Climate change is important to the Canada Pension Plan Investment Board, but it’s not ready to divest of its holdings in conventional oil and gas.
Although a segment of the Canadian population may want the CPPIB to drop conventional energy, the board’s top spokesman says its investment decisions are not necessarily motivated by politics or a change in public policy.
Michel Leduc, CPPIB senior managing director and global head of public affairs and communications, said in a phone interview on Monday that conventional energy sources are not going away as quickly as some people may believe, and oil and gas will have a role in the global economy for some time to come.
Michel Leduc is senior managing director and global head of public affairs and communications at the Canada Pension Plan Investment Board. – Contributed
It is the investment board’s view that conventional oil and gas is still a good investment, providing a good return for years to come, said Leduc, and the board will maintain such investments.
The conventional oil and gas companies are making the switch to unconventional wind and solar energy themselves, Leduc argued, so if the CPPIB was to cut its investment in such companies it would actually help slow the transition from conventional to renewable energy.
The subject of energy may come up again Tuesday when Leduc hosts a CPPIB virtual town hall for Nova Scotians, during which he will explain what the investment board is doing with its $430-billion fund.
Every second year, the CPPIB holds public meetings individually for each province and the northern territories throughout October. Nova Scotia is the second last of year’s presentations.
There are a total of 20 million CPP contributors and beneficiaries in Canada and, of that, there are 461,799 contributors and 220,693 retirement beneficiaries in Nova Scotia.
Leduc said that despite the economic concern brought about by the COVID-19 pandemic, the solvency and sustainability of the Canada Pension Plan is on solid footing for at least the next 75 years.
Before the creation of the CPPIB in 1997, the Canada Pension Plan was 100 per cent invested in government debt, Leduc said. To better prepare for so-called black swan events, such as a pandemic, the investment board has diversified the fund.
The fund is invested in three broad categories: 20 per cent in fixed income, which is mainly sovereign bonds and provincial bonds; 53 per cent in equities, both publicly traded stocks and private companies wholly controlled by the CPPIB; and the remainder would be in real assets, which includes toll roads, commercial real estate and ports, which provide steady income for a long period.
Geographically, only about 15 per cent of the CPPIB’s investments are in Canada, Leduc said, and about 85 per cent is invested across the developed economies of the world.
Considering that Canada represents only about three per cent of global markets, most of the CPPIB investments are outside of the country to be fully diversified and protect the fund from downturns in the Canadian economy.
The largest portion of the outside investments are in the United States, followed by Europe, Japan, South Korea and then developing countries, which includes China, India, Brazil, Mexico, Chile and Colombia.
In Canada, the fund is invested in both conventional and renewable energy, the financial sector and technology, including Ottawa-based tech darling Shopify, Leduc said.
The CPPIB has a 50 per cent holding in the 407 toll highway in Ontario, which has proven to be the investment board’s largest investment so far.
In Nova Scotia, the fund has investments in Empire Co. Ltd., parent of the Sobeys grocery chain, and Crombie REIT, both of which are controlled by the founding Sobey family of Pictou County.
Internationally, the CPPIB owns 23 ports in the United Kingdom, which also provide steady income over a long period.
CPPIB VIRTUAL TOWN HALL
The virtual Canada Pension Plan Investment Board town halls are accessed at cppinvestments.com/publicmeetings. The Nova Scotia session is scheduled for today from noon to 1 p.m.
To join, click the link for the meeting and register with an email address. Registrants will get a response and can submit a question in advance.
In Nova Scotia, 461,799 residents are CPP contributors (47.9 per cent of the provincial population) and 220,693 are CPP retirement beneficiaries (22.9 per cent of the population).
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
