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Here’s what seven investment giants with $2.3 trillion in assets are betting on in 2023

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Tumbling global stock and bond prices this year, together with pain in private equity amid deteriorating deal volume left investors around the world casting their nets far and wide for opportunities.

In interviews with Bloomberg News, seven institutional investors with about US$2.3 trillion in combined assets under management from Beijing to Toronto and Melbourne outlined investment plans heading into what’s likely to be a challenging 2023.

Some say valuations in public and private markets need to fall further before they’ll spend big, building up cash piles that will enable them to react quickly when an investment thesis aligns. Meantime, others are spotting areas like rare metals as a home for their capital as long-term shifts leave these sectors ripe for big payoffs.

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Here’s a look at those strategies and how they’re positioning their funds:

GIC Pte. Ltd., estimate US$690 billion

For Singaporean sovereign wealth fund GIC Pte., preparation means having cash at the ready, a willingness to spend it and an ability to buy low-cost assets as other investors sell out. Chief investment officer Jeffrey Jaensubhakij has made investments that offer protection from inflation and says that price pressures will continue to rise amid tight labour markets and an under investment in commodities.

“Having some dry powder means that as opportunities emerge you have an ability to deploy quickly and not be caught in some asset liability mismatch you need to solve,” he said. “It’s been important for us to try to move assets from the asset classes like bonds and equities into things like real estate and inflation where the ability to either be CPI-linked or the ability with high demand to raise rents over time allows us some protection against inflation.”

Longer term, infrastructure projects and commodities can act as a hedge, he said. Meanwhile, student accommodation that can be used as hotels for tourists and business travellers during summer, and telecoms infrastructure and real estate in key markets like Japan and Australia are among his key investment ideas.

GIC chief executive Lim Chow Kiat said buying secondary private equity funds during the pandemic proved lucrative and has whetted the firm’s appetite to do more of this type of deal.

“The opportunity opened up so the team responded to that and actually deployed a lot of capital into that space and generated good return,” he said. “That’s another example of something we’d like to inculcate more and do more here.”

Fidelity International Ltd., US$613.3 billion

Anne Richards, chief executive of Fidelity International, said that Asia including China could rebound in sentiment faster than other parts of the world.

“The dynamics in Asia versus the dynamics with the U.S. and Europe are quite different,” Richards said during a panel at the Bloomberg New Economy Forum on Wednesday. “We are more positive on Asia as a region both from a market perspective as well as from a flow perspective for 2023.”

Richards said that she’s seeing increasing interest, if not action yet, for Asia and China. The second-largest economy’s recent relaxation of COVID measures and policy support for the property sector have investors betting that President Xi Jinping is refocusing his attention on economic growth.

“There’s a lot of optimism of where China is in its interest rate policy cycle, and the benefits that will bring for the region as well as the kind of gradual opening up,” she added.

AustralianSuper Pty Ltd., A$272 billion (US$184 billion)

AustralianSuper chief investment officer Mark Delaney is taking a cautious approach. His pension firm, the largest in Australia, began turning defensive late last year, reducing its exposure to listed equities and credit.

“We have built up our positions in cash and more recently fixed interest, things that we think could benefit from a downturn,” Delaney told Bloomberg. Over the next 12 months, the fund is unlikely to materially change asset allocation and remains concerned about private markets.

“What we’re most cautious about is the asset classes (in) which values haven’t adjusted yet, and you might put private equity into that category for example, and potentially property and maybe infrastructure,” he said. “The share market probably has done more than half of its adjustments from the peak to what we think is likely to be the trough.”

Instead, the fund expects to be hunting for new investments when good opportunities begin to emerge in about 12 months.

“Most likely the first place we’ll go will be to deploy capital into fixed interest, as they respond to the end of the tightening cycle and eventual easing cycle,” he said. “From that, if share prices continue to adjust there will be opportunities in the share market and also by and large in the credit markets around the same time.”

Ontario Teachers’ Pension Plan, $242.5 billion

Chief executive officer Jo Taylor is looking to mining assets, with rare earth minerals and metals a key target.

“Rare metals. Because they are just that — they are scarce and there aren’t that many that aren’t Chinese owned,” he said. “You can have the commodity rather than some sort of traded index, it’s not a big market.”

That means targeting copper producers in Canada and Chile, lithium from Latin America and finding sources of cobalt.

“We’re looking for partners on a private basis; could be a project. We’ve done some with Glencore and others in the past,” he said. “Even if we go very active on this it’s not going to be that we move the market on this.”

And he’s also scouring markets to find scarcity trades more broadly, from battery manufacturing chains and chip-makers to water, food and Indian businesses where there are relatively few scaled business. In August, OTPP bought a majority stake in Sahyadri Hospitals Ltd. as part of its first private equity buyout in India.

Partners Group Holding AG, US$131 billion

Partners Group chairman Steffen Meister is mindful of the suffering to people and businesses in recent years. But from a business perspective, now is a good time to strike deals, he said.

“Strictly speaking about business and opportunities, this is the time when you have the opportunities because the economy is not disappearing,” he said.

Meister warns that this only works for firms that anticipated the turmoil. Partners Group has pushed out refinancing until 2025 and hedged much of their rates exposure, he said. The fallout from the U.K.’s recent volatility in the pound and gilts would help boost other opportunities.

“It’s a very human thing when you look at the public markets where people are biased by the immediate reaction,” he said, with near-shoring — moving far-flung operations to countries closer to home — among the investment opportunities he sees in the U.K. “The last two years you were really concerned and now I think you can relax a bit more.”

Longer term thematics such as aging populations are also a good sources of deals, Meister added. This could mean housing or residential apartments built for rent with affordability and inclusion becoming a major topic. Other investment ideas include logistics, cold storage and pharmaceutical storage.

Temasek Holdings Pte. Ltd., US$295 billion

Temasek International’s chief investment officer Rohit Sipahimalani cited investment themes such as sustainable living, growing consumption, longer lifespans and healthcare.

But where Meister feels now is the time to make deals, Temasek is slowing the pace of investments. One focus is on helping companies in its portfolio survive the impending economic downturn and use it to expand and “strengthen their positions” over the coming year, he said. For new deals, the investment giant will be more selective.

“We’re cautious because we don’t think valuations fully reflect the downside we expect over the next 12 months,” he said. “The reason we’ve slowed down is because of the valuation environment — there’ll be better opportunities down the line.”

China Asset Management, 1.79 trillion yuan (US$253 billion)

Despite steep declines this year, China’s A-share stock market remains a better option than U.S., European or Hong Kong equity markets, according to Richard Pan, chief investment officer of global capital investment at Beijing-based China Asset Management.

The Federal Reserve still has to hike interest rates to bring down inflation as the U.S. continues to head toward a recession, Pan said. This threatens to fuel outflows from markets like Hong Kong, while Europe is in a worse situation, grappling with the energy crisis and debt issues.

“China is a rare place where the government is still in a loosening cycle,” providing ample liquidity, said Pan. “The yuan has also remained stable against a basket of currencies despite depreciation against the strengthening dollar.”

China Asset Management sees opportunities in both new energy and fossil fuels due to the huge demand in the coming decade, and likes healthcare and medical equipment stocks, he said. The company also favours consumer stocks as consumption will normalize, sooner or later, especially high-end players like luxury shopping malls that have seen sales climb even as economic growth cooled. Pan said concerns that China may backpedal on its opening up policy are misplaced, even as COVID surges have stoked concerns.

“The pandemic is a once-in-a-century rare situation and should not be seen as normal,” he said. “People shouldn’t be excessively pessimistic about China’s economy.”

— With assistance from Abhishek Vishnoi and Sarah Wells

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Zacks Investment Ideas feature highlights: Alphabet, Tesla, Shopify, Amazon and Palo Alto

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For Immediate Release

Chicago, IL – February 2, 2023 – Today, Zacks Investment Ideas feature highlights Alphabet GOOGL, Tesla TSLA, Shopify SHOP, Amazon AMZN and Palo Alto Networks PANW.

Which of These Stocks Has Been the Best Buy, Post-Split?

Stock splits have been a regular occurrence in the market over the last several years, with many companies aiming to boost liquidity within shares and knock down barriers for potential investors.

Of course, it’s important to remember that a split doesn’t directly impact a company’s financial standing or performance.

In 2022, several companies performed splits, including Alphabet, Tesla, Shopify, Amazon and Palo Alto Networks. Below is a chart illustrating the performance of all five stocks over the last year, with the S&P 500 blended in as a benchmark.

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As we can see, PANW shares have been the best performers over the last year, the only to outperform the general market.

However, which has turned in a better performance post-split? Let’s take a closer look.

Tesla

We’re all familiar with Tesla, which has revolutionized the EV (electric vehicle) industry. It’s been one of the best-performing stocks over the last decade, quickly becoming a favorite among investors.

Earlier in June of 2022, the mega-popular EV manufacturer announced that its board approved a three-for-one stock split; shares began trading on a split-adjusted basis on August 25th, 2022.

Since the split, Tesla shares have lost roughly 40% in value, widely underperforming relative to the S&P 500.

Palo Alto Networks

Palo Alto Networks offers network security solutions to enterprises, service providers, and government entities worldwide.

PANW’s three-for-one stock split in mid-September seemingly flew under the radar. The company’s shares started trading on a split-adjusted basis on September 14th, 2022.

Following the split, PANW shares have struggled to gain traction, down roughly 15% compared to the S&P 500’s 3.3% gain.

Shopify

Shopify provides a multi-tenant, cloud-based, multi-channel e-commerce platform for small and medium-sized businesses.

SHOP shares started trading on a split-adjusted basis on June 29th, 2022; the company performed a 10-for-1 split.

Impressively, Shopify shares have soared for a 50% gain since the split, crushing the general market’s performance.

Alphabet

Alphabet has evolved from primarily being a search engine into a company with operations in cloud computing, ad-based video and music streaming, autonomous vehicles, and more.

Last February, the tech titan announced a 20-for-1 split, and investors cheered on the news – GOOGL shares climbed 7% the day following the announcement. Shares started trading on a split-adjusted basis on July 18th, 2022.

Alphabet shares have sailed through challenging waters since the split, down 10% and lagging behind the S&P 500.

Amazon

Amazon has evolved into an e-commerce giant with global operations. The company also enjoys a dominant position within the cloud computing space with its Amazon Web Services (AWS) operations.

AMZN’s 20-for-1 split was a bit of a surprise, as it was the company’s first split since 1999. Shares started trading on a split-adjusted basis on June 6th, 2022.

Following the split, Amazon shares have lost roughly 18% in value, well off the general market’s performance.

Bottom Line

Stock splits are typically exciting announcements that investors can receive, with companies aiming to boost liquidity within shares.

Interestingly enough, only Shopify shares reside in the green post-split of the five listed.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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$13 million investment in Campbellford Memorial Hospital

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The Campbellford Memorial Hospital will be receiving a $13 million investment from the Ontario Government to address infrastructure concerns.

The announcement was made at the hospital by Northumberland—Peterborough South MPP David Piccini.

The $13 million is broken down as follows:

  • $9,639,900 will be going to CMH as one-time capital funding to address the HVAC and generator
  • $1,874,929 for reimbursement of CMH’s COVID-19-related capital expenses
  • $771,797 in COVID-19 incremental operating funding
  • up to $600,000 in one-time funding to support the hospital’s in-year financial and operating pressures
  • $163,600 in pandemic prevention and containment funding
  • $81,132 through the Health Infrastructure Renewal Fund
  • $46,884 in health human resources funding.

Interim President and CEO Eric Hanna welcomed the news, saying much needs to be done about the HVAC and generator.

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At the announcement, Hanna spoke of the issues with the generator.

“I’ve got the wee little generator up at the lake and then I’m thinking well, everything should be going well at the hospital,” Hanna told the audience in attendance.

“You get a call from the person in charge who says, ‘Guess what Eric? Generator didn’t start. Oh, so what does that mean? There’s no power in the hospital.’  That’s happened a couple of times in the past year and the generator is over 30 years old.”

Hanna says the solution was not as easy as replacing the generator.

“You can go buy the generator and that may be about a million dollars. But then when we found out afterwards, we came to hook up the new generator to the electrical distribution system and said it won’t work with that because your electrical distribution system is 1956. You can’t plug this generator into that. So now we’re putting close to $5 million into a whole electrical distribution system so the generator will work. It’s part of that ongoing thing and that’s why these costs continue to go up.”

The HVAC system was also something addressed by Hanna.

“It’s a contract close to $7 million to replace that. This wing, for example. There’s no fresh air in this wing. It hasn’t worked in here for 15 years. So now this is administrative areas and the concern was that in some of the patient carriers, it wasn’t working either.  So – having those discussions with David (Piccini) and saying what we have to do to correct this.”

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Chile’s Enap Set to Slash Debt Burden That Weighed on Investment

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(Bloomberg) — Enap, Chile’s state oil and gas company, plans to use near-record earnings to slash its debt burden, while increasing investment in its refineries and in exploration and production.

The company aims to reduce its debt load to about $3 billion “medium term” from the current $4.3 billion, Chief Executive Officer Julio Friedmann said in an interview. Plans include a bond sale in the first half of this year to refinance some securities.

The improved financial position — with 2022 profit surging to $575 million — comes after Enap’s oil and gas operations in Egypt, Ecuador and Argentina got a boost from high crude prices, while healthy international refining margins benefited plants in Chile. Those trends are expected to extend into this year and next, enabling the company to pre-pay some short-term obligations. About half of the current debt burden matures in the next three years.

“We are going to issue bonds,” the MIT-trained executive said Wednesday from the Aconcagua refinery in central Chile. “We are closely evaluating the local and international markets.”

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At the same time, Friedmann, who took the reins at Enap in November, plans to increase capital expenditure to about $700 million this year from $550 million last year.

The increase comes after underinvestment in the past few years because of Covid restrictions and the heavy debt load. Spending will focus on making treatment processes cleaner and upgrading infrastructure, as well as a more aggressive approach to increasing gas reserves in the far south of the country, he said.

Gas Markets

Enap plans to expand in both liquefied petroleum gas and natural gas markets in Chile, focusing on the wholesale business and eventually selling directly to large-scale consumers such as mines. Organizational changes to enable the expansion will be announced soon. There are no plans to enter the final distribution business, Friedmann said. The company wants to supply more gas to southern cities as a way of replacing dirtier fuels such as wood and diesel.

Enap and its partners are also preparing pipelines and a refinery near Concepcion to start receiving crude from Argentina’s Neuquen basin sometime this year in an arrangement that could supply as much as 30% of its needs.

While there’s plenty of potential do collaborate more with energy-rich Argentina, particularly in the Magallanes area, that would require greater long-term visibility on supplies from the neighboring country, Friedmann said.

He sees a role for Enap in the development of green hydrogen in Chile. It’s in talks with three companies to enable its facilities in Magallanes to be used to receive all the wind turbines, electrolyzers and other equipment that will be needed to make the clean fuel. Enap is also evaluating its own small pilot plants and will consider whether to take up options to enter other green hydrogen projects as an equity partner.

While the company will maintain its focus on meeting rising demand for traditional fuels, it anticipates new regulation that will require lower emissions. It’s also looking closely at clean-fuel options for aviation, Friedmann said.

(Adds clean fuel plans in last paragraph. I previous version corrected spelling of CEO’s surname.)

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