Financial markets have weakened due to the strength of North American economies and the expectation of higher interest rates. The consumer is running out of steam, but other parts of the economy, such as infrastructure spending, are in better shape. Goodreid recommends Booking Holdings, Chubb, and Dana as investment opportunities. Booking is well-positioned to capture post-COVID travel dollars, Chubb benefits from higher rates, and Dana is a strong player in the EV revolution. The global sell-off in bonds indicates acceptance of higher interest rates. [ae148b81]
Laurentian Bank's stock drops after analyst downgrades rating, General Motors delays plant conversion, retail sales increase, climate protesters disrupt energy conference, Canadian businesses urged to prioritize climate risk, and more. [754297aa]
ICICI Securities has a positive outlook on cyclical sectors of the economy, where there is robust growth and the prices are not as high as the more defensive sectors. Investments in capital expenditure, the real estate market, and consumer spending are showing improvements. The flight of money to safe havens will only occur when there is a recession in developed markets. The cycle of increasing interest rates might have come to an end. According to ICICI Securities, the U.S. bond yields rose to a 15-year peak. The outlook for global growth remains vulnerable to the Euro area and China. [bf142be4]
BofA Securities investment strategist Michael Hartnett has published a list of 'angry trades' for 2024, which are investment strategies that would be successful if widely held market-related forecasts turn out to be wrong. The strategies include betting on lower-than-expected oil prices if global elections go smoothly, investing in economically sensitive stocks in the case of a U.S. economic slowdown, buying Treasury Inflation Protected Securities (TIPS) and selling companies with higher debt levels if inflation and bond yields rise less than predicted, and selling emerging markets assets if the U.S. dollar strengthens. The list also includes contrarian trades related to China and the United Kingdom, highly indebted companies, and large cap technology stocks. [9c452cb7]
Additionally, the article discusses why some investors are putting too much money into guaranteed investment certificates (GICs) in Canada. Clean energy stocks are also experiencing losses despite government support and demand from countries committed to reducing greenhouse gas emissions. The article concludes with a discussion on benchmarking investment returns and tax-loss selling season. [9c452cb7]
Leaders from major Canadian, Malaysian, and Indian pension funds shared their approaches to navigating geopolitical risks in pursuit of growth. KWAP combines field research and desktop studies to monitor global events, particularly in volatile regions like China. HDFC focuses on the Indian market but acknowledges the need to review holdings with global exposure. CDPQ integrates geopolitical risks into its assessment and has substantial investments in publicly listed companies with indirect exposure. KWAP emphasizes private equity transactions for higher returns. CDPQ has shifted its portfolio allocation to be more globally diversified and has integrated sustainability into its investment approach. The focus for all three funds is on delivering sustainable and long-term investment returns while balancing risk and reward. [f93a6223]
The Canadian model of pension investment management is seen as the gold standard, but the government's push for pension funds to invest more in Canada is concerning. The author argues that this would dilute the funds' fiduciary obligation to deliver safe and growing investments. The author also highlights the challenges of investing in the current economic climate, including inflation pressures and volatile financial markets. The Canadian pension model is built on three pillars: stand-alone pension investment firms, independent governance, and hiring qualified talent. The author criticizes the proposed dual mandate and political influence, which undermine the model's independence. The author argues that diversification is crucial for reducing risk and maximizing returns, and pressuring pension funds to increase domestic investments overlooks this value. The author rejects the idea of using pension funds to prop up Canadian equity markets and suggests that tax measures, economic incentives, and infrastructure projects are more effective ways to attract investment. The author emphasizes that pension funds should focus on their clear mandate of providing safe and secure retirement savings for hard-working Canadians. [f4e93a82]
The Liberal government wants Canadian pension plans to invest more in Canada, but this has raised concerns about risking pension returns for political purposes. The government believes that domestic investments by pension funds can boost the Canadian economy and create jobs. However, pensions argue that mandating investments in Canada could upset returns and dilute their fiduciary obligation to deliver safe and growing pension investments. Canadian investments abroad have grown significantly compared to foreign investment in Canada. The proposal to increase investments in Canada is seen as a suggestion rather than a mandate. The Canada Pension Plan, the largest federally regulated pension, has a significant portion of its investments outside of Canada. While the plan acknowledges the importance of the Canadian market, it also emphasizes the need for global diversification. Pensions argue that increasing investments in Canada should be balanced with the risks of investing too much in one country. [d257e623]
The Canada Pension Plan Investment Board (CPPIB) has reduced 10% of its China equity team based in Hong Kong, signaling a shift in its approach to China. The CPPIB acknowledges that its past investment activity in China has not always aligned with its environmental, social, and governance criteria. China's economic growth has stalled, with a 1.5% GDP growth in 2023. The Chinese government has cracked down on the financial services sector and centralized the management and regulation of the economy. The CPPIB faces the challenge of mitigating rising investment risk in China while seeking high returns for Canadian pensioners. It remains to be seen if these moves are temporary or part of a wider trend of public pension funds reducing their exposure to China in emerging markets investments. [7a4a962a]