November 22, 2023
Foreign investors reduced their holdings of Canadian securities by $15.1 billion in September, mainly due to retirements of bonds. Meanwhile, Canadian investors acquired $11.6 billion of foreign securities, ending the third quarter with the largest investment since the fourth quarter of 2021.
As a result, international transactions in securities generated a net outflow of funds of $26.7 billion from the Canadian economy in September 2023. The outflow of funds reached a record $41.4 billion in the third quarter, completely offsetting the inflow of funds of $39.4 billion recorded in the first half of the year.
Chart 1 
Canada’s international transactions in securities
Largest retirements of Canadian bonds since December 2018
Non-resident investors reduced their exposure to Canadian securities by $15.1 billion in September 2023. Overall, retirements of bonds were moderated by foreign acquisitions of equity securities during the month.
The reduction in foreign holdings of Canadian bonds totalled $17.5 billion in September with retirements totalling $20.4 billion, the highest amount since December 2018. These retirements were in both government and corporate bonds, with the latter mainly composed of instruments backed by mortgages. In September 2023, Canadian long-term interest rates reached the highest level since December 2007.
Non-resident investors acquired $1.6 billion of Canadian shares in September 2023, after nine consecutive months of divestment. Investments in shares of the manufacturing as well as the trade and transportation industries were moderated by a divestment in shares of the banking sector. Canadian share prices, as measured by the S&P/TSX index, fell 3.7% in September.
Chart 2
Foreign investment in Canadian bonds, by sector of issuer
Strong Canadian investment in foreign bonds
Canadian investors added $11.6 billion of foreign securities to their holdings in September, led by a $10.5 billion investment in foreign bonds. The investment in non-US foreign bonds (+$6.7 billion) reached the highest amount in a year and mainly targeted government bonds. In addition, investors acquired $3.8 billion of US bonds in September, after buying $3.7 billion of US bonds in the previous month. US long-term interest rates rose in September, to the highest level since October 2007.
Chart 3
Canadian investment in foreign bonds
Canadian acquisitions of foreign shares slowed to $1.7 billion in September 2023. Nonetheless, Canadian investment in foreign shares totalled $20.3 billion in the third quarter, the highest since the fourth quarter of 2021. Share prices in major foreign equity markets decreased in September 2023.
Source: Statistics Canada
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