Canadian investors reduced their holdings of foreign securities by C$24.0B in March, mainly sales of foreign shares; non-residents added C$30.6B of Canadian securities to their holdings, mainly in the form of private corporate bonds: Statistics Canada

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OTTAWA , May 17, 2022 (press release) –

Foreign investors acquired $46.9 billion of Canadian securities in March, the largest investment since April 2020. At the same time, Canadian investors reduced their holdings of foreign securities by $24.0 billion, following a $9.9 billion divestment in February.

As a result, international transactions in securities generated an unprecedented net inflow of funds of $70.9 billion in the Canadian economy in March. The inflow of funds totalled $119.7 billion in the first quarter, by far the largest amount ever observed since data have been compiled. This activity occurred against the backdrop of rising interest rates and prices and uncertainty related to the global geopolitical situation.

Chart 1: Canada's international transactions in securities

Chart 1: Canada's international transactions in securities

Foreign investment in Canadian securities focuses on corporate instruments
Foreign investment in Canadian securities reached $46.9 billion in March, the largest investment since April 2020. Foreign investors mostly added Canadian corporate instruments to their holdings in the month. For the first quarter of 2022, foreign investment in Canadian securities totalled $74.5 billion, compared with $16.1 billion for the same period in 2021.

Foreign acquisitions of Canadian bonds amounted to $30.3 billion in March. Non-resident investors acquired $30.6 billion of private corporate bonds, adding to purchases of $37.2 billion recorded in the first two months of the year. The activity in March mainly targeted new bonds denominated in foreign currencies and issued by Canadian chartered banks. In addition, foreign investors increased their holdings of federal government bonds by $7.0 billion. In March, Canadian long-term interest rates have reached the highest levels since October 2018.

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

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

Foreign investment in Canadian shares amounted to $14.1 billion in March, led by shares of the manufacturing, as well as the trade and transportation industries. Canadian share prices, as measured by the Standard and Poor's/Toronto Stock Exchange composite index, went up 3.6% in March to reach a record-high level.

Chart 3: Foreign investment in Canadian equity and investment fund shares, by type of transaction

Chart 3: Foreign investment in Canadian equity and investment fund shares, by type of transaction

Largest Canadian divestment in foreign securities since March 2020
Canadian investors reduced their holdings of foreign securities by $24.0 billion in March, the largest decline since March 2020. The reduction in the month was mainly because of sales of foreign shares and was moderated by acquisitions of US bonds. For the first quarter of 2022, Canadian divestment in foreign securities totalled $45.3 billion. This followed a period of strong demand for these assets with a record investment of $165.5 billion in 2021.

Canadian investors reduced their exposure to foreign equity markets by $27.6 billion in March. The divestment was mainly in US shares with sales totalling $20.8 billion, notably shares of large capitalization technology firms. Meanwhile, Canadian investors reduced their exposure to non-US foreign shares by $6.8 billion, the largest divestment since January 2016.

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

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

On the other hand, Canadian investors acquired $3.6 billion of foreign debt securities in March, mainly in the form of bonds. This activity was led by purchases of both US government bonds (+$4.9 billion) and US corporate bonds (+$2.8 billion) and was moderated by sales of non-US foreign bonds (-$4.4 billion). In March, US long-term interest rates reached their highest levels since May 2019.

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 April 2022 will be released on June 17, 2022.

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.​​​​​​​

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