Foreign investors are dumping Canadian stocks and bonds in droves amid a global flight to safe-haven assets such as gold and with tariff uncertainty hanging over the northern nation.
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The latest data from Statistics Canada shows that foreign investors reduced their exposure to Canadian stocks by $3 billion in June, following a massive divestment of $11.5 billion in May of this year. Most of the selling occurred in bank stocks, which make up nearly half the weighting of the Toronto Stock Exchange.
Foreigners bought $6.9 billion of Canadian bonds in June, but that was down nearly 30% from $9.7 billion purchased in May. Corporate bond purchases led the way, followed by provincial government bonds. There was a $1.3 billion reduction in foreign holdings of Canadian federal government bonds.
Buy Canadian?
Foreigners aren’t the only ones shifting capital out of Canada. Canadian investors bought $9 billion of foreign securities in June, most of it U.S. stocks. This resulted in an $8.3 billion outflow from the Canadian economy and brought the total exit of capital for this year’s second quarter to $43.7 billion, noted Statistics Canada.
The shift away from Canadian stocks and bonds comes as foreign investors seek safety and as uncertainty remains high about the impact that U.S. import duties will have on the Canadian economy. Some analysts and economists are urging Canada’s federal government in Ottawa to strike a new trade deal with the U.S. to avoid a further flight of capital.
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