Daily Test 2 - Canada's international transactions in securities, June 2024

Canadian investors increased their exposure to foreign securities by $16.4 billion in June, mainly in US shares. Meanwhile, foreign acquisitions of Canadian securities slowed to $5.2 billion in June, down from significant investments in the previous two months.

As a result, international transactions in securities generated a net outflow of funds of $11.2 billion from the Canadian economy in June, following two monthly inflows in April and May totalling $57.8 billion.

Canadian investment in foreign securities reached $16.4 billion in June. The activity was led by acquisitions of US equity securities (+$12.5 billion), with a focus on large capitalization technology shares. Canadian pension funds largely contributed to the investment activity. US share prices, as measured by the Standard & Poor's (S & P) 500 composite index, were up by 3.5% to end June with record high levels.

At the same time, Canadian investors acquired $6.4 billion of foreign debt securities in June, mainly money market instruments (+$2.4 billion) and US corporate bonds (+$2.4 billion). In particular, the investment in foreign paper reached the largest level since May 2017 and was mainly in instruments denominated in US dollars and Japanese yen.

Foreign investors acquired $5.2 billion of Canadian securities in June, down from significant investments in the previous two months. The activity targeted debt securities and was moderated by a foreign divestment in equity securities.

Non-residents acquired $10.6 billion of Canadian debt securities in June. The investment was mainly composed of private corporate debt securities (+$10.4 billion), specifically newly issued bonds by the financial sector. Meanwhile, non-residents added $7.5 billion of federal government debt securities to their holdings. This activity was moderated by retirements of federal government enterprises bonds. Overall, foreign investment in Canadian debt securities amounted to $75.7 billion in the second quarter of 2024, the largest amount since the second quarter of 2020, at the onset of the COVID-19 pandemic.

In June 2024, the Bank of Canada reduced its policy rates by 25 basis points to 4.75%, the first reduction since March 2020.

On the other hand, non-resident investors continued to reduce their exposure to Canadian shares, divesting $5.5 billion worth in June, following a divestment of $9.5 billion in May. On an industry basis, the divestment in June was mainly in shares of chartered banks, as well as shares of the professional, scientific and technical services industry. Canadian share prices, as measured by the S & P/Toronto Stock Exchange composite index, were down by 1.8% in June.

The Canada and the World Statistics Hub (Catalogue number13-609-X) is available online. This product illustrates the nature and extent of Canada's economic and financial relationship with the world using interactive graphs 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, the United Kingdom, Mexico, China and Japan.

As a complement to this release, the data visualization product "Securities statistics," part of the series Statistics Canada – Data Visualization Products (Catalogue number71-607-X), is available online.

The User Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-606-G) is also available.

The Methodological Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-607-X) is available.