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June 28, 2022
EMERGING MARKETS OFFER ACTIVE OPPORTUNITY
For active managers, emerging markets may provide an opportunity to weather recent market volatility and potentially generate alpha, says Todd McClone, a portfolio manager for William Blair’s emerging markets strategies. However, emerging markets are not homogeneous and pinpointing the reason for dispersion is critical to finding opportunities. Over the past decade, the economic performance and resulting earnings growth of emerging markets has disappointed relative to developed markets (particularly the United States), he says. This is because since the global financial crisis (GFC), quantitative easing in developed markets has supported economic growth and equity market valuations, but that policy option has not been readily available in emerging markets. This is starting to end with much of the world tightening monetary policy and emerging markets are coming out of the pandemic stronger with growth starting to pick up naturally. In Brazil, for example, valuations are already attractive in the wake of last year’s substantial derating with the Brazilian central bank aggressively raising interest rates in response to the spike in inflation. Meanwhile, China, which was first out of the pandemic, has already begun the process of easing monetary policy. It’s moving at a slower pace than the market hoped, but the pace of easing should accelerate in the coming months and quarters, supporting economic growth, corporate profit growth, and equity market valuations which are currently at 10-year lows. This dispersion in monetary policy cycles gives investors the opportunity to add exposure to countries where an easing monetary policy should support growth and valuations, and to avoid countries where the opposite is true. Where countries are in their monetary policy cycles directly impacts the market’s perception of future economic growth and corporate profits, and, importantly, what multiples to pay for those profits, he says.
June 28, 2022
MENTAL HEALTH UNCHANGED
At 64.9, the mental health of Canadians remains nearly unchanged from the prior month, says LifeWorks’ ‘Mental Health Index.’ It shows 32 per cent of Canadians have a high mental health risk, 43 per cent have a moderate mental health risk, and 25 per cent have a low mental health risk. Anxiety, optimism, and general psychological health scores declined from April to May 2022. For the third consecutive month, the mental health score of managers is lower than non-managers and the national average.
June 28, 2022
CANADIAN EQUITIES OUTPERFORM
The performance differential between the Canada and U.S. equity markets in 2022 might be called a ‘Tale of Two Sectors,’ says an analysis by Morningstar Indexes. Its domestic index has declined 9.4 per cent year-to-date as of June 16 as compared to a 21.7 per cent decline for its total market exposure index for the same time period. This reverses a notably different long-term trend which saw the Canada index underperform its U.S. counterpart by approximately 700 basis points on an average annual basis over the past 10 years. Dan Lefkovitz, a strategist at Morningstar Indexes, says, “As a resources-heavy market, Canada is benefitting from surging prices for oil and other commodities. In the U.S., the tech sector, which was overvalued coming into the year, has been leading the market down, but the tech wreck in Canada has been mostly limited to Spotify.”
June 28, 2022
DIGITAL ASSETS GROWTH EXAMINED
CPBI Ontario will look at ‘The Growth and Implications of Digital Assets.’ Arijit Das, senior vice-president, digital asset innovation technology, at Northern Trust, will explain how financial institutions are defining digital assets, the technology being developed to support them, and what financial institutions should be aware of and investing in to keep up with growing demand. It takes place September 20. Information is at https://www.cpbi-icra.ca/Events/Details/Ontario/2022/09-20-The-Growth-and-Implications-of-Digital
June 28, 2022
STARTUP GETS FUNDING
Ledger Investing, an InsurTech startup, has raised $75 million in Series B funding led by WestCap, with participation from Teachers’ Venture Growth and Intact Ventures, and previous investors: SignalFire, MassMutual Ventures, Allegis Capital, and Accel. The marketplace connecting insurance risk with capital will use the funds to accelerate revenue growth across its insurance-linked security (ILS) brokerage and asset management businesses and launch data infrastructure service products. Teachers’ Venture Growth (TVG) is part of the Ontario Teachers’ Pension Plan Board.
June 27, 2022
EXPATS BURNING OUT
The vast majority of expats are burned out, stressed, and re-evaluating life and work priorities for more flexibility or to be closer to family and friends, says the eighth edition of the ‘Cigna 360 Well-Being Survey.’ ‘Burned Out Overseas – The State of Expat Life 2022’ found 90 per cent of expats are stressed and 98 per cent have experienced symptoms of burnout ‒ likely driven by feeling unable to switch off from work. Expats are experiencing an overwhelming sense of isola