Canadian investment abroad ramped up in 2018, largely driven by a weaker Canadian dollar, and foreign investment in Canada also rose, thanks to an increase in merger and acquisition activity, according to a Statistics Canada report.
StatsCan said Canadian direct investment abroad jumped by 10.4% to $1.3 trillion in 2018. Most of the gain came in equity holdings, which rose by $115 billion to almost $1.2 trillion, it said. At the same time, offshore debt holdings rose by $6 billion to $91 billion.
Most of the increase was driven by weakness in the Canadian dollar, which dropped by 8.7% against the U.S. dollar, declined by 3.7% against the euro and 2.8% against the British pound during the year.
By sector, most of the growth in the stock of direct investment abroad came in the finance and insurance industry, StatsCan reported, with the value of investment in the sector rising by $53 billion to $471 billion.
At the same time, the stock of foreign direct investment (FDI) in Canada also rose by 5.0% to $877 billion in 2018, StatsCan said.
“The increase was the largest in four years and was the result of higher equity positions (up $44 billion to $732 billion), moderated by lower debt instrument positions (down $2 billion to $145 billion),” StatsCan noted.
“The increase in the equity position was stimulated by a pickup in merger and acquisition activity following a net decline in this activity in 2017,” it added.
StatsCan said the growth in FDI was widespread, with the manufacturing sector leading the way, followed by wholesale trade, and the agriculture, forestry, fishing and hunting industries.