International investment position edges up: StatsCan

Canada’s international investment position improved in the third quarter, as the boost supplied by a weaker loonie was offset by market losses, Statistics Canada reports.

The national statistical agency reported that the value of foreign assets rose by $5.5 billion last quarter to $1.38 trillion.

Canada’s international assets and liabilities both rose by 0.7% in the third quarter, with assets rising by $57.7 billion in the quarter, as liabilities rose by $52.2 billion.

“Overall, the upward revaluation from fluctuations in exchange rates was offset by the downward revaluation due to market price changes, with equity and debt markets slowing in both Canada and the U.S.,” StatsCan said.

Specifically, weaker asset prices led to a $52.6-billion decrease in Canada’s net foreign asset position, it reported.

In the third quarter, the U.S. stock market was down by 3.6%, and the Canadian market declined 3.0%. Additionally, European markets dropped by 5.1% and Japan was down 4.0%, StatsCan said.

This market weakness was offset by fluctuations in exchange rates, as the Canadian dollar dropped by 2.1% against the U.S. dollar in the quarter.

The loonie also rose against the pound, the Euro and the yen, it noted.

Additionally, StatsCan reported that the value of Canadian debt held by foreign investors rose by 2.1% in the third quarter, an increase of $81.4 billion to $3.94 trillion.

As a percentage of GDP, Canada’s gross external debt edged up to 135.8% at the end of the third quarter from 135.0% in the previous quarter.

“The increase was driven by the financial sector (up $83.9 billion), mainly transactions of Canadian chartered banks,” it said.

The government sector’s gross external debt decreased by $19.1 billion to $611.9 billion by the end of the third quarter.