Edmonton Journal

Fiera CEO forecasts US$90 oil by 2020

Fundamenta­ls of global supply-demand favouring higher prices: Desjardins

- KRISTINE OWRAM

Early last year, Jean-Guy Desjardins correctly predicted that Canadian equities were due for a rebound. He’s now saying oil prices will double, taking energy stocks along for the ride.

“The fundamenta­ls of the global supply-demand relationsh­ip are favouring higher oil prices,” Desjardins, chief executive officer of Fiera Capital Corp., said in an interview in Toronto. “When it goes up it’s going to go up for an extended period of time. I think it can go back to US$90, not in six months but over a couple of years.”

That’s way more bullish than most analysts, with the median forecast in a Bloomberg survey calling for US$65 crude in 2020 from US$45 now.

Still, Desjardins believes global central banks will keep some amount of stimulus as their economies recover, boosting demand for crude.

His method to prepare for this outcome is to buy up relatively cheaper Canadian shares.

Desjardins last February had called the bottom of the S&P/TSX Composite Index, which met his forecast by rising 18 per cent in 2016. This year, however, it has dropped about one per cent as oil prices languish while the S&P 500 has gained nine per cent.

“You’re better off being overweight­ed in Canadian equities today than being overweight­ed U.S. equities,” he said.

Montreal-based Fiera — which had $122.1 billion in assets under management as of March 31 making it Canada’s third-largest independen­t asset manager — is hoping to increase it to $200 billion by 2020. To get there, Desjardins said the company will need to add about $25 billion through strategic acquisitio­ns, in addition to organic and market-value growth.

Some 16 potential acquisitio­ns are being considered — 10 in the U.S., four in Canada and two in Europe — targeted at fixed-income managers focusing on emerging markets, U.S. taxable assets and Canadian alternativ­e assets.

Desjardins said his preference is to stick to North America, but he’s open to doing a deal in Europe or Asia if it’s an “exceptiona­l opportunit­y.” Fiera made its first foray into Europe with last year’s acquisitio­n of London-based Charlemagn­e Capital Ltd., which specialize­s in emerging and frontier markets.

Emerging markets are being watched because they’re seen as beneficiar­ies of the current global economic cycle.

“I think emerging markets are at the beginning of an upward cycle under the impact of a growing global economy,” he said. “I feel pretty good saying two years but I could almost say four years before we possibly go into recession.”

 ?? CHRISTINNE MUSCHI ?? Fiera’s Jean-Guy Desjardins believes demand for crude will rise from central banks keeping some stimulus as economies recover.
CHRISTINNE MUSCHI Fiera’s Jean-Guy Desjardins believes demand for crude will rise from central banks keeping some stimulus as economies recover.

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