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

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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