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Canadian crude-by-rail shipments poised to surge, spurring investment – Financial Post

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Canadian shipments of crude by rail are poised to surge next year, spurring investment in new export infrastructure.

Crude-by-rail capacity in Alberta is expected to grow by 100,000 barrels a day in December after the provincial government eased production limits for oil transported by train, the Energy Ministry said Wednesday. Western Canadian rail loadings had already climbed as high as 411,000 barrels a day in November despite a week-long Canadian National Railway Co. worker strike that disrupted shipments. Now they’re set to reach 550,000 barrels a day, Alberta Premier Jason Kenney said earlier this month.

Calgary-based Gibson Energy Inc. became the latest company to announce new rail projects in response to the rising demand. The company on Wednesday said it plans to build a million barrels of new storage tanks at its Hardisty, Alberta, terminal, where it also plans to construct and operate a diluent recovery unit that will allow it to send more oilsands crude by train. SunCoke Energy Inc. and Summit Terminaling are developing a rail terminal to deliver Canadian heavy crude to Louisiana refineries.

Rail has became critical to oil exporters after pipelines filled to capacity two years ago, causing prices to collapse and prompting Alberta’s government to impose limits on some oil production at the start of the year. With no new pipelines scheduled to be built before late next year and projects such as the Trans Mountain pipeline expansion facing legal challenges, exports by train have picked up.

Alberta has eased production limits, causing heavy Canadian crude’s discount to the U.S. benchmark to widen to more than US$20 a barrel this month. At that level, crude-by-rail shipments become more economic, encouraging more cargoes, according to John Zahary, chief executive officer of Altex Energy Ltd, a crude-by-rail terminal operator.

“I think probably the next few months will get busier as we get into next year and these movements increase,” he said.

Bloomberg.com

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China will boost investment in strategic industries: state planner – TheChronicleHerald.ca

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BEIJING (Reuters) – China said on Wednesday it will boost investment in strategic industries including core tech sectors such as 5G, artificial intelligence and chips.

China will accelerate development of new materials to ensure stable supply chains for aircraft, microelectronic manufacturing and deep-sea mining sectors, the National Development and Reform Commission (NDRC) said.

China will also speed development of vaccine innovation, diagnostic, testing reagents and antibody drugs, the NDRC said.

(Reporting By Ryan Woo and Lusha Zhang; Editing by Shri Navaratnam)

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Can Interest in ESG Investing Hold Up During a Pandemic? – Morningstar.ca

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Interest in sustainable investing has grown tremendously in recent years, and our research has shown that this applies to most investors, regardless of gender or age. Given this rise in popularity, a growing number of asset managers and public companies are making sustainability-focused changes. 

As Morningstar’s director of sustainability research Jon Hale noted in his Sustainable Funds U.S. Landscape Report, many “companies started off 2020 by issuing significant commitments to sustainability.” Along with these commitments, asset flows into sustainable funds increased fourfold in 2019 alone and continue to see record inflows so far this year.

Despite this unprecedented growth, some believe that interest in environmental, social, and governance investing is fickle and will dwindle when the going gets rough. In our research, we have found that interest in ESG investing can take the heat. 

Putting Interest in ESG Investing to the Test
To test the durability of investors’ interest in ESG, we conducted an online experiment during the beginning of the extreme market volatility caused by the COVID-19 pandemic (March 26, 2020 to March 29, 2020).

We asked 626 people to imagine they’d started a new job and were setting up a retirement account for which they needed to distribute assets among 15 fund options. The context of that choice varied in the experiment; the participants were randomly assigned into one of three groups:

  • Group 1: Participants received standard metrics about each investment: the name, Morningstar Category (large value, mid-cap growth, and so on), five-year total return, 10-year total return, annual reported net expense ratio, and Morningstar Rating (the star rating).
  • Group 2: Participants were offered the exact same lineup and information but were also given each investment’s Morningstar Sustainability Rating.
  • Group 3: Participants were given a questionnaire to help remind them of their personal ESG preferences (known as an identity prime questionnaire) and then received the exact same lineup and information as Group 2.

We then compared the average amount that each of the three groups invested in each option.

ESG Continues to Hold Investors’ Attention
One investment in this experiment that particularly required people to trade off between returns and a high sustainability rating was Royce Special Equity (RYSEX), which has a 5-globe rating but a fairly low five-year trailing return. 

Although Group 1 (which had no ESG information about the investment alternatives) largely ignored Royce Special Equity, Groups 2 and 3 invested substantially more money into it. In other words, this choice showed that investors do seem to be swayed by a fund’s sustainability rating when making asset-allocation decisions, and moreover that identity priming isn’t needed to encourage people to invest with sustainability in mind. 

The exhibit below shows the detailed results of the average amount that each group allocated to each investment option. The globe symbols denote the funds’ sustainability ratings, and the percentages are the funds’ five-year returns.

ESG chart 1

These results show that the individuals in Groups 2 and 3, who had access to fund options’ ESG information, increased the average sustainability rating of their portfolios by a statistically significant amount compared with Group 1. 

Also, and most importantly, we found that the investment allocations in Groups 2 and 3 were less correlated with returns overall, suggesting that participants focused less on returns when they made their investment selections.

ESG Investing Interest Is Here to Stay
This research suggests that even during a pandemic and extreme market volatility, investors continue to be interested and swayed by ESG information. In other words, interest in ESG investing is not going anywhere, and investment professionals would be well-served by incorporating it into their practices.

 

Learn More About This Experiment by Downloading “The Sustainability Stress Test”

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Warehouses Beat Malls as Virus Fuels Record Global Investment – BNN

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(Bloomberg) — Supply Lines is a daily newsletter that tracks Covid-19’s impact on trade. Sign up here, and subscribe to our Covid-19 podcast for the latest news and analysis on the pandemic.

Warehouse deals accounted for a record share of global commercial real estate investment in the first half of the year as the surge in e-commerce during lockdown fueled demand for logistics properties.

About $75 billion was spent on industrial and logistics properties in the first six months, or about 20% of total investment, according to broker Savills Plc. Warehouses surpassed stores to become the third-most-popular real estate asset class after offices and homes, the firm said in a report based on Real Capital Analytics Inc. data.

“The current global e-commerce boom, accelerated by consumers shifting their purchasing online throughout the pandemic, has been a major catalyst for this sector’s growth,” Paul Tostevin, world research director at Savills, said in a statement.

Online sales are forecast to increase by 31% in Western Europe this year, accounting for about 16% of total retail sales, according to the Centre for Retail Research. In the U.S., the e-commerce market share will reach 14.5%, eMarketer research shows. That’s led to “unprecedented levels of investor demand,” with companies such as Amazon.com Inc. on a leasing spree to support expansion, according to the Savills report.

The world’s biggest real estate investors including Blackstone Group Inc. and GIC Pte have made substantial and lucrative bets on warehouse properties over the past decade. Blackstone has spent about $40 billion on warehouses around the world in the past two years alone, RCA data show. The rise in demand for warehouse properties has also propelled companies including Prologis Inc. and Segro Plc to the top of real estate investment trust indexes, while mall landlords have tumbled in value.

The amount of capital invested in warehouses annually rose sixfold in the decade through 2019, when $196 billion of deals were completed, Savills said in the report. In the U.S., deals jumped tenfold in the period.

©2020 Bloomberg L.P.

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