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Released: 2022-01-17
Foreign investors acquired $30.1 billion in Canadian securities in November, the largest investment since April 2020. At the same time, Canadian investors increased their holdings of foreign securities by $17.5 billion, led by purchases of U.S shares.
As a result, international transactions in securities generated $12.6 billion in net inflows into the Canadian economy in November.
Chart 1
Canada’s International Securities Transactions
The largest foreign investment in Canadian securities since April 2020
Foreign acquisitions of Canadian securities totaled $30.1 billion in November, the largest investment since April 2020, during the first wave of the COVID-19 pandemic.-19 pandemic in Canada. In November, foreign investment focused on federal government debt securities and to a lesser extent on private company debt securities. A foreign divestment in Canadian equities dampened overall acquisition activity in the month.
Foreign investors added $31.4 billion in debt to their portfolios in November, up from a $20.4 billion investment in October. This activity mainly reflected the purchases of federal government debt securities, both bonds ($8.6 billion) and money market instruments ($6.5 billion). In addition, investors added $9.8 billion in private corporate debt to their holdings in November, a seventh consecutive monthly investment, for a total of $87.6 billion. In November, Canadian long-term interest rates rose to their highest level since February 2019. Meanwhile, the Canadian dollar depreciated against the U.S dollars.
Chart 2
Foreign Investments in Canadian Debt Securities, by Issuer Sector
Non-resident investors reduced their aggregate exposure to the Canadian stock market by $1.3 billion in November, after three consecutive months of investment. The decline reflected the retirement of Canadian portfolio stocks as a result of cross-border M&A activity. Foreign purchases of Canadian equities in the secondary market, led by shares of chartered banks, moderated the overall decline in the month. Canadian stock prices, as measured by the composite Standard and Poor’s/TSX index, fell 1.8% in November after hitting a record high in October.
Restoring Canadian Investment in Foreign Securities
Canadian acquisitions of foreign securities reached $17.5 billion in November, compared with an investment of $5.4 billion in October and comparable to the average investment in August and September. Investing activity in November was led by acquisitions of U.S shares.
Canadian investors added $7.4 billion to U.S shares to their holdings in November, after investing $652 million in October. Activity in November focused on shares of large-cap technology companies and shares of investment funds that tracked broad market indices. U.S stock prices, as measured by the composite Standard and Poor’s 500 index, fell 0.8% in November. In addition, Canadian investors purchased $4.0 billion worth of non-U.S foreign equities, after a $2.5 billion divestiture in October. The November investment was mainly focused on shares of British companies.
Chart 3
Canadian Foreign Equity Investments and Investment Fund Shares
Meanwhile, Canadian investors have added $6.1 billion in foreign debt securities to their portfolios, primarily in U.S dollar-denominated instruments. This activity represented the 10th consecutive month of investment in foreign debt securities totaling $47.4 billion. Investments in November were mainly focused on U.S corporate bonds ($2.8 billion) and U.S government bonds ($1.6 billion). In November, Canadian long-term interest rates exceeded their U.S counterpart with the largest appreciation since August 2011.
Chart 4
Canadian Foreign Bond Investment
Note to readers
The dataset on international securities transactions includes portfolio transactions in equities and shares of mutual funds, bonds and money market instruments for both Canadian and foreign issues. This activity excludes transactions in equity and debt instruments between affiliates, which are classified as foreign direct investment in international accounts.
Shares and shares in mutual funds include common and preferred stock, as well as units or shares of mutual funds. For brevity, the terms “stocks” and “stock and mutual fund shares” have the same meaning.
debt securities include bonds and money market instruments.
bonds have an original maturity of more than one year.
Money Market Instruments have an original maturity of one year or less.
Government of Canada Paper includes treasury bills and Canadian dollar bills.
All values in this press release are net transactions unless otherwise stated.
Next issue
Data on Canada’s international securities transactions for December 2021 will be released on February 17, 2022.
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.
The data visualization product ‘Securities Statistics’, part of the series Statistics Canada – Data Visualization Products (71-607-X), is available online.
The 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 charts 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, United Kingdom, Mexico, China and Japan.
Contact details
For more information or to inquire about the concepts, methods or data quality of this release, please contact us (free) 1-800-263-1136; 514-283-8300; [email protected]) or Media Relations ([email protected]).
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Sources 2/ https://www150.statcan.gc.ca/n1/daily-quotidien/220117/dq220117a-eng.htm The mention sources can contact us to remove/changing this article |
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