City investments fell nearly $5 million in the first quarter of this year

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There was $79,923,836.46 in the long-term portfolio and $29,485,162.61 in the medium-term portfolio as of March 31, for a total of $109,408,999.07.

The City of Moose Jaw’s investment portfolios lost nearly $5 million in the first quarter of this year due to, among other things, nervous stock markets, the war in Ukraine and rising inflation.

At the regular City Council meeting on May 24, Council received the report from the Investment Committee with the results for the first quarter of 2022. Council then voted unanimously to receive and file the document.

There were $79,923,836.46 in the long-term portfolio and $29,485,162.61 in the medium-term portfolio as of March 31, for a total of $109,408,999.07, according to the report. In comparison, as of December 31, 2021, these values ​​were $83,929,536.26, $30,245,558.98 and $114,175,095.24, respectively.

Long term portfolio

From January 1 to March 31, the long-term portfolio decreased by 4.77% and lost $4,005,699.80. This caused the portfolio to drop to $79,923,836.46 from $83,929,536.26.

Medium term portfolio

From January 1 to March 31, the medium-term portfolio decreased by 2.51% and lost $760,396.37. This caused the wallet to drop to $29,485,162.61 from $30,245,558.98.

Together, the two portfolios lost $4,766,096.17 during the first quarter, which equates to 15.3 percentage points in municipal taxation.

Since the inception of these portfolios in 2019, they have provided total returns of $18,484,248.18.

Portfolio changes

At the investment committee meeting, the committee made two changes to the way the money in the long-term portfolio is invested.

Mayor Clive Tolley proposed that $2.71 million of this portfolio be invested in the City of Moose Jaw’s operating account; this motion was approved.

Tolley also proposed that the municipality establish a $2 million position in iShares Global Quality Dividend over time; this motion was approved.

Future prospects

Russia’s invasion of Ukraine could lead to a long period of uncertainty, with the invasion devastating the latter’s economy and severe sanctions that limit the flow of money, goods and technology affecting the economy. first, portfolio manager RBC Dominion Securities said in its report.

Due to this war, the financial institution has forecast a 0.7% reduction in eurozone GDP growth this year to 3% and a 0.3% decrease in US GDP growth to 3, 1%.

“From a long-term perspective, the Russian-Ukrainian war brings with it a range of potential implications, including a new Cold War, increased military spending, nuclear proliferation and increased motivation to redirect energy supplies towards renewables” , added RBC.

Meanwhile, the global economic recovery is slowing due to the pandemic, tighter financial conditions, slowing Chinese growth, reduced US spending and high levels of inflation, according to the report.

Global growth will likely slow to 3.6% this year from 6.2% last year. Growth in developed countries will fall to 3% from 5.1%, while growth in emerging markets will slow to 4.1% from 7.3% last year.

RBC predicted that the damage caused by sanctions against Russia will be unclear, meaning the risk of a recession in the United States this year is higher than ever.

Inflation is also hitting the United States – and the world – in the gut and is at the highest levels not seen in decades, RBC said. The main drivers are soaring commodity prices, supply chain issues, stimulative central banks, labor shortages and a global housing boom.

“We continue to believe that inflation will eventually return fully to normal over the longer term horizon, with aging populations and slower population growth bringing inflation even below historical norms,” the company added. .

RBC added that the Russian-Ukrainian war would change the monetary landscape, that central banks would react to inflationary pressures, that the long-term direction of bond yields would remain higher, that equities would have better return potential if earnings materialize and that cash would be redeployed to bonds and equities will be more attractive.

The next regular council meeting will be on Monday, June 13.

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