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Foreign investors drop holdings in Canadian equities

By The IJ Staff | June 18 2019 05:30PM

Foreign investors reduced their holdings of Canadian securities by $12.8 billion in April, mainly in the form of equities, while Canadian investors marginally reduced their holdings of foreign securities, according to figures released by Statistics Canada.

When a Canadian firm is acquired by a foreign firm and the transaction involves the issuance of new shares by the acquiring firm, the geographical composition of investors' portfolios changes. In terms of the latest numbers, Canadian investors’ holdings of foreign shares increase as they receive new shares and foreign investors’ holdings of Canadian shares decline as they render shares.

Canadians bow out of foreign securities

Canadian investors reduced their holdings of foreign securities by $194 million in April, following a $1.3 billion investment in March.

Canadian holdings of foreign debt securities were down by $337 million in April, after three months of investment. Acquisitions of U.S. corporate bonds were moderated by sales of U.S. treasury instruments. U. S. short- and long-term interest rates edged down in the month.

Canadian investment in foreign equities was $143 million in April. The activity reflected significant issuances of new U.S. shares to Canadian investors resulting from cross-border mergers and acquisitions in Canada. Meanwhile, sales of U.S. shares on the secondary market almost completely offset this activity. April marked the sixth consecutive month for which Canadian investors reduced their exposure to U.S. shares. The U.S. stock market rose 3.9% in April.

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