November 10, 2016 / 3:58 PM / a year ago

Canada pension boss sees opportunities after Trump win

TORONTO (Reuters) - The Canada Pension Plan Investment Board, one of the world’s biggest dealmakers, sees potential opportunities arising from Republican Donald Trump’s election victory, its chief executive said in an interview.

Mark Machin, who became CPPIB’s chief executive in June, said equity markets were reacting positively to the Republican party having control of the house and senate, potentially making it easier to pass legislation, and to the possibility of lighter regulation, particularly in the financial sector.

He also identified Trump’s commitment to spend big on infrastructure as a potential opportunity for investors.

“There’s a lot of expectation of increased fiscal stimulus, less regulation, more economic activity, that’s getting priced in here and that’s obviously helping the value of the assets that we own in the country and we would expect it will throw up some interesting opportunities over time,” Machin said.

Machin added that the expectation for rising interest rates in the U.S. was something that the CPPIB had been “anticipating for quite a time”.

“The market’s moving towards where we’ve had some positioning,” he said.

Machin said CPPIB, the world’s third biggest infrastructure investor, would be keen to invest in more U.S. infrastructure projects.

“We’d very much welcome more infrastructure opportunities. That’s terrific for us,” he said.

Machin also welcomed plans announced by the Canadian government last week to set up an infrastructure bank and said CPPIB could be willing to invest in ‘greenfield’ projects that include taking on construction risk through the new entity.

“We’re open to that. We’d certainly look at those opportunities,” he said.

Canada’s biggest public pension fund, which invests on behalf of 19 million Canadians, said on Thursday it ended the second quarter of its fiscal year with C$300.5 billion in assets, up from C$287.3 billion three months earlier.

The CPPIB, which manages Canada’s national pension fund, said it delivered gross investment returns of 4.83 percent in the second quarter, or 4.75 percent, net of all costs. That compared with returns of 1.5 percent in the previous quarter.

A report by RBC Investor & Treasury Services earlier this month showed Canadian pensions achieved average returns of 4.2 percent in the last quarter, benefiting from strength in global and Canadian equities markets.

Despite pursuing a strategy of diversifying into alternative asset classes such as infrastructure and real estate, the majority of CPPIB’s investments remain in public equities and fixed-income markets.

Reporting by Matt Scuffham; Editing by Chizu Nomiyama, Jonathan Oatis and Bernard Orr

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