Ongoing volatility in global equity markets and continuing economic uncertainty has led to negative growth in Canadian defined-benefit (DB) pension plans for the second consecutive quarter, according to a new report from Toronto-based Royal Bank of Canada’s (RBC) investor and treasury services division.

“The sharp correction of the Chinese stock market in August put the focus squarely on the possibility of a hard landing for China, in particular, and stalled global growth, in general,” says David Heisz, CEO of RBC Investor Services Trust and RBC Investor and Treasury Services, in a statement. “These concerns were reflected in all the major equity indices and continue to draw a watchful eye from central banks around the globe.”

The third quarter (Q3) of 2015 saw a decline of 2% within DB plan assets, which followed a second-quarter decrease of 1.6%. This back-to-back contraction has not been seen since the fourth quarter of 2008 and first quarter of 2009, when the economy was immersed in the global financial crisis.

The most recent quarter saw the foreign equity holdings of DB pension plans produce a loss of 2.2%, underperforming the MSCI world index benchmark by 0.5%.

“The emerging-markets sector was hardest hit in Q3, declining 11.8%, reflecting investors’ concerns over the mounting economic challenges faced by these nations with export and [gross domestic product] growth stalling,” Heisz says.

The silver lining comes in the form of the Canadian dollar’s depreciation of 6.9% against the U.S. dollar in Q3. This offset some of the investment losses Canadian DB plans experienced on their foreign equity holdings. Foreign equities have generated 8.6% for Canadian pensions year-to-date, Heisz notes.

Canadian equities in DB pension plans fell by 7.8% in Q3 compared with a loss of 7.9% for the S&P/TSX composite index benchmark. The decline is generally attributed to ongoing weak global demand in the resources sector. Canadian equity holdings within DB plans have lost 7.5% year to date.

Canadian pensions’ returns on their domestic fixed-income assets were flat in Q3 and slightly underperformed the FTSE TMX universe Canadian bond index by 0.2%. Domestic bonds have returned 2.3% year-to-date.

“Government bonds were the best performing segment in Q3 as prices rose with a flattening yield curve, reflecting a strong flight to safety,” says Heisz. “Corporate and provincial bonds, meanwhile, had to contend with widening credit spreads as investors prioritized safety over yield and both segments were slightly negative on the quarter.”

He also notes that, overall, DB pension plan returns are at 2.5% year to date, which is respectable in light of prevailing market conditions.

The research in the RBC report comes from an analysis of the firm’s “all plan universe” that tracks the performance and asset allocation of more than $650 billion in assets under management across Canadian DB pension plans.