The CDPQ has unveiled on Friday the results of its first half, revealing a decline of its net assets, which amounted to 333 billion $ June 30, 2020. As at 31 December last year, the net assets amounted to $ 340,1 billion $.
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7 August 2020 15: 30
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The Caisse generated a return of -2,3 % in the first half of 2020
Ugo Giguère
The Canadian Press
MONTREAL — The Caisse de dépôt et placement du Québec (CDPQ) undergoes also the economic impacts of the pandemic COVID-19, posting a return of -2,3 % in the first six months of 2020.
The CDPQ has unveiled on Friday the results of its first half, revealing a decline of its net assets, which amounted to 333 billion $ June 30, 2020. As at 31 December last year, the net assets amounted to $ 340,1 billion $.
Throughout the conference call with journalists, the president and chief executive officer, Charles Emond, insisted on the fact that the Fund is not in crisis, as it was the case during the recession of 2008.
“We have ample liquidity we need and all the flexibility required, he assured. The cash that we have are sufficient to meet the needs of our depositors, to support companies in Québec and invest in an agile way, opportunistically, to create returns.”
In the press release issued in the morning, the Caisse is attempting to be reassuring, recalling its annualized return of 6.3% over a period of five years and 8.7 % over ten years.
The CEO summarized the negative performance of the Fund to three main factors: first, the closure of shopping centres by reason of the COVID-19. It is an area of major investment for its real estate arm Ivanhoe Cambridge. These assets are valued at $ 12 billion in Canada.
In the second place, Charles Emond discusses the under-weighting of the CDPQ in large technology stocks (GAFA) and in all the digital sector in general.
“We have an economy that is in the process of scanning. It is important to open up and expose themselves to this area here that’s going to take more and more importance”, recognized the big boss who has made one of the priorities of his action plan to revive growth.
In the Equity category, the negative return at the end of the first half of the year stood at 5 %.
According to Mr. Emond, it is particularly because of the expectations of the depositors of the Fund, in terms of the level of risk, which it had avoided until now to invest significantly in technology companies on the stock markets. Its own criteria that target high-quality securities, high market share and levels of profitability levels have also played a role.
The third cause of the decline in the first half of 2020 would be significant interests held by the CDPQ in large quebec titles that have also been victims of the pandemic. Charles Emond maintains, however, that many of these delays have already been caught up in the single month of July.
Cirque du Soleil
Among the losses of the jewels of quebec, we may point to the serious problems faced by Cirque du Soleil. In the bankruptcy of this entertainment giant, the Caisse de dépôt et placement du Québec has suffered a loss of 170 million US$.
During the conference call of Friday, the CEO Charles Emond revealed that the Fund had written off its books all of its investment in the circus.
Moreover, at the time when creditors are trying to revive the company, founded by Guy Laliberté, the CDPQ has not completely closed the door to future participation in the new entity.
However, Charles Emond argues that strict conditions are necessary to ensure that the new Cirque du Soleil to succeed, is the presence of an operator and strategic to a level of debt that is considered reasonable. A decision could be made subsequently with respect to a Fund’s participation.
Ivanhoe Cambridge
A good portion of the losses incurred during the first six months is attributable to the real estate portfolio from Ivanhoé Cambridge.
More precisely, portfolios, real Estate and Infrastructure have experienced a decline of 7.3 % since the beginning of the year 2020, of which 11.7% for the single portfolio Buildings.
The weight of this decline lies mainly with the commercial centres, the value of which is declining with the closure of many of the banners in the retail trade. The dramatic increase of e-commerce makes it more vulnerable to these commercial investments.
According to the president and chief executive officer of Ivanhoe Cambridge, Nathalie Palladitcheff, we are witnessing a catch-up of the market in Canada. It seems that the phenomenon observed elsewhere in the world had not yet truly hit the country.
A shift has already been undertaken in the last year to dispose of certain shopping centers and promote investment in the industrial, logistics, residential and office buildings “new generation”, said Ms. Palladitcheff.
By the end of the year, Charles Emond says that he will be “careful, rigorous, selective” in the face of a fragile situation, and months will be difficult due to the uncertainty surrounding the global health crisis.
