Monthly commentary - Mackenzie Greenchip Team

January 31, 2025

Portfolio Manager Monthly Insights

Key takeaways

Environmental sectors and the Greenchip strategy turned in small gains but underperformed broad indexes.

Shifting sentiment was sufficient to drive material losses in most solar and wind equipment producers and in utilities with large portfolios and pipelines of renewable electricity assets. Jinko Solar and Canadian Solar were marked down between 10–20%, while Canadian independent power producers Northland and Innergex each lost nearly 10%.

As earnings reports for the final quarter of the year rolled in, we experienced a positive surprise in Sandvik, Swedish based provider of advanced mining equipment. Also strong in January were electricity transmission equipment provider Siemens Energy, which pre-announced very strong financial performance, and Brazilian transmission and hydro dam operator Eletrobras.

Macroeconomic recap

2025—and a new regime in Washington—was ushered in with a bang, yet asset markets hardly blinked. Trump’s—and Musk’s—first days began with a flurry of executive orders and policy announcements, and by an all-out campaign in Washington against Democrats and the civil service. While vowing to MAGA (Make America Great Again), Trump also catered to the most speculative tendencies of American culture by attaching his name to new crypto coin issuance and by involving the government in yet more $100s of billions of AI investment (Stargate), surely distracting from the more prosaic task of rebuilding manufacturing might. On the AI front, the release of DeepSeek, an open-source AI model built in China that appears to be far less reliant on massive amounts of energy or high-end semiconductors, put a deep scare into euphoric American markets, but ultimately even this significant narrative change was quickly dismissed. In short, more volatility than usual in global stocks and bonds, but in the end the same result: higher global equities prices and higher US dollar as markets acted the role of Trump’s accomplice.

Current positioning and Outlook

Environmental sectors and the Greenchip strategy turned in small gains but underperformed broad indexes. Trump’s expected anti-environmental policies began with a moratorium on wind development on federal lands and offshore seabed but as yet major decisions regarding the Inflation Reduction Act (IRA) and long-standing tax credit incentives had not been announced. Nevertheless, shifting sentiment was sufficient to drive material losses in most solar and wind equipment producers and in utilities with large portfolios and pipelines of renewable electricity assets. Jinko Solar and Canadian Solar were marked down between 10–20% while Canadian independent power producers Northland and Innergex each lost nearly 10%. As earnings reports for the final quarter of the year rolled in, we experienced negative results in power semi producer STMicro, as that sector continues to search for a cyclical bottom in industrial and auto end demand, and a positive surprise in Sandvik, Swedish based provider of advanced mining equipment. Also strong in January were electricity transmission equipment provider Siemens Energy, which pre-announced very strong financial performance, and Brazilian transmission and hydro dam operator Eletrobras.

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