In an 1897 editorial, the New York Sun famously reassured eight-year-old Virginia O’Hanlon, telling her: “Yes, Virginia, there is a Santa Claus. He exists as certainly as love and generosity and devotion exist.”
Although this story may smack of the triumph of hope over experience, there’s always been wisdom in the idea of Saint Nick. To the extent he represents generosity and devotion—well, who wouldn’t want to believe in that?
While investing is much better left to experience, not hope, once in awhile there’s a gift so compelling you have to believe: if not in Father Christmas, then in the data itself. As the new year dawns, that gift is the emerging markets.
While stocks hit all-time highs and U.S. domestic equities are overvalued at 22 times earnings, emerging markets trade at just 15 times earnings (as measured by the iShares Emerging Markets ETF (EEM)
—despite the fact that emerging markets have higher growth rates. Other relative valuation measures cast these markets in a similarly good light. They trade at a slim 69% premium to book value (vs. 255% for the S&P 500). Emerging markets have never been more forsaken. With the luster of globalization dimmed by the pandemic and nationalism, owning shares in developing economies has appeared less attractive to many Americans. But that concern is already more than priced in. There’s also a burgeoning macro tailwind that favors foreign shares: a weakening dollar makes assets denominated in diversified baskets of currencies more attractive.
Meanwhile, the globe is awash in overvalued assets. A zero interest rate policy has propped up real estate while the Trump tax cuts have temporarily boosted prices of U.S. growth stocks. The extrapolation of an endless pandemic has prolonged and extended the tech bubble. Bonds have never been more expensive, offering pitiful yields in return for high interest-rate risk. Even ridiculously frothy cryptocurrencies and gold have ridden the wave of easy monetary policy. No gifts there.
Whenever any type of investment has underperformed as much as the emerging markets have, investors tend to give up hope—precisely when their performance is about to reverse. In fact, it’s the capitulation of disappointed investors that sows the seeds of the new rally. No one can time the markets, but several years of underperformance leave emerging market stocks with the most compelling valuation of any asset class out there.
So Virginia, yes, there is a Santa bearing one investment gift for 2021. But you won’t find it anywhere close to home.
Disclosure: James Berman owns emerging market stocks and ETFs, both in his own accounts and for his clients.
Cominar Real Estate Investment Trust Announces January 2021 Monthly Distribution – Canada NewsWire
QUÉBEC CITY, Jan. 15, 2021 /CNW Telbec/ – Cominar Real Estate Investment Trust (“Cominar”) (TSX: CUF.UN) announced today a distribution of 3.00 cents per unit to unitholders of record as at January 29, 2021, payable on February 15, 2021.
PROFILE AS AT JANUARY 15, 2021
Cominar is one of the largest diversified real estate investment trusts in Canada and is the largest commercial property owner in the Province of Québec. Our portfolio consists of 313 high-quality office, retail and industrial properties, totalling 35.7 million square feet located in the Montreal, Québec City and Ottawa areas. Cominar’s primary objective is to maximize total return to unitholders by way of tax-efficient distributions and maximizing the unit value through the proactive management of our portfolio.
SOURCE COMINAR REAL ESTATE INVESTMENT TRUST
For further information: Analysts and Investors: Sylvain Cossette, President and Chief Executive Officer, [email protected]; Antoine Tronquoy, Executive Vice President and Chief Financial Officer, [email protected], Tel: (418) 681-8151; Media: Sandra Lécuyer, Vice President, Talent and organisation, [email protected]
Gold investment demand remains well supported in 2021 – report – MINING.com
In its 2021 outlook report, the World Gold Council (WGC) predicts that investment demand for gold will remain well supported, while gold consumption should benefit from the nascent economic recovery, especially in emerging markets.
Record year for gold
Gold was one of the best performing major assets of 2020, driven by a combination of high risk, low interest rates and positive price momentum – especially during late spring and summer.
By early August, the LBMA gold price reached a historical high of $2,067.15/oz as well as record highs in all other major currencies. While gold subsequently consolidated below its intra-year high, it remained comfortably above $1,850/oz for most of Q3 and Q4 2020, finishing the year at $1,887.60/oz.
Interestingly, gold’s price performance in the second half of the year seemed to be linked more to physical investment demand – whether in the form of gold ETFs or bar and coins – rather than through the more speculative futures market, the WGC points out.
For example, COMEX net long positioning reached an all-time high of 1,209 tonnes in Q1 but ended the year almost 30% below this level. The Council believes this was due to the dislocation that COMEX futures experienced in March relative to the spot gold price, making it more expensive to hold futures compared to other choices.
Investors’ preference for physical and physical-linked gold products last year further supports anecdotal evidence that, this time around, gold was used by many as a strategic asset rather than purely as a tactical play.
Low interest rates and inflation
Global stocks performed particularly well during November and December, with the MSCI All World Index increasing by almost 20% over the period. However, rising covid-19 cases and a reportedly more infectious new variant of the virus created a renewed sense of caution.
Yet, neither this nor the highly volatile US political events during the first week of 2021 deterred investors from maintaining or expanding their exposure to risk assets.
The S&P 500 price-to-sales ratio is at unprecedented levels, and analysis by Crescat Capital suggests that the 15 factors that make up their S&P 500 valuation model are at – or very near – record highs.
Going forward, the Council believes that the very low level of interest rates worldwide will likely keep stock prices and valuations high. As such, investors may experience strong market swings and significant pullbacks. These could occur, for example, if vaccination programs take longer to distribute – or are less effective – than expected, given logistical complexities or the high number of mutations reported in some strains.
In addition, many investors are concerned about the potential risks resulting from expanding budget deficits, which, combined with the low interest rate environment and growing money supply, may result in inflationary pressures. This concern is underscored by the fact that central banks, including the US Federal Reserve and European Central Bank, have signalled greater tolerance for inflation to be temporarily above their traditional target bands.
Gold has historically performed well amid equity market pullbacks as well as high inflation. In years when inflation was higher than 3%, gold’s price increased 15% on average.
Notably too, research by Oxford Economics shows that gold should do well in periods of deflation. Such periods are typically characterized by low interest rates and high financial stress, all of which tend to foster demand for gold.
Further, gold has been more effective in keeping up with global money supply over the past decade than US T-bills, thus better helping investors preserve capital.
Market surveys indicate that most economists expect growth to recover in 2021 from its dismal performance during 2020. And although global economic growth is likely to remain anaemic relative to its full potential for some time, gold’s more stable price performance since mid-August may foster buying opportunities for consumers.
The economic recovery may particularly realize in countries like China, which suffered heavy losses in early 2020 before the spread of the pandemic was controlled more effectively than in many western countries.
“Given the positive link between economic growth and Chinese demand, we believe that gold consumption in the region may continue to improve,” the WGC says.
Similarly, the Indian gold market appears to be on a stronger footing. Initial data from the Dhanteras festival in November suggest that while jewelry demand was still below average, it had substantially recovered from the lows seen in Q2 of last year.
However, with the global economy operating well below potential and with gold prices at historical high levels, consumer demand may remain subdued in other regions.
Central bank demand
After positive gold demand in H1, central bank demand became more variable in the second half of 2020, oscillating between monthly net purchases and net sales, the WGC says. This was a marked change from the consistent buying seen for many years, driven in part by the decision of the Central Bank of Russia to halt its buying program in April.
Nonetheless, central banks are on course to finish 2020 as net purchasers (although well below the record levels of buying seen in both 2018 and 2019), and 2021 may not be much different.
There are good reasons why central banks continue to favour gold as part of their foreign reserves, which, combined with the low interest rate environment, continue to make gold attractive.
Recovery in mine production is likely this year after the fall seen so far in 2020. Production interruptions peaked during the second quarter of last year and have since waned.
While there is still uncertainty about how 2021 may evolve, it seems very likely that mines will experience fewer stoppages as the world recovers from the pandemic.
According to the WGC, this would remove a headwind that companies experienced in 2020 but that is not commonly part of production drivers. Even if potential second waves impact producing countries, major companies have introduced protocols and procedures that should reduce the impact of stoppages compared to those seen in the early stages of the pandemic.
The Council expects that the need for effective hedges and the low-rate environment will keep investment demand well supported in 2021, though it may be heavily influenced by the perceptions of risk linked to the speed and robustness of the economic recovery.
NorthWest Healthcare Properties Real Estate Investment Trust Announces January 2021 Distribution – Canada NewsWire
TORONTO, Jan. 15, 2021 /CNW/ – NorthWest Healthcare Properties Real Estate Investment Trust (TSX: NWH.UN) (the “REIT”) announced today that the Trustees of the REIT have declared a distribution of $0.06667 per unit for the month of January 2021, representing $0.80 per unit on an annualized basis. The distribution will be payable on February 15, 2021, to unitholders of record as at January 29, 2021.
Unitholders can participate in the REIT’s Distribution Reinvestment Plan (“DRIP”). Eligible investors registered in the DRIP will have their monthly cash distributions used to purchase Trust Units, and will also receive bonus units equal to 3% of their monthly cash distributions. Complete details of the DRIP are available on the REIT’s website at www.nwhreit.com or from a unitholder’s investment advisor.
About NorthWest Healthcare Properties Real Estate Investment Trust
NorthWest Healthcare Properties Real Estate Investment Trust (TSX: NWH.UN) is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. The REIT provides investors with access to a portfolio of high-quality international healthcare real estate infrastructure comprised of interests in a diversified portfolio of 190 income-producing properties and 15.4 million square feet of gross leasable area located throughout major markets in Canada, Brazil, Europe, Australia and New Zealand. The REIT’s portfolio of medical office buildings, clinics, and hospitals is characterized by long term indexed leases and stable occupancies. With a fully integrated and aligned senior management team, the REIT leverages over 230 professionals across nine offices in seven countries to serve as a long-term real estate partner to leading healthcare operators.
This press release contains forward-looking statements which reflect the REIT’s current expectations regarding future events. The forward-looking statements involve risks and uncertainties. Actual results could differ materially from those projected herein. The REIT disclaims any obligation to update these forward-looking statements.
SOURCE NorthWest Healthcare Properties Real Estate Investment Trust
For further information: please contact Paul Dalla Lana, CEO at (416) 366-8300 x 1001.
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