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Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

There is a good reason that Canadian investors should care about the South Korean economy.

The country is a major Asian industrial hub, and, unlike China, the data is reliable. More specifically, South Korea’s equity benchmark is highly correlated with global base metals prices, according to BMO, and this makes the country’s recent upside GDP surprise relevant for domestic mining stocks,

“South Korea’s economy fared better than expected last year. Real GDP contracted 1.0% in 2020, which is a much lighter hit than most economies suffered through. The economy has weathered the pandemic quite well, and we expect it to post a modest 3.3% growth rate in 2021 due to resilient domestic demand and a continued rebound in exports. And, as South Korea is still early in its economic recovery, we do not expect the Bank of Korea to tighten interest rates any time soon’

“@SBarlow_ROB From BMO: Upside surprise for South Korea GDP’ – (research excerpt) Twitter


The U.S. equity team at Goldman Sachs attempted to assess the effects of ESG investing on stock valuations in a Tuesday report (my emphasis),

US ESG-focused equity fund inflows in 2020 totaled $47 billion, two times larger than the previous five years combined. In terms of fund performance, the average US ESG equity fund has outpaced the S&P 500 (30% vs. 21%) … The secular migration into ESG will likely persist and accelerate under the Biden Administration… We highlight two strategies that should benefit from continued inflows into US ESG-focused equity funds: 1) US stocks in the GS Global Renewable Energy basket (GSWDRNEW) and 2) a sector-neutral list of S&P 500 companies with high Environmental & Social (E&S) scores.”

Stocks in the renewable power basket include Plug Power Inc., Bloom Energy Corp., Brookfield Renewable Corp., Renewable Energy Group Inc., Enphase Energy Inc., Canadian Solar Inc. and AES Corp.

“@SBarlow_ROB GS: “US stocks in the Goldman Sachs Global Renewable Energy basket” – (table) Twitter


Long-time readers will know that my two favourite equity sectors for longer term investors are health care and cloud computing.

BofA Securities published a report Wednesday on semiconductor stocks exposed to cloud spending,

“Top hyperscalers Microsoft (1/26), Facebook (1/27), Amazon (2/02), and Google (2/02) are set to report Q4 earnings over the next week and will set the tone for cloud expectations in 2021 … In 2020, Super 7 (US hyperscalers + Baidu, Alibaba, Tencent) grew 32% YoY, which drove ~30% growth in cumulative cloud sales for INTC, AMD, and NVDA… Similar to what INTC just reported last week, we model deceleration in YoY data center/server sales for both NVDA and AMD in Q4… in the US, vaccine rollouts have been slower than expected given difficult logistics and lack of resources and could delay any significant reopening until later in the year, which would be a positive for cloud/gaming/PC-exposed semis and could drive upside to cloud capex ests. Key risk to compute semis are high valuations as interest rates rise (now above 1% vs. .5% in Aug) and supply constraints at TSMC, but we continue to like this group’s long-term secular high growth exposure to AI (Artificial Intelligence), 5G, cloud computing, and gaming.”

Mr. Arya has buy ratings on a host of stocks including Advanced Micro Devices Inc., Analog Devices inc., NVIDIA Corp, KLA Corp. and Texas Instruments Inc.

" @SBarlow_ROB BoA: Top picks in cloud-exposed semis” – (research excerpt) Twitter


Diversion: “The 50 Best Cult Movies’ – The Ringer

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