Canada: International transactions in securities, August 2017

Foreign investment in Canadian securities totalled $9.8 billion in August, down from $24.0 billion in July. At the same time, Canadian investors increased their holdings of foreign securities by $12.0 billion, led by purchases of US corporate instruments.

As a result, international transactions in securities generated a net outflow of funds of $2.2 billion from the Canadian economy in the month.

Foreign investment in Canadian securities slows

Foreign acquisitions of Canadian securities totalled $9.8 billion in August, below the monthly average investment of $17.7 billion observed from January to July. The activity in August was concentrated in the Canadian debt market.

Foreign investment in Canadian bonds amounted to $8.2 billion in August, mainly secondary market purchases of government instruments denominated in Canadian dollars. This followed an investment of $23.8 billion in July. Foreign investors acquired $4.3 billion of federal government bonds and $1.8 billion of provincial government bonds in August. Foreign investors also added private corporate bonds to their holdings in the month, but at a much slower pace than in the previous two months. Canadian long-term interest rates were down by 12 basis points in August following a significant increase in July.

Non-resident investors resumed their acquisitions of Canadian money market instruments by adding $1.5 billion to their holdings in August, following two straight months of divestment. Foreign acquisitions of corporate and provincial government paper were moderated by a divestment in Canadian Treasury bills during the month. Canadian short-term interest rates edged down and the Canadian dollar depreciated slightly against its US counterpart in the month.

Foreign investment in Canadian equities totalled $232 million in August, down from the previous month. This was the fourth consecutive month of foreign acquisitions of Canadian shares. Canadian stock prices edged up in the month.

Canadian investors buy US securities

Canadian investors resumed their acquisitions of foreign securities by adding $12.0 billion to their holdings in August, led by purchases of US corporate instruments. This followed a divestment of $1.8 billion in July.

Canadian investment in foreign bonds increased in August to reach $4.9 billion, the highest investment since February 2016. The bulk of the activity in August was in US corporate bonds. Acquisitions of US Treasury bonds and non-US foreign bonds also contributed to the increase. US long-term interest rates were down by 11 basis points in the month.

Canadian investment in foreign equities rebounded to reach $7.2 billion in August, after a $2.9 billion divestment in July. The increase was largely due to acquisitions of US shares. US stock prices edged up in the month.

StatsCanada

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.