Third quarter sees record securities outflow: StatsCan

First-half portfolio inflows were wiped out in the third quarter as offshore investors trimmed their holdings in September, according to new data from Statistics Canada.

The national statistical agency reported that foreign investors reduced their Canadian securities holdings by $15.1 billion in September, driven largely by bond retirements. This was partially offset by investors adding equities.

At the same time, Canadian investors added $11.6 billion worth of foreign securities in September which, combined with the reduction in foreign investor holdings, generated a net outflow of $26.7 billion from the Canadian economy in the month.

The strong outflow of funds in September pushed the third quarter total to a record $41.4 billion, which completely offset the $39.4 billion that flowed in during the first half of the year.

Foreign investors reduced their holdings of Canadian bonds by $17.5 billion in September, with retirements reaching $20.4 billion in both government and corporate bonds — the highest total since 2018, StatsCan reported.

At the same time, foreign investors added $1.6 billion of Canadian equities, putting an end to nine consecutive months of reducing their equity holdings.

“Investments in shares of the manufacturing as well as the trade and transportation industries were moderated by a divestment in shares of the banking sector,” StatsCan said.

Canadian investors added $11.6 billion worth of foreign securities in September — primarily bonds. Foreign bond holdings grew by $10.5 billion, with non-U.S. bonds seeing their highest level of investment so far this year at $6.7 billion.

Investors also added $3.8 billion worth of U.S. bonds in the month, and $1.7 billion worth of foreign equities.

For the third quarter overall, Canadian investors added $20.3 billion worth of foreign equities, which was the highest quarterly total since 2021, StatsCan noted.