Foreign investors reduced holdings of Canadian securities in June: StatsCan

International securities transactions generated a net outflow of $24.1 billion from the Canadian economy in June as foreign investors divested holdings in debt and equities, Statistics Canada says.

After two straight months of debt acquisitions totalling $88.3 billion, foreign investors reduced Canadian debt holdings by $7.8 billion in June, according to a report the agency released Monday.

Most of the divestment ($7.1 billion) was in Canadian provincial debt and federal government enterprises ($4.9 billion). Foreign holdings of federal government debt were down by $1.1 billion due to divestment in bonds that was moderated by money market purchases, the report said.

Foreign purchases of Canadian private corporate debt ($5.3 billion) helped to offset the outflows.

In the first half of 2020, “the total amount of debt securities owed by the federal government was up by 44.6%,” the report said.

“Foreign investors contributed strongly to this financing activity, as their holdings of these instruments increased by 25.0% over this period.”

On the equities side, foreign investors continued a divestment trend that began last fall by reducing their exposure to Canadian equities by $5.7 billion in June, StatsCan said, with the “bulk of the foreign divestment” in banking sector shares.

Canadian investors continued to pour money into U.S. equities in June, with U.S. acquisitions accounting for $9.4 billion of the $10.6 billion invested in foreign securities.

Canadian investors added $18.9 billion of U.S. shares to portfolios in the second quarter, the report said. This activity came after Canadians shed $29.2 billion worth of U.S. equities in March when stocks plunged in response to the Covid-19 pandemic.

Mark Burgess

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Mark was the managing editor of Advisor.ca from 2017 to 2024.