Canada: International Transactions in Securities, May 2017

Foreign investment in Canadian securities amounted to $29.5 billion in May, mainly purchases of government debt instruments. At the same time, Canadian investors increased their holdings of foreign securities by $4.4 billion, led by investments in US debt instruments.

As a result, international transactions in securities generated a net inflow of funds of $25.1 billion in the Canadian economy, a second consecutive large monthly net inflow of funds.

Foreign investment in Canadian securities up significantly

Foreign investment in Canadian securities reached $29.5 billion in May, up significantly from $10.6 billion in April. Foreign investors mainly added government debt securities to their holdings and, to a lesser extent, equities. Since the beginning of the year, foreign acquisitions of Canadian securities have totalled $100.6 billion, compared with $82.0 billion for the same period in 2016.

Non-resident investment in Canadian bonds was $20.8 billion in May, the largest investment since March 2015. Record acquisitions of provincial government bonds, largely new issues denominated in foreign currencies, were the main contributors to investment activity in May. In addition, non-resident investors purchased $6.4 billion of corporate bonds and $4.3 billion of federal government bonds. Canadian long-term interest rates were down by seven basis points, a fourth straight monthly decline.

Foreign investment in the Canadian money market was $1.4 billion in May. Foreign investors acquired a record $6.5 billion of federal government paper while they reduced their exposure to corporate paper. Canadian short-term interest rates were unchanged and the Canadian dollar appreciated against its US counterpart by less than one US cent.

Foreign investment in Canadian equities amounted to $7.2 billion in May. Foreign purchases on the secondary market accounted for the bulk of this activity. Canadian stock prices were down by 1.5%.

Canadian acquisitions of foreign securities focus on US debt instruments

Canadian investors resumed their acquisitions of foreign securities by adding $4.4 billion to their holdings in May, led by investment in US debt instruments.

Canadian investors acquired $5.9 billion of foreign debt securities in May, the first investment in three months and the largest since December 2015. Record acquisitions of US Treasury bills and US corporate bonds were moderated by sales of US Treasury bonds in May. US long-term interest rates were unchanged and short-term interest rates increased by nine basis points.

Canadian investors reduced their holdings of foreign equities by $1.5 billion in May, a second consecutive monthly divestment. Sales of US shares were moderated by acquisitions of non-US foreign shares. US stock prices increased by 1.2%.

StatsCanada

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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