Canadians continued to divest foreign securities in September, shedding a “significant” $4.5 billion worth after a record $7.1 billion divestment in August.
Statistics Canada said the activity was mainly due to a substantial disposition of foreign money market instruments.
Meanwhile, non-residents removed $5.2 billion worth of Canadian securities from their holdings, split almost equally between bonds and equities.
September marked the fifth straight month in which non-residents divested from Canadian securities.
Canadians disposed of $4.4 billion worth of foreign money market instruments in September, adding to August’s record divestment of $7 billion.
Currency-wise, the reduction in holdings in September was equally split between Canadian dollar-denominated and U.S. dollar-denominated foreign paper — but more than 80% of August’s divestment was in Canadian dollar-denominated foreign paper.
On a sector basis, over 60% of the divestment was in money market instruments issued by foreign banks. In addition, Canadians disposed of $605 million worth of U.S. treasury bills, following investments totalling $1.1 billion in these instruments in July and August.
Canadians trimmed $940 million worth of foreign bonds from their holdings in September, following a similar divestment ($1.1 billion) in August. Residents had been investing an average $4.1 billion per month from December 2005 to July 2007.
Over the month, Canadians sold $1.1 billion worth of U.S. government bonds, continuing the divestment trend started in June.
In September, the prices of U.S. government benchmark bonds soared in response to the deep cut in interest rates by the US Federal Reserve. The majority of the sales in September involved bonds with shorter term to maturity (two to five years) compared to August (five to 10 years).
Currency-wise, residents sold $341 million worth of maple bonds (Canadian dollar-denominated foreign bonds) in September, the second straight month of divestment in these instruments.
Residents continued to acquire foreign corporate shares for the 12th consecutive month, adding $792 million worth in September. Investment centred on U.S. equities as residents acquired $944 million worth.
Canadians dump $4.5 billion in foreign securities in September
Non-residents divest Canadian securities for fifth straight month
- By: IE Staff
- November 19, 2007 November 19, 2007
- 09:45