Investors reduced foreign equities holdings in October: StatsCan

Foreign investors reduced holdings of Canadian private corporate debt securities and equities in October, while domestic investors reduced their U.S. holdings, according to data released by Statistics Canada on Friday.

The foreign divestment of Canadian securities totalled $15.8 billion in the month. Foreign investors reduced exposure to Canadian private corporate debt securities by $17.3 billion, driven mainly by the retirement of U.S. dollar-denominated instruments.

StatsCan said foreign investors also reduced holdings of Canadian equities by $2 billion, mainly in the banking and manufacturing industries.

The foreign divestment was moderated by foreign acquisitions of $3.8 billion of federal government bonds and $2.3 billion of provincial government bonds, the highest combined amount since June.

At the same time, domestic investors divested $8.2 billion in foreign securities on a net basis, nearly all of which were U.S. shares. This selloff came after four consecutive monthly investments by Canadian investors in foreign assets totalling $42.8 billion.

The Canadian divestment included $8.3 billion of U.S. shares, the largest amount since March. The selloff was focused on large-cap stocks. This was offset by Canadian investors adding $1.5 billion of U.S. government bonds and $1.2 billion of corporate bonds.

In addition, Canadian investors reduced their holdings of non-U.S. foreign debt securities by $2 billion, mainly in government bonds.

Overall, the significant divestment of foreign investors and Canadian investors selling foreign holdings resulted in a net outflow of $7.6 billion from the Canadian economy in October.

Jonathan Got

Jonathan Got is a reporter with Advisor.ca and its sister publication, Investment Executive. Reach him at jonathan@newcom.ca.