Foreign investment in Canadian securities resumed in April as non-residents added C$10.1B to their holdings, marking the highest such acquisition in a year, while Canadian investment in foreign securities slowed to C$2.5B: Statistics Canada

OTTAWA , June 16, 2014 (press release) – Foreign investment in Canadian securities resumed in April as non-residents added $10.1 billion to their holdings, marking the highest such acquisition in a year. Meanwhile, Canadian investment in foreign securities slowed to $2.5 billion.

Foreign investment in Canadian debt securities resumes

Foreign investment in Canadian debt securities was $6.5 billion in April, following a $4.3 billion divestment in March. Non-resident investors continued to shift their portfolios in favour of Canadian corporate debt securities, and reduced their holdings of government debt instruments for a ninth straight month.

Chart 1 
Foreign investment in Canadian securities

Chart description: Foreign investment in Canadian securities

CSV version of chart 1

Foreign investment in the Canadian money market amounted to $4.1 billion, following a $6.1 billion divestment in the previous month. The inflows in April were led by foreign purchases of provincial government paper. Non-resident investors also acquired federal government paper following six months of divestment in these instruments, largely retirements. Canadian short-term interest rates edged up by six basis points in April.

Foreign acquisitions of Canadian bonds amounted to $2.4 billion and reflected purchases of new private corporate bonds ($6.5 billion), which were strong for a second consecutive month. This investment was partially offset by a $3.9 billion reduction in foreign holdings of federal government bonds in April. Over the last three months, foreign divestments of federal government bonds totalled $9.0 billion. Canadian long-term interest rates were down slightly in April and the Canadian dollar appreciated 0.8 US cent against the US dollar.

Foreign investors add to their holdings of Canadian equities

Foreign investors acquired $3.6 billion of Canadian shares in April, all secondary market purchases. This marked an eighth consecutive month of such investment in the domestic equity market. Canadian stock prices continued their upward trend, gaining 2.2% in April to reach their highest level since May 2008.

Canadian investors acquire foreign equities and sell foreign debt

Canadian investors' acquisitions of foreign equities amounted to $3.5 billion in April as investment in US shares exceeded that of non-US foreign shares for the first time in three months. The US stock market, as measured by the Standard and Poor's 500 index, was up slightly (+0.6%) at month-end.

Chart 2 
Canadian investment in foreign securities

Chart description: Canadian investment in foreign securities

CSV version of chart 2

Canadian investors repatriated $1.0 billion of funds from foreign debt markets in April. Canadian holdings of US Treasury securities were down by $3.7 billion, the largest divestment since January 2013. This activity was moderated by acquisitions of US corporate debt securities, led by bonds denominated in Canadian dollars. Both long and short-term US interest rates were down in April.

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