Canadian investors reduced their holdings of foreign securities by C$9.7B in February, mainly sales of US shares; non-residents added C$7.4B of Canadian securities to their holdings, mainly in the form of corporate bonds: Statistics Canada

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OTTAWA , April 19, 2022 (press release) –

Canadian investors reduced their holdings of foreign securities by $9.7 billion in February, following an $11.4 billion divestment in January. At the same time, foreign investors acquired $7.4 billion of Canadian securities, mainly in the form of corporate bonds.

As a result, international transactions in securities generated a net inflow of funds of $17.1 billion in the Canadian economy in February.

Chart 1: Canada's international transactions in securities

Chart 1: Canada's international transactions in securities

Canadian divestment in US equity securities continues
Canadian investors reduced their holdings of foreign securities by $9.7 billion in February for a second consecutive month of large divestment. The reduction was mainly because of sales of US shares and was moderated by acquisitions of US corporate debt securities.

Canadian investors continued to reduce their exposure to foreign equity securities, disposing of $11.5 billion in February, following a divestment of $16.7 billion in January. Investors sold $9.4 billion worth of US shares, largely investment fund shares tracking broad stock market indexes. US stock prices, as measured by the Standard and Poor's 500 composite index, were down by 3.1% in February, following a decrease of 5.3% in the previous month.

Chart 2: Canadian investment in foreign equity and investment fund shares

Chart 2: Canadian investment in foreign equity and investment fund shares

By contrast, Canadian investors acquired $1.8 billion of foreign debt securities in February. The activity was led by purchases of US corporate debt securities and was moderated by sales of US government bonds. In February, US long-term interest rates reached their highest levels since July 2019.

Foreign investment in Canadian securities focuses on corporate bonds
Foreign acquisitions of Canadian securities amounted to $7.4 billion in February, the lowest investment since March 2021. The activity in the month of February mainly targeted corporate bonds and was moderated by a reduction in holdings of government debt securities.

Foreign investment in Canadian corporate bonds reached $18.2 billion in February, the largest investment since September 2021. Acquisitions of new bonds from both public and private financial corporations, largely denominated in US dollars and euros, contributed to the investment activity. Meanwhile, non-resident investors reduced their exposure to federal money market instruments by a record $9.1 billion, after investments totalling $10.3 billion in the previous three months. The divestment activity was driven by retirements of these instruments.

Chart 3: Foreign investment in Canadian debt securities, by sector of issuer

Chart 3: Foreign investment in Canadian debt securities, by sector of issuer

In February, short- and long-term Canadian interest rates were both up, with long-term rates rising to their highest level since December 2018. Meanwhile, the Canadian dollar appreciated against the US dollar and the euro.

Foreign investors reduced their exposure to Canadian equities by $1.0 billion in February, after divesting $641 million in January. In February, retirements of Canadian shares were again moderated by foreign acquisitions on the secondary market. Canadian share prices, as measured by the Standard and Poor's / Toronto Stock Exchange composite index, edged up in February after a slight decline the previous month.

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 March 2022 will be released on May 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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