OTTAWA – According to a Statistics Canada report released this morning, Canadian investors acquired a record $28.1 billion in foreign securities in June, largely purchases of US shares. Meanwhile, non-residents added $19.6 billion in Canadian securities to their holdings, mainly in the form of money market instruments.
As a result, international transactions in securities generated a net outflow of funds from the Canadian economy of $8.5 billion in June, for a total of $30.6 billion in the first half of 2021.
Canadian investment in foreign securities focuses on US shares
Canadian investment in foreign securities amounted to a record $28.1 billion in June. For the first half of the year, Canadian investment in foreign securities totalled $94.2 billion, compared with a divestment of $21.2 billion for the same period in 2020. Investors largely purchased US shares in the first half of 2021.
Canadian investors acquired $20.8 billion of US shares in June, their second-largest investment on record after an all-time high investment observed in December 2020. The investment activity in June mainly targeted shares of large capitalization technology firms. US stock prices, as measured by the Standard and Poor’s 500 composite index, were up in June to unprecedented levels.
Canadian investors added $6.2 billion of foreign debt securities to their portfolios in June, a fifth straight month of net purchases. Investors focused on non-US foreign bonds ($2.6 billion) and US government Treasury securities ($2.4 billion). In June, US long-term interest rates fell to their lowest level since February, while US short-term interest rates edged up.
Foreign investment in Canadian securities targets the Canadian money market
Foreign acquisitions of Canadian securities totalled $19.6 billion in June. The investment activity in the month mainly targeted the Canadian money market. For the first half of the year, foreign purchases of Canadian securities totalled $63.5 billion, compared with $90.0 billion for the same period in 2020.
Foreign investment in Canadian money market instruments strengthened considerably in June, as non-residents added $18.8 billion worth to their holdings, their largest investment in six years. Foreign acquisitions of federal government Treasury bills and provincial government paper accounted for most of the investment activity. Canadian long-term interest rates decreased by six basis points and short-term interest rates were up by five basis points in June. Meanwhile, the Canadian dollar depreciated against its US counterpart by 2.2 US cents.
Foreign investors reduced their holdings of Canadian bonds by $52 million in June, after buying $17.8 billion in May and $5.5 billion in April. The activity in the month reflected net retirements of federal government enterprise bonds moderated by new issues of private corporate bonds, mainly US dollar-denominated instruments by Canadian chartered banks.
Foreign investment in Canadian equity securities resumes
Foreign investors purchased $918 million in Canadian equity securities in June, following a $3.3 billion divestment in May. Investors mainly targeted shares of the information and cultural industry in the month. From January to June, foreign purchases of Canadian equity securities totalled $26.1 billion, compared with a total divestment of $33.1 billion for the same period in 2020. Canadian equity prices, as measured by the Standard and Poor’s/TSX composite index, were up by 2.2% in June.
Courtesy of Statistics Canada.