Q: I am baffled by the decline in Car.un from $56 to $48,with declining interest rates.Can you shed some light on this?
5i Research Answer:
While interest rates set by central banks are declining, the rate of bonds (yield curve) has been moving in the oppositve direction. On CAR.UN, there has not been material news in a month, but investors may be worried about the recent slowdown in immigration as announced by the government, and the fact that Canada's population could shrink for a couple of years, which of course would impact housing demand. CAR has had a bad couple of weeks, but is still up 22% over one year. It is one of the more expensive REITs based on cash flow as well, which can at times limit investor enthusiasm.