Foreign investors reduced their holdings of Canadian securities by $17.5 billion in June, the largest divestment since December 2018. Meanwhile, Canadian investors reduced their holdings of foreign securities by $12.3 billion , following a small investment in May.
As a result, international transactions in securities generated a net outflow of $5.2 billion from the Canadian economy in June. Nevertheless, since the beginning of the year, these transactions have generated considerable net inflows of $110.7 billion.
Canada’s international transactions in securities
First foreign divestment in Canadian securities in almost two years
Foreign investors reduced their exposure to Canadian securities by $17.5 billion in June, mainly due to equity sales. This was the first foreign divestment in Canadian securities since July 2020. For the first half of the year, foreign investment in Canadian securities reached $82.0 billion, compared to $69.2 billion for the same period in 2021.
Non-resident investors reduced their exposure to Canadian equities by $12.6 billion in June, after divesting $1.2 billion the previous month. Most of the foreign divestment has been in banking sector stocks. Canadian stock prices, as measured by the Standard and Poor’s/TSX composite index, fell 9.0% in June, the largest percentage decline since March 2020. In comparison, stock prices for Canadian banks, as measured by the Standard and Poor’s/TSX Banking Sector Index, fell 11.0%.
Foreign investment in Canadian stocks and investment fund shares
Foreign investors reduced their holdings of Canadian debt securities by $5.0 billion in June, the first divestment since March 2021. The divestment was mainly in government instruments (-$15.7 billion) and corporates from the federal government (-$8.6 billion). Foreign acquisitions of Canadian private corporate debt securities moderated the overall decline for the month. In June, Canadian long-term interest rates reached their highest level since March 2011. Meanwhile, the Canadian dollar appreciated against the major foreign currencies, with the exception of the US dollar.
Foreign investment in Canadian debt securities, by sector of issuer
Canadian investors sell US stocks
Canadian investors reduced their holdings of foreign securities by $12.3 billion in June, a fourth monthly divestment in 2022. The reduction during the month was mainly due to sales of U.S. stocks and money market instruments American. For the first half of the year, Canadian divestment in foreign securities totaled $28.7 billion, compared to an investment of $93.6 billion for the same period in 2021.
Canadian investors reduced their exposure to foreign equity markets by $10.3 billion in June. Divestment activity, led by Canadian pension funds, was primarily in US equities. Sales of these instruments reached $9.6 billion in June. US stock prices, as measured by the Standard & Poor’s 500 composite index, fell 8.4% in June. Meanwhile, Canadian investors reduced their exposure to non-US foreign stocks by $703 million.
Canadian investments in foreign equities and mutual fund shares
Meanwhile, Canadian investors sold $2.0 billion worth of foreign debt securities in June, their first divestment since January 2021. In June, U.S. long-term interest rates rose and fell. reached their highest level since October 2018.
Notice to readers
The data series on international transactions in securities covers portfolio transactions in stocks and shares of investment funds, bonds and money market instruments for Canadian and foreign issues. This activity excludes equity and debt transactions between affiliated companies. These are classified as foreign direct investment in the international accounts.
Equity and investment fund shares include common and preferred stocks as well as units or shares of investment funds. For the sake of brevity, the terms “equities” and “equities and investment fund units” have the same meaning.
Debt securities include bonds and money market instruments.
Obligations have an initial maturity of more than one year.
Money market instruments have an original term to maturity of one year or less.
Government of Canada document includes treasury bills and Canada bills in US dollars.
All values in this release are net transactions, unless otherwise indicated.
Data on Canada’s international transactions in securities for July will be released on September 16.
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 relations with the world using interactive charts and tables. This product provides easy access to trade, investment, employment and travel information between Canada and a number of countries including the United States, United Kingdom, Mexico, China and Japan.
Complementing this release is the “Securities Statistics” data visualization product, which is part of the Statistics Canada – Data visualization products (71-607-X), is available online.
The User Guide: Canadian System of Macroeconomic Accounts (13-606-G) is also available.
The Methodological Guide: Canadian System of Macroeconomic Accounts (13-607-X) is available.
For more information, or to inquire about the concepts, methods, or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; [email protected]) or Media Relations ([email protected]).