MARQUEST WEEKLY COMMENTARY – FEBRUARY 1, 2016.

Liis Palmer, Cassels Investment Management Inc.

Global Balanced Fund

Last week the MSCI World Index was up 1.7 percent. The TSX was up 3.5 percent. The C$ was up 1.1 percent against the US$. The Marquest Global Balanced Fund A units closed at $16.80 ($16.89 before the $0.09 monthly distribution) compared with $16.59 the previous week. US Manufacturing PMI, Existing Home Sales and Initial Jobless Claims reports were all better than expected. An increase in the oil price, the Bank of Japan’s policy easing and the likelihood of a slowdown in US interest rate increases helped markets gain ground at the end of the month.

Significant contributors to performance were Crescent Point Energy (up 11.8 percent), HDFC Bank (up 6.6 percent) and Schlumberger (up 8.4 percent). WTI was up 4.4 percent to $33.62/barrel which drove investors to cover short positions in energy stocks. There was talk of Russian overtures to Saudi Arabia with regard to petroleum supply cuts. HDFC Bank was strong after reporting good retail loan growth, healthy fee income and stable asset quality. It rates a premium to its peers in India.

Laggards were Ryanair (down 8.1 percent), Aetna Health (down 8.2 percent) and Disney (down 4.1 percent). Though Ryanair is a leader in the European airline business, competition is fierce and capacity has been expanding. Yields are lower due to higher capacity and Ryanair’s 95% hedging strategy for fuel costs has left it unable to enjoy the lower oil prices. They report Q3 next week. Aetna, one of the largest health benefits providers in the US, was down in advance of the Q4 results. It looks like Aetna’s numbers have come in well ahead of expectations