Canada’s International Transactions In Securities, August 2015

Foreign investors added $3.1 billion of Canadian securities to their holdings in August, after a $10.1 billion divestment in July. At the same time, Canadian investment in foreign securities resumed with acquisitions totalling $8.7 billion, mainly US securities.

Foreign investors acquire Canadian debt securities and sell equities

Foreign investors added $3.1 billion of Canadian securities to their holdings in August. The activity during the month was all in the form of debt securities, as non-residents reduced their exposure to Canadian stocks for the third time in four months.

Foreign acquisitions of Canadian bonds amounted to $5.6 billion, mainly federal government and federal government business enterprise bonds. Albeit small, foreign investors continued to reduce their exposure to provincial government bonds in August with a seventh consecutive monthly divestment in these instruments.

Net cross-border transactions in the Canadian money market were subdued in August, with foreign investors acquiring $249 million worth of these instruments. Foreign acquisitions of $2.3 billion of federal Treasury bills were largely offset by a reduction in holdings of Canadian corporate paper. Both short- and long-term interest rates in Canada were down, while the Canadian dollar depreciated slightly against its US counterpart in August.

Foreign investors reduced their holdings of Canadian shares by $2.7 billion in August, following a $9.7 billion divestment in July. This divestment during the month resulted from sales on the secondary market. The Canadian stock market was down by 4.2% during the month, the largest decline in 11 months.

Canadian acquisitions of foreign securities resume

Canadian investment in foreign securities resumed in August with acquisitions totalling $8.7 billion. This activity followed a slight divestment in July. US securities accounted for most of the acquisitions during the month.

Canadian investment in foreign debt securities totalled $2.9 billion in August. Canadians purchased $2.6 billion of US corporate bonds, marking the highest such activity since March 2007. Holdings of US Government bonds were up by $2.5 billion, following a $4.0 billion investment in July. A divestment in non-US foreign bonds moderated the overall acquisitions during the month. US long-term interest rates declined by 15 basis points in August.

Canadian investment in foreign equities was $5.8 billion in August, the largest since July 2014. This investment included both US and non-US foreign shares. Canadian acquisitions of US equities were the highest in 2015 at $3.2 billion, at the same time as a sizable decline in US stock prices.

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell