflow of funds of $6.5 billion in the Canadian economy in July.
Chart 1
Canada's international transactions in securities
Foreign investment in Canadian securities led by federal government debt instruments
Foreign investors acquired $11.0 billion of Canadian securities in July, marking an increase compared with the $5.2 billion investment made in June. The investment in July focused on debt securities and was mainly in bonds.
Non-resident investors acquired $9.1 billion of Canadian debt securities in July. The investment activity mostly targeted federal government debt securities and private corporate bonds. Foreign investors added $8.8 billion of federal government debt securities to their holdings, mainly acquisitions of bonds (+$6.5 billion). Foreign investment in federal government bonds has reached $59.4 billion so far in 2024, compared with $12.5 billion over the same period in 2023.
Chart 2
Foreign investment in Canadian debt securities, by sector of issuer
Chart 3
Foreign investment in federal government debt securities
In July 2024, foreign investors acquired $6.9 billion of Canadian private corporate bonds. The activity reflected issuances of new bonds by financial institutions and denominated in foreign currencies. On the other hand, non-resident investors reduced their holdings of Canadian corporate paper by $6.3 billion, the largest divestment since January 2024 in these short-term instruments.
In July, the Bank of Canada reduced the policy rate to 4.50% from 4.75%, after reducing it by 25 basis points in June.
Foreign investment in Canadian portfolio shares reached $1.9 billion in July, after two consecutive months of divestment. On an industry basis, the foreign investment was mainly in shares of the trade and transportation, as well as the management of companies and enterprises industries. Canadian share prices, as measured by the Standard & Poor's (S & P)/Toronto Stock Exchange composite index, were up by 5.6% in July.
Canadian investment in foreign securities slows down
Canadian investors acquired $4.5 billion of foreign securities in July, down from a significant investment of $16.4 billion in June. The slowdown in activity targeted both foreign debt securities and foreign shares.
Chart 4
Canadian investment in foreign equity and investment fund shares
In July, Canadian investors added $2.3 billion of debt securities to their holdings, led by a $4.7 billion investment in foreign bonds. Investment in US government bonds went up from $0.7 billion in June to $2.1 billion in July. On a year-to-date basis, Canadian investors have acquired $24.6 billion of US government bonds in 2024, compared with $2.3 billion over the same period in 2023.
On the other hand, Canadian investors reduced their exposure to foreign money market instruments by $2.4 billion in July, after investing a similar amount in June. The divestment in July was mainly in instruments denominated in Japanese yen. The Canadian dollar depreciated against the Japanese yen throughout July.
Canadian acquisitions of foreign shares decreased from $10.0 billion in June to $2.1 billion in July. The lower acquisition was largely the result of a reduction in investment in US equity securities from $12.5 billion in June to $6.4 billion in July.
US share prices, as measured by the S & P 500 composite index, were up by 1.1% in July compared with 3.5% in June.
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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.
Next release
Data on Canada's international transactions in securities for August will be released on October 17.
Products
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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