Canada's international transactions in securities, June 2018
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Released: 2018-08-17
Foreign investment in Canadian securities totalled $11.5 billion in June, up from $3.0 billion in May. At the same time, Canadian investment in foreign securities increased to $11.3 billion, the largest investment since January 2018.
As a result, international transactions in securities generated a net inflow of funds of $256 million in the Canadian economy in June, for a total of $7.6 billion in the second quarter.
Foreign investment in Canadian bonds continues
Foreign investment in Canadian securities totalled $11.5 billion in June and mainly targeted the Canadian bond market. For the first half of the year, foreign purchases of Canadian securities totalled $43.7 billion, compared with $98.2 billion for the same period in 2017.
Chart 1
Foreign investment in Canadian securities
Non-resident investment in Canadian bonds reached $11.7 billion in June, the highest investment since November 2017. The activity in June reflected strong foreign purchases of corporate bonds, moderated by sales of government bonds. New issues of Canadian private corporate bonds placed in foreign markets, largely denominated in foreign currencies, led the investment activity. The divestment in government bonds was mainly in provincial and, to a lesser extent, federal government bonds. Canadian long-term interest rates were down by 19 basis points and the Canadian dollar depreciated against its US counterpart by 1.7 US cents in June.
Foreign investors reduced their holdings of Canadian money market instruments by $1.7 billion in June, a third consecutive monthly decline. A divestment in government business enterprise paper contributed to the reduction in the month. Canadian short-term interest rates were down by four basis points in June.
Activity in the Canadian equity market resulted in a foreign investment of $1.5 billion in June, following a $2.8 billion divestment in May. Canadian stock prices rose by 1.4% in June. Foreign investors increased their holdings of Canadian shares by $6.7 billion in the first half of the year, compared with $47.1 billion for the same period in 2017. Canadian stock prices edged up in the first half of 2018.
Canadian investment in foreign securities increases
Canadian investment in foreign securities increased to $11.3 billion in June, the largest investment since January 2018. Investors purchased foreign bonds and foreign shares during the month. For the first half of the year, Canadian investment in foreign securities totalled $35.4 billion, compared with $39.7 billion for the same period in 2017. Although the levels were comparable, the composition of the investment was different between the two periods. Canadian investors largely targeted foreign bonds in the first half of 2018, as opposed to foreign shares in 2017.
Chart 2
Canadian investment in foreign securities
Canadian investment in foreign debt securities totalled $7.3 billion in June. Acquisitions of non-US foreign bonds and US Treasury bonds were the main contributors to the investment activity. US long-term interest rates were down by seven basis points and US short-term rates increased slightly in the month.
Canadian investment in foreign equities rebounded to reach $4.0 billion in June, after three straight months of divestment. Canadian investors targeted both US and non-US shares. US stock prices edged up in the 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, which are classified as foreign direct investment in the international accounts.
Equity and investment fund shares include common and preferred equities, as well as units/shares of investment funds.
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 July will be released on September 17.
Products
The Methodological Guide: Canadian System of Macroeconomic Accounts (13-607-X) is available.
The User Guide: Canadian System of Macroeconomic Accounts (13-606-G) is also available. This publication will be regularly updated to maintain its relevance.
The updated Canada and the World Statistics Hub (13-609-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.
Contact information
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To enquire about the concepts, methods or data quality of this release, contact Éric Simard (613-219-5932; eric.simard@canada.ca), International Accounts and Trade Division.
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