The City of Moose Jaw’s investment portfolios generated nearly $10 million this year in interest, while the portfolios have created over $20 million in additional revenue since their inception two years ago.
During city council’s Dec. 13 regular meeting, council received the investment committee’s report for 2021. From Jan. 1 to Nov. 30, the municipality’s medium-term and long-term portfolios had generated $9,255,474.49 in interest.
There was $29,806,075.08 in the medium-term portfolio and $82,061,692.44 in the long-term portfolio as of Nov. 30, for a total of $111,867,767.52. In comparison, by the end of 2020, those portfolios were $31,279,510.67 and $75,367,454.91, respectively.
Since 2019, the portfolios have generated a combined $20,945,110.87 in interest.
Council later voted to receive and file the document.
During the shortened fourth quarter, the medium-term portfolio saw a negative return of 0.44 per cent. However, year-to-date, the portfolio achieved 6.35 per cent, while it has seen returns of 6.4 per cent since inception in 2019.
In comparison, the expected return of this file was 4.25 per cent.
During the shortened fourth quarter, the long-term portfolio saw a negative return of 1.12 per cent. However, year-to-date, the portfolio has achieved 9.70 per cent, while it has seen returns of 9.88 per cent since inception two years ago.
In comparison, the expected return of this investment file was six per cent.
The investment committee continues to overweight both portfolios in equities by about five per cent, a decision made to offset historic lows in fixed income markets that are seeing negative returns due to inflation, said Coun. Dawn Luhning, a member of the investment committee.
The committee’s decision to sell the city’s bond portfolio and reinvest that money into guaranteed investment certificates (GICs) is proving to be a good decision, she added, given the near-negative — or in some cases, actual negative — returns of current bond opportunities.
The economic rebound from last year’s recession is now past and some of the “extreme dislocations” resulting from the pandemic are moderating, the Royal Bank of Canada said in its global investment outlook that was part of the investment report.
“While the economy is slowing, growth remains robust and consumers are well-positioned to support the expansion. Bond yields remain unsustainably low and we continue to prefer equities as surging corporate profits have pushed the bull market to new highs,” the report continued.
RBC forecasted that real gross domestic product (GDP) growth in many developed countries would be about four per cent, nearly double the pre-pandemic levels. While the pandemic remained a risk and government stimulus money was still floating around, one factor that could offset those risks is the trillions of dollars that consumers had saved and that could boost the economy through increased spending.
Inflation was expected to return to pre-pandemic levels once the “distortions of the pandemic” had faded, while the U.S. greenback was expected to see a long-term downward trend with further weaknesses in the coming years, the report added. Meanwhile, soaring corporate profits were contributing to an extended bull market in stocks.
The next regular city council meeting is Monday, Jan. 10.
Bitcoin falls 9.3% to $36,955
Bitcoin dropped 9.28% to $36,955.03 at 22:02 GMT on Friday, losing $3,781.02 from its previous close.
Bitcoin, the world’s biggest and best-known cryptocurrency, is up 2.4% from the year’s low of $36,146.42.
Ether, the coin linked to the ethereum blockchain network, dropped 12.27% to $2,631.35 on Friday, losing $368.18 from its previous close.
(Reporting by Jaiveer Singh Shekhawat in Bengaluru; Editing by Sriraj Kalluvila)
Oil, gas investment forecast to rise 22% in Canada – Investment Executive
It’s positive news for an industry that has now essentially recovered to its pre-pandemic levels, after a disastrous 2020 that saw oil prices collapse due to the impact of Covid-19 on global demand.
But CAPP president Tim McMillan pointed out that in spite of the fact that oil prices are at seven-year highs and companies are recording record cash flows, capital investment remains well below what it was during the industry’s boom years. In 2014, for example, capital investment in the Canadian oilpatch hit an all-time record high of $81 billion, capturing 10% per cent of total global upstream natural gas and oil investment.
“Today we’re at $32 billion, and we’re only capturing about six% of global investment,” McMillan said. “We’ve lost ground to other oil and gas producers, which I think is problematic for a lot of reasons . . . and it leaves billions of dollars of investment that is going somewhere else, and not to Canada.”
Investment in conventional oil and natural gas is forecast at $21.2 billion in 2022, according to CAPP, while growth in oilsands investment is expected to increase 33% to $11.6 billion this year.
Alberta is expected to lead all provinces in overall oil and gas capital spending, with upstream investment expected to increase 24% to $24.5 billion in 2022. Over 80% of the industry’s new capital spending this year will be focused in Alberta, representing an additional $4.8 billion of investment into the province compared with 2021, according to CAPP.
While the 2022 forecast numbers are good news for the Canadian economy, McMillan said, it’s a problem that companies aren’t willing to invest in this country’s industry at the level they once did.
He said investors have been put off by Canada’s record of cancelled pipeline projects, regulatory hurdles and negative government policy signals, and many now see Canada as a “difficult place to invest.”
However, Rory Johnston, managing director and market economist at Toronto-based Price Street Inc., said laying the decline in the industry’s capital spending at the feet of the federal government is overly simplistic.
He added while current “rip-roaring, amazing” cash flows and a period of sustained high oil prices will certainly give some producers the appetite to invest this year, Johnston said, it will likely be on a project-by-project basis and certainly on a smaller scale than the major oilsands expansions of a decade ago.
“You have global macro trends across the entire industry that have begun to favour smaller, fast-cycle investment projects – and most oilsands projects are literally the polar opposite of that,” he said.
One reason capital spending isn’t likely to return to boom time levels is because companies have become much more cost-efficient after surviving a string of lean years. And that’s not a bad thing, Johnston said.
“The decade of capex boom out west was tremendously beneficial for Canada and Albertans, but it also caused tremendous cost inflation,” he said.
“While what we’re seeing right now is not as construction-heavy and not as employment-heavy – and those are two very, very large downsides – the upside is that you’re much more competitive in a much more competitive oil market,” Johnston said.
In a report released this week, the International Energy Agency (IEA) hiked its oil demand growth forecast for the coming year by 200,000 barrels a day, to 3.3 million barrels a day.
According to the IEA, global oil demand will exceed pre-pandemic levels this year due to growing Covid-19 immunization rates and the fact that the new Omicron variant hasn’t proved severe enough to force a return to strict lockdown measures.
Toronto index set for biggest weekly drop since early December
Canada’s main stock index fell on Friday as weaker crude oil prices weighed on energy stocks, putting the benchmark index on course for its biggest weekly drop since early December.
At 9:35 a.m. ET (14:35 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was down 141.11 points, or 0.67%, at 20,917.07. It hit a more than two-week low in the previous session.
The index has lost 2.4% so far this week, hurt by higher bond yields as expectations build that central banks will hike interest rates over the coming months to tame unruly inflation.
The healthcare and technology sectors have dominated the weekly losses, dropping 7.4% and 4.5%, respectively.
On Friday, the energy sector led the declines with a fall of 1.9% as an unexpected rise in U.S. crude and fuel inventories profit-booking pressured crude oil prices.[O/R]
The financials sector slipped 0.8%, while the industrials sector fell 0.5%.
The materials sector, which includes precious and base metals miners and fertilizer companies, lost 0.4% on weaker copper prices. [MET/L]
On the economic front, data showed Canadian retail sales rose 0.7% to C$58.08 billion ($46.40 billion) in November on higher sales at gasoline stations, and building materials and gardening equipment and supplies dealers.
“Canadian retail sales for November grew less than expected, while new house price inflation plateaued at a high level, another sign of stagflation in the North American economy,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.
The TSX posted one new 52-week highs and 10 new lows.
Across all Canadian issues there were two new 52-week highs and 55 new lows, with total volume of 32.05 million shares.
(Reporting by Amal S in Bengaluru; Editing by Aditya Soni)
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