Canada’s Net Foreign Asset Position Jumps C$619 Billion to C$1.95 Trillion

Canada’s net foreign asset position rose by C$619.2 billion in the second quarter of 2026 to C$1,945.5 billion, the largest quarterly increase on record, Statistics Canada reported Thursday. The rebound followed two consecutive quarterly declines and restored much of the ground lost over the previous six months. All figures in this story are in Canadian dollars.

Most of the increase came from changes in the value of existing holdings rather than new cross-border investment. Market-price revaluations added C$495.8 billion to the net position, exchange-rate movements added C$123.7 billion, and net financial-account flows contributed C$11.7 billion. Other changes reduced the position by C$11.9 billion. The mix is important because it shows that the quarter’s record gain was primarily a valuation event.

Statistics Canada’s current international investment position table lists the first-quarter 2026 net position at C$1,326.2 billion. That is lower than the C$1,360.5 billion reported in the agency’s June first-quarter release, so the new C$619.2 billion quarterly increase is measured from the updated first-quarter base. The second-quarter level also moved above the C$1,825.0 billion recorded at the end of the third quarter of 2025.

Foreign stock-market gains supplied most of the lift

The strongest driver was the rise in foreign equity values during the quarter. Statistics Canada said the U.S. stock market gained 14.9%, the European market rose 13.6%, and the Japanese market advanced 37.2%, while the Canadian market increased 6.4%. Because Canada holds a large stock of foreign equities, those overseas market gains had a larger effect on the asset side of the country’s external balance sheet than the rise in Canadian share prices had on liabilities.

At the end of the quarter, equities represented 69.8% of Canada’s international assets, compared with 49.3% of its international liabilities. Market-price changes lifted the value of international assets by C$723.8 billion and liabilities by C$228.0 billion. The difference between those two revaluations produced the C$495.8 billion positive contribution to the net foreign asset position.

Portfolio holdings show the scale of the move. Canadian portfolio investment abroad increased to C$5,202.4 billion from C$4,641.1 billion in the first quarter. Within that total, foreign equity and investment-fund shares held by Canadian investors rose by C$524.7 billion to C$4,050.3 billion. Direct-investment assets also increased, with the equity component up C$380.7 billion to C$4,591.7 billion. Those changes include market revaluations as well as new investment and other adjustments, so they should not be read as cash purchases alone.

Currency movements added another C$123.7 billion to the net position. During the quarter, the Canadian dollar depreciated 1.9% against the U.S. dollar, 0.9% against the euro, and 2.0% against the British pound, while edging up 0.2% against the Japanese yen. A weaker Canadian dollar raises the Canadian-dollar value of foreign-currency assets and liabilities. The effect was positive on balance because 97.1% of Canada’s international assets were denominated in foreign currencies at quarter-end, compared with 35.8% of liabilities. U.S.-dollar exposure alone accounted for 66.7% of assets and 25.9% of liabilities.

International assets grew by more than C$1 trillion

Canada’s international assets increased by C$1,093.4 billion during the quarter to C$12,386.0 billion, the largest quarterly gain on record. Market-price revaluations accounted for C$723.8 billion of that increase, exchange-rate movements added C$174.8 billion, and acquisitions of foreign assets contributed C$157.3 billion. Other changes added C$37.5 billion.

International liabilities also rose, but by much less. They increased C$474.2 billion to C$10,440.6 billion. Market prices added C$228.0 billion to liabilities, foreign borrowing added C$145.6 billion, exchange-rate changes contributed C$51.1 billion, and other changes added C$49.4 billion. The much larger increase on the asset side is what widened the gap between what Canadian residents own abroad and what non-residents own in Canada.

Foreign demand for Canadian government bonds was a major part of the borrowing increase. Statistics Canada said the share of outstanding federal government bonds held by foreign investors reached 44.6% in the second quarter, up from a low of 27.0% in the first quarter of 2021. A separate balance-of-payments release for the second quarter showed foreign investors bought a record C$110.2 billion of Canadian debt securities, including C$80.8 billion of government bonds. At the same time, Canadian investors added C$45.6 billion of foreign securities, leaving portfolio flows into Canada larger than flows abroad during the quarter.

The contrast between those flows and the headline C$619.2 billion increase helps clarify what the international investment position measures. It is a stock of external financial assets and liabilities at a point in time. New investment changes that stock, but market prices, currency moves, write-offs, reclassifications, and other valuation adjustments can also move it sharply. In the second quarter, revaluation effects were far larger than net financial-account flows.

The U.S. remains central to Canada’s external balance sheet

Geographically, Canada’s net foreign asset position with the United States rose by C$418.5 billion to C$1,667.8 billion. The position with all other countries increased by C$200.7 billion to C$277.7 billion. The U.S. therefore continued to account for the large majority of Canada’s positive net position with the rest of the world, consistent with the country’s deep financial exposure to U.S. markets.

The improvement in the net position did not mean Canada’s gross external debt fell. Gross external debt, which measures Canadian debt instruments held by foreign investors, increased by C$204.1 billion to C$5,051.0 billion. It represented 146.9% of gross domestic product in the second quarter, up from 145.6% in the first quarter.

Government-sector gross external debt rose by C$98.5 billion to C$1,048.5 billion, while financial-sector gross external debt increased by C$88.3 billion to C$2,978.5 billion, its fourth consecutive quarterly increase. The financial sector accounted for 59.0% of Canada’s gross external debt at the end of June. Those debt figures can rise at the same time as the net foreign asset position because the net measure includes the full value of international assets and liabilities, including equity as well as debt.

Statistics Canada is scheduled to release international investment position data for the third quarter of 2026 on December 10. That release will provide the next official read on whether the second-quarter valuation rebound persisted as global asset prices and exchange rates changed through the summer.