Canadian investors shed record level of foreign securities in March

By Kelsey Johnson

OTTAWA (Reuters) – Canadian investors divested a record-breaking C$42.2 billion ($30 billion) in foreign securities in March amid heightened market volatility caused by the coronavirus pandemic, Statistics Canada data showed on Friday.

Canadian investors sold C$29.3 billion in U.S shares, by far the largest since data have been compiled, Statscan said, noting investors also sold off C$11.5 billion in foreign bonds in March, with nearly half in U.S. Treasury bonds.

The previous record for Canadian sales of foreign securities was C$15.5 billion in January 2016.

Global stock and capital markets began to show higher volatility in late February, the agency said, as the global COVID-19 crisis intensified.

That volatility, which in Canada was marked by the start of a severe decline in stock prices and government bond yields in the last few days of February, extended to March, Statscan said, as officials shuttered non-essential businesses and urged people to stay home to slow the spread of the virus.

The S&P 500 (SPX) plunged to its lowest in more than three years in March, down as much as 35.4% from a record high in the previous month.

Meanwhile, foreign investors also reduced their exposure to Canadian securities in March by C$9.8 billion, largely on sales of shares.

Foreign investors sold C$6.1 billion in Canadian shares in March, with the banking and energy and mining sectors the largest contributors to the foreign divestment seen in the month, the agency said.

Canadian stock prices declined 17.7% in March, but have been trending upwards since the end of that month, Statscan said.