Dutch investors retrench to their home market during the COVID-19 crisis

Large purchases of domestic debt securities in April 2020

In April 2020, Dutch investors on balance purchased EUR 29.3 billion of domestic money market and capital market paper. In March 2020, investors also made large domestic purchases (EUR 9.3 billion). Before the coronavirus (COVID-19) crisis, Dutch positions were reduced. January and February 2020 saw net sales of EUR 5.1 billion and EUR 188 million respectively. This appears from preliminary DNB figures based on reports covering approximately 85% of Dutch securities holdings (Figure 1).

The monthly purchases of Dutch debt securities in April 2020 are substantial, covering approximately 7.2% of domestic debt securities held by private and institutional investors, compared to positions at the beginning of April 2020. These purchases were concentrated in Dutch corporate bonds (EUR 23.5 billion) and sovereign debt (EUR 5.8 billion).

One explanation for the large domestic purchases is the withdrawal from abroad to the Netherlands during the COVID-19 crisis. In April 2020, Dutch investors sold EUR 10.6 billion worth of foreign money market and capital market paper, while in the first quarter of 2020 foreign positions increased monthly through net purchases (EUR 12.0 billion). In April 2020, Dutch investors on balance mainly sold debt securities issued by Italy (EUR 5.2 billion), Germany (EUR 3.8 billion) and the United States (EUR 2.0 billion).

Record issuance of corporate bonds in April

Another explanation for the large purchases of Dutch debt securities is the volume of Dutch debt issues by both the Dutch government and the private sector in April 2020. Partly driven by the COVID-19 pandemic and the pandemic emergency purchase programme (PEPP), debt securities issues were historically high, with net issues reaching EUR 22.5 billion and EUR 44.6 billion respectively in the money and capital markets. Net corporate bond issues even amounted to EUR 41.5 billion, the largest monthly figure since records began in 1989 (Figure 2).

High profits for Dutch shareholders in April

Due to global price increases, share gains were significant in April 2020. Dutch investors achieved price gains of EUR 47 billion (10.6% month on month) on their shareholdings. More than half of the profits (EUR 25 billion) were made by equity investments in the United States.