Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Citi analyst Chris Montagu released his monthly report on the world’s top-performing investment themes.
“We note the portfolio representing the top quintile Themes in our Global Theme Machine delivered a return of 23.3%, outperforming MSCI World Index by 6.8% over 2020 … March’s best performing Theme was +7.5%: Clean Water (MSCI World +3.4%). Re-opening Themes are in focus too: Global Trade (+16.1% YTD), Sharing Economy (+16.0%), Belt & Road (+12.2%), as well as the Biden-driven market focus on Infrastructure (+10.7%). Weakest performance YTD was evident in Space Race (-2.3%), SaaS (+1.0%), DNA/Genetics (+1.4%), CyberSecurity (+1.8%) – all associated with poor Valuation attractiveness and good Growth attractiveness.”
The report includes a short list of global stocks with the highest exposure to the top performing themes. These are LG Display, FORYOU A (China) , Baidu ADS, Silicon Labs (U.S.), Gopro A (U.S.), Unity Software (U.S.), Digital Telecom IFCF (Thailand), Netlink (Singapore), Jasmine Broadband INET (Thailand) and Link Net PT (Indonesia).
“@SBarlow_ROB Citi: “Stocks with High Exposures to Multiple Top15 [performing investment] Themes”” – (table) Twitter
Scotiabank analysts outlined the outlook for oil prices and provided some top picks in the domestic energy sector,
“We believe the current backwardation in the futures strip [crude futures curve] is overly pessimistic and that global demand recovery will gain further momentum in 2H/21. We expect global spare capacity to remain plentiful in 1H/21 before declining dramatically in 2H/21 as vaccine penetration continues to increase. Looking at the Canadian oil market, differentials are forecasted to tighten in Q2/21 on expected major turnarounds. Additional pipeline egress is expected to provide runway for the next several years depending on the pace of Canadian production growth … TOP PICKS: Large-cap oil-weighted [picks are] Canadian Natural Resources Ltd. (CNQ-T) and Cenovus Energy Inc. (CVE-T). Mid-cap oil-weighted [top picks are] Crescent Point Energy Corp. (CPG-T), Enerplus Corporation (ERF-T), and Freehold Royalties Ltd. (FRU-T) Large-cap Montney / natural gas. Tourmaline Oil Corp. (TOU-T)”
” @SBarlow_ROB BNS top picks in Cdn oils” – (research excerpt) Twitter
“Refinitiv published a report on the rise of ESG funds in 2020. For my part, I won’t be talking a lot about this trend, strong as it is, until there are regulations surrounding what is and what isn’t an ESG-compliant investment. From the report:
“2020 saw some surprising moves. ‘A strange reaction to the pandemic sell-off in March was large outflows from ESG money market funds — while conventional money market funds were seeing record inflows,’ [Robert Jenkins, Global Head of Research at Refinitiv Lipper] observed…Despite the sell-off, all asset classes snapped back in April and then marched ever higher in the ensuing months, generating record new inflows. The noteworthy spike in equity funds in the second half of the year was likely due to retail investors getting into ESG investing through equity fund products. ‘Retail investors powered several trends this past year with more people taking up trading as a work-from-home distraction,’ Jenkins noted.”
Newsletter: “Investors too comfortable with dividend stocks” – Globe Investor
Diversion: From Morgan Housel’s A Few Short Stories,
“There’s a powerful urge to think of risk as something that happens to other people. Other people get unlucky, other people make dumb decisions, other people get swayed by the seduction of greed and fear. But you? Me? No, never us. False confidence makes the eventual reality that much more shocking.”
Tweet of the Day: ” @_BenWright_ This chart shows changes in household spending by sector during the pandemic. Biggest increase? Alcohol and tobacco. (Source: @ProsperityJmi) ” – Twitter
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