Canadian investors – for the first time in four months – reduced their holdings in foreign securities by $1.5 billion, in September, according to StatsCan data released just this week.
“Holdings of both equity and debt securities were down over the month,” reads the report, pointing to the $0.5 billion selloff in foreign equities by Canadian investors, both retail and institutional.
Those clients also dropped $0.8 billion in foreign bonds and $1.3 billion in non-US foreign stocks.
The collective move represents something of an about-face for clients, who have this year increasingly pressed advisors for foreign investments, in particular, U.S. equities.
The unprecedented demand has been largely viewed as retreat from the home-country bias most advisors grapple with in trying to grow client exposure to high-performing securities outside Canada’s flagging markets.
The latest StatsCan data, which also identifies a $8.4-billion spike in foreign inflows targeting Canadian securities, suggests many Canadian investors remain skittish about stepping off their home patch.
Still, the September pullback could well be a temporary return to the Canadian safe harbour, argue some advisors. They point to what was happening in the U.S. market in September and the push factors attached to that drama.
A possible shcutdown of the U.S. federal government dragged the major indices lower in September as Congress struggled to find a deal that would all the country to sidestep that move. In last September, both the Dow Jones and the S&P 500 registered weekly drops after finishing higher the four previous weeks. Consumer confidence also took a dive, falling to the lowest level in five months.
Canadian investors in the U.S. may have also felt that apprehension, with analysts expecting October’s stats will show that sentiment carried over into October, once again boosting the appeal of Canadian securities for Canadian investors.