Global market recovery boosted Canada’s net international investment position in Q2

The global stock market recovery in the second quarter boosted Canada’s international investment position by $160.5 billion to $1.1 trillion, Statistics Canada said in a report on Thursday.

After initially plunging in response to the emergence of the Covid-19 outbreak, global equity markets recovered sharply in Q2.

“The major stock markets recorded significant gains in the second quarter,” StatsCan said. “Over the quarter, the Canadian stock market increased by 16%, the U.S. stock market grew by 20% and the European stock market rose by 16%.”

This, in turn, drove foreign assets to record levels.

International assets grew by $409.5 billion in the quarter to $5.8 trillion, “exceeding the levels recorded at the end of 2019,” StatsCan said.

The boost from higher equity markets was partly offset by a strong Canadian dollar against most major foreign currencies.

The market rebound also boosted international liabilities but by a smaller amount, StatsCan reported.

Liabilities increased by $249 billion in Q2 to $4.7 trillion, “led by higher equity prices and record foreign investment in Canadian debt securities.”

The value of Canadian debt instruments held by foreign investors rose by $26.1 billion in the quarter to $2.88 trillion, led by the government sector, StatsCan noted.

The federal government boosted its borrowing to finance support for households and businesses impacted by the pandemic, “resulting in a record amount of this debt being acquired by foreign investors,” StatsCan said.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.