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Canadians buying less foreign securities

Stats Canada published an interesting set of figures yesterday reflecting that Canadians (as a group) are getting out of and staying away from foreign debt instruments, but also are selling foreign securities.

Foreign equities were also sold, as Canadian investors shed $6.4 billion of foreign securities over the month. This was the fourth month of divestment in foreign securities. In stark contrast to 20 consecutive years of significant portfolio investment abroad, Canadian investors reduced their holdings of foreign securities in 2008, returning funds to the Canadian economy.

Stats Canada Canada’s international transactions in securities (2009)

So Canadians are taking a “Buy Canadian” policy when it comes to securities, which is interesting, does this mean Canadians don’t trust foreign investments, or simply it is Canadians bailing out of all investments and this is a reflection of the great exodus from the marketplace?

The more interesting remark made at the end of this report was:

Overall, Canadian stock prices retreated 35% in 2008, the largest annual decline since 1931. This translated into moderate net sales for this instrument on secondary markets for the year.

That is a fascinating number, to me, and it makes me ask a few questions of my investments:

  • Did my investments drop by 35% over this year? If it was more, then I need to rethink my investments.
  • If less, then maybe it wasn’t such a bad set of investments.

Some more data to compare your performance against is always helpful when you are looking at the performance of your investments.

Why are Canadians investing less in Foreign investment vehicles? Any opinions out there?

Feel Free to Comment

  1. If Canadians sold stocks and bonds to hold more cash, like everybody else in the world, and they preferred to hold their cash in Canadian Dollars, as would only be natural, that might completely explain the “Buy Canadian” effect you mention.

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