Canadian investors reduced their holdings of foreign securities by C$1.4B in August, mainly US corporate securities; non-residents added C$22.0B of Canadian securities to their holdings, led by acquisitions of bonds: Statistics Canada

Sample article from our Housing & Economy

OTTAWA , October 18, 2022 (press release) –

Foreign investment in Canadian securities growth accelerated in August and reached $22.0 billion, the largest investment since April. Meanwhile, Canadian investors reduced their holdings of foreign securities by $1.4 billion, after buying $4.3 billion in July.

As a result, international transactions in securities generated a net inflow of funds of $23.4 billion in the Canadian economy in August, for a total of $145.9 billion in 2022.

Chart 1: Canada's international transactions in securities

Strong foreign investment in Canadian bonds
Non-residents added $22.0 billion of Canadian securities to their portfolios in August, led by acquisitions of bonds. Overall, the foreign investment in Canadian bonds totalled $20.1 billion and mainly targeted new bonds of Canadian chartered banks denominated in US dollars and euros. In addition, foreign holdings of bonds issued by the federal government ($6.1 billion) and by their enterprises ($5.1 billion) were up; they were mainly bonds that mature in three years or less.

In August, Canadian short-term interest rates rose to the highest levels since December 2007, and long-term interest rates rose 25 basis points. Meanwhile, the Canadian dollar depreciated against both the US dollar and the euro.

Chart 2: Foreign investment in Canadian bonds, by sector of issuer

Foreign investors reduced their holdings of Canadian shares by a marginal $15 million in August. This decrease followed four consecutive months of larger divestment totalling $16.6 billion. In August, non-residents disposed of shares of the manufacturing industry and the energy and mining industries. This activity was moderated by foreign acquisitions of shares of Canadian chartered banks, as well as shares of firms of the trade and transportation industries. Canadian share prices, as measured by the Standard and Poor's/Toronto Stock Exchange composite index, went down by 1.8% in August.

Chart 3: Foreign investment in Canadian equity and investment fund shares

Canadian divestment in foreign shares continues
Canadian investors reduced their holdings of foreign securities by $1.4 billion in August, after investing $4.3 billion in July. The reduction in August was mainly due to sales of US corporate securities and was moderated by acquisitions of non-US foreign bonds.

Canadian investors reduced their exposure to foreign equity securities by $2.3 billion in August, resulting in a seventh month of divestment in 2022. From the beginning of 2022 to August, investors sold $57.6 billion of foreign shares compared with an investment of $71.2 billion over the same period in 2021. Canadian investors disposed of $1.4 billion worth of US shares in August, largely investment fund shares tracking broad stock market indices. US stock prices, as measured by the Standard and Poor's/Toronto Stock Exchange composite index, were down by 4.2% in August and by 17.0% since the beginning of 2022.

Chart 4: Canadian investment in foreign equity and investment fund shares

At the same time, Canadian investors acquired $862 million of foreign debt securities. The activity was led by purchases of non-US foreign bonds ($2.0 billion) and was moderated by sales of US corporate bonds ($1.4 billion).

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 September will be released on November 18.

Products
The Canada and the World Statistics Hub (Catalogue number13-609-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 (Catalogue number71-607-X), is available online.

The User Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-606-G) is also available.

The Methodological Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-607-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).

Industry Intelligence Editor's Note: This press release omits select charts and/or marketing language for editorial clarity. Click here to view the full report.

 

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.

More from our Housing & Economy Coverage
See our dashboard in action - schedule an demo
Dan Rivard
Dan Rivard
- VP Market Development -

We offer built-to-order housing & economy coverage for our clients. Contact us for a free consultation.

About Us

We deliver market news & information relevant to your business.

We monitor all your market drivers.

We aggregate, curate, filter and map your specific needs.

We deliver the right information to the right person at the right time.

Our Contacts

1990 S Bundy Dr. Suite #380,
Los Angeles, CA 90025

+1 (310) 553 0008

About Cookies On This Site

We collect data, including through use of cookies and similar technology ("cookies") that enchance the online experience. By clicking "I agree", you agree to our cookies, agree to bound by our Terms of Use, and acknowledge our Privacy Policy. For more information on our data practices and how to exercise your privacy rights, please see our Privacy Policy.