Canada's international transactions in securities, December 2024
Released: 2025-02-17
Foreign investors increased their exposure to Canadian securities by $14.4 billion in December, mainly in debt securities. Meanwhile, Canadian investors acquired $3.8 billion of foreign securities, down from a $17.6 billion investment in November.
As a result, international transactions in securities generated a net inflow of funds of $10.6 billion in the Canadian economy in December. For the whole year of 2024, cross-border portfolio investment resulted in a net inflow of funds in the Canadian economy of $81.1 billion.
Chart 1
Canada's international transactions in securities
Strong foreign investment in federal government bonds
Foreign acquisitions of Canadian securities totalled $14.4 billion in December, driven by a $13.8 billion investment in debt securities. In December, non-resident investors increased their exposure to federal government bonds by $13.9 billion, the highest investment since April 2020. In contrast, foreign investors reduced their exposure to Canadian corporate bonds by $8.2 billion in December 2024. This was the largest divestment since July 2020 and was mainly in federal government enterprises bonds.
Foreign investment in Canadian money market instruments slowed from a strong $19.5 billion in November 2024 to $6.7 billion in December. The investment in December mainly targeted private corporate paper (+$5.4 billion). Meanwhile, investors reduced their holdings of government of Canada paper by $0.2 billion following an unprecedented investment of $15.3 billion in November.
The investment activity in December occurred against the backdrop of a reduction of the Bank of Canada's policy rate, from 3.75% to 3.25%, and the depreciation of the Canadian dollar against the US dollar.
Chart 2
Foreign investment in Canadian debt securities, by sector of issuer
Foreign investment in Canadian portfolio shares reached $0.5 billion in December, after a notable divestment of $8.6 billion in November. On an industry basis, the foreign investment in December was mainly in shares of the manufacturing industry and the management of companies and enterprises industry. Canadian share prices, as measured by the Standard & Poor's (S&P)/Toronto Stock Exchange composite index, decreased by 3.6% in December.
Canadian investment in foreign securities slows down
Canadian investors acquired $3.8 billion of foreign securities in December, down from a significant investment of $17.6 billion in November. The slowdown in activity was mainly in foreign debt securities.
Canadian investors sold $1.5 billion of foreign debt securities in December, following two consecutive months of notable investment totalling $24.9 billion. The activity in December was led by a $4.1 billion divestment in US government bonds, the largest divestment since May 2023.
Chart 3
Canadian investment in foreign bonds
Meanwhile, Canadian investors increased their exposure to foreign equities by $5.3 billion in December 2024, largely in US shares (+$4.4 billion).
Strong cross-border portfolio investments in 2024
Following increases in the previous two years, central banks' policy rates in major economies such as the United States, the United Kingdom and Canada declined in 2024. Specifically, the Bank of Canada policy rate went down from 5.0% to 3.25% and remained lower than the US rate during the year. At the same time, the Canadian dollar depreciated against most major currencies and ended the year down against the US dollar. Equity prices in global stock markets, including the United States and Canada, were up in 2024.
On an annual basis, foreign investors added $192.9 billion of Canadian securities to their holdings in 2024, following acquisitions totalling $32.8 billion in 2023. In 2024, foreign acquisitions focused on federal government bonds (+$100.3 billion) and private corporations' bonds (+$78.9 billion). In contrast, foreign investors reduced their holdings of Canadian portfolio shares by $7.6 billion in 2024, after a significant divestment of $48.3 billion in 2023. The reduction in 2024 reflected foreign acquisitions on the secondary market (+$7.9 billion) being more than offset by retirements, largely resulting from merger and acquisition activities.
Canadian share prices, as measured by the S&P/Toronto Stock Exchange composite index, were up by 18.0% in 2024, following a lower increase of 8.1% in 2023.
Chart 4
Foreign investment in Canadian securities by type of instrument, annual
At the same time, Canadian investors increased their exposure to foreign securities by $111.7 billion in 2024, following an investment of $53.6 billion in 2023. Canadian acquisitions of foreign bonds reached $86.9 billion in 2024, compared with $33.4 billion in 2023. Acquisitions in 2024 mostly targeted non-US foreign bonds ($45.9 billion). Meanwhile, Canadian investors increased their exposure to foreign equities by $26.3 billion, compared with $16.3 billion in 2023. The bulk of the activity in 2024 targeted US shares, with purchases totalling $41.8 billion, mainly in shares issued by large capitalization technology firms.
US share prices, as measured by the S&P 500 composite index, were up by 23.3% in 2024, compared with a 24.2% increase in 2023.
Chart 5
Canadian investment in foreign securities, by type of instrument, annual
Focus on Canada and the United States
Over the past five years, cross-border transactions in securities have grown significantly, reflecting the increased exposure of Canadian investors to international financial markets, notably to the US market.
Canadian investment in foreign securities amounted to $361.6 billion from 2020 to 2024, with two-thirds ($243.1 billion) of these acquisitions targeting US securities. This investment was evenly split between equities ($122.9 billion) and debt securities ($120.2 billion), with $51.0 billion being in US Treasury bonds.
In comparison, following the global financial crisis, Canadian acquisitions of US securities totalled $228.0 billion from 2010 to 2019, with there being almost equivalent amounts in equity ($117.1 billion) and debt ($110.9 billion) instruments. However, the composition of acquisitions of US bonds differed significantly from the period 2020 to 2024, with there being marginal investments in US Treasury bonds ($2.6 billion).
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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 January 2025 will be released on March 17.
Products
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.
Contact information
For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; infostats@statcan.gc.ca) or Media Relations (statcan.mediahotline-ligneinfomedias.statcan@statcan.gc.ca).
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