The City of Moose Jaw’s stock investments gained more than $5 million during the fourth quarter of 2022 but lost over $8 million in total for the year.
During city council’s Feb. 13 regular meeting, council received the investment committee’s report with results from Q4 of 2022. Council then voted unanimously to receive and file the document.
There was $24,653,490.64 in the moderate-term portfolio and $71,298,803.85 in the long-term portfolio as of Dec. 31, 2022, for a total of $95,952,295. In comparison, as of Sept. 30, those numbers were $23,712,577.23, $66,994,498.29 and $90,707,075.52, respectively.
At one point, those investments were worth $102 million.
Moderate-term portfolio
The report showed from Oct. 1 to Dec. 31, the moderate-term portfolio increased by 3.97 per cent and gained $940,913.41. This increased the portfolio to $24,653,490.64 from $23,712,577.23.
However, for all of 2022, this portfolio declined 4.53 per cent.
Long-term portfolio
The report showed that from Oct. 1 to Dec. 31, the long-term portfolio increased by 6.42 per cent and gained $4,304,305.56. This increased the portfolio to $71,298,803.85 from $66,994,498.29.
However, for all of 2022, this portfolio declined 8.54 per cent.
Combined, both portfolios gained $5,245,218.97 during the fourth quarter, equal to about 15.8 percentage points in municipal taxation.
One percentage point in municipal taxation this year equals $330,701.
In comparison, both portfolios experienced losses in the first, second and third quarters of $4.7 million, about $8.05 million and $533,555.91, respectively. Therefore, after excluding the fourth quarter, the portfolios lost a total of $8,104,433.11 last year.
Committee meeting
According to the investment committee minutes from Jan. 26, members voted to have city hall transfer $452,592 monthly from February to July — a total of $2,715,552 — into the long-term portfolio from municipal funds. This would mitigate short-term economic and market risks and take advantage of market declines in 2022.
Economic forecast
Economic growth continues to slow, a recession is likely, inflation is declining, the U.S. dollar’s value may have peaked, central banks are tightening monetary quantities, bond markets are finding support, and the risk for equity market valuation has diminished but earnings remain vulnerable, RBC Dominion Securities said in its fourth-quarter investment outlook that was included in the investment committee report.
RBC expects to see a deceleration in growth this year, with most economies in the developing world slipping into a recession and emerging-market economics slowing. Overall, the company predicts global GDP to expand by 2.1 per cent in 2023, which is one-third less than in 2021 and one-half less than in 2022.
However, RBC predicts that the probability and expected depth of a recession might be lower than initially thought. Moreover, it expects a recession “to be of middling depth in most regions,” with a 1.75-per-cent peak-to-trough decline persisting for about three quarters.
Supply chain problems, commodity prices, monetary stimulus and fiscal stimulus were the main drivers that pushed inflation to multi-decade highs, but those are all reversing course and inflation has started to calm, said RBC. However, other factors may slow inflation’s descent, including tight labour markets, continued high goods prices and shelter costs.
The U.S. dollar had a 12-year bull run, but that ended in November, leading investors to wonder whether the greenback’s dominant period is over, the report continued. With valuations stretched, it’s clear that the current bull market is mature and that a major turning point is near.
“Such peaks are tough to call,” added RBC, “but we have greater conviction that a softening in the greenback is in store and that it will herald the start of a multi-year decline.”
The next regular council meeting is Monday, Feb. 27.
