Barlow’s Research Roundup: Federal budget a potential boost for this apartment REIT, says Scotiabank analyst

Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

Budget and REITs

Scotiabank analyst Mario Saric assesses the effects of Thursday’s budget on apartment REITs,

“Yesterday’s Federal Budget included updated Immigration targets. While the devil is always in the details, we think the update is a positive for higher population growth, and therefore rental demand, although the latter will take time to materialize, in our view. Despite a flat permanent resident annual target (approximately 380,000), it appears a corrective multi-year focus on substantial NPR reductions is over; this was our base case expectation. Renting also remains cheaper than owning. A step in the right direction, but we need supply absorption for rents to move higher. We still see 2H/27 as the earliest demand vs. supply inflection point, an event that we think can result in material Apartment REIT outperformance vs. other asset classes. In the meantime, KMP remains our only SO rating, albeit the preference gap has narrowed a bit as discussed yesterday”.

Iran conflict to persist

RBC Capital Markets head of global commodity strategy Helima Croft is concerned about an escalation of military action in Iran,

“While voter anger over high energy prices propelled Tuesday’s blue wave, a deal to bring the unpopular Iran war to a near-term conclusion will remain challenging. From our standpoint, the most likely course of action for the remainder of the year appears to be either a military escalation or a continuation of the blockade/ongoing tanker attack stalemate … During our recent trip to the Gulf, we encountered significant skepticism about the likelihood of a negotiated settlement that would lead to the full reopening of the Strait of Hormuz given Iran’s continued insistence on the full implementation of the June MOU … Throughout the week, we were struck by the divergence between deepening escalation concerns in the Gulf and the headline driven off-ramp optimism of market participants thousands of miles away. The selloff in the days preceding the midterms seemed predicated on the idea that the White House was extremely incentivized to stave off a democratic landslide by announcing a peace deal. Now that the electoral debacle has occurred, the theory of the deal case has shifted to one of the President cutting his losses in the face of public rebukes from the America-first camp and Senator Chuck Schumer’s (D-NY) pledge to end the war. Certainly, we think the prospects of a sustainable agreement would rise if the Iranians offered major concessions on the nuclear program, cash transfers, and Hormuz control rights. Hence, we will be monitoring the Qatari diplomatic track for any signs of a material shift. However, there are no indications yet that the Iranian leadership has moderated such demands, and, if anything, they have seemingly increased their social media trolling of the White House post midterms. Attacks on vessels continue, with the IRGC reporting that several oil tankers have hit waterway mines and caught fire since last night”

Healthy pensions

National Bank chief economist and strategist Stefane Marion reminded investors of Canada’s relatively healthy public pension outlook,

“The release of Marsh’s (formerly Mercer) latest Global Pension Index highlights an increasingly difficult intergenerational trade-off as elevated bond yields and aging populations squeeze public finances. Governments face mounting demands from younger households for housing, infrastructure and cost-of-living relief, just as pension and healthcare expenditures are set to rise. With debt-servicing costs also absorbing a growing share of revenues, the fiscal room to satisfy both generations is narrowing. The challenge is particularly acute in countries relying heavily on pay-as-you-go pension systems, where a shrinking working-age population must support a growing number of retirees. Bringing together Marsh’s pension-sustainability scores and OECD data on public pension spending and demographics helps illustrate the scale of the challenge. As today’s Hot Chart shows, Canada stands out among its G7 peers, with the highest pension-sustainability score, relatively low public pension spending and a more favourable demographic profile. This advantage partly reflects Canada’s greater reliance on funded pension arrangements, which reduces its exposure to demographic pressures compared with systems that depend more heavily on current workers’ contributions to finance retirement benefits. While Canada is not immune to aging-related pressures, it enters this adjustment from a stronger position than many European economies. For the latter, delaying reform risks turning an already difficult fiscal sustainability challenge into a broader issue of intergenerational fairness and social cohesion”.

(See Bluesky post of the day below for chart)

Bluesky post of the day

Canada in relatively better shape re public pensions (National Bank)

[image or embed]

— Scott Barlow (@jsbarlow.bsky.social) November 6, 2026 at 7:36 AM

Diversion

“The Hidden Brain Mechanism That Makes You Love Coffee, Chocolate, Fat, and Sugar” - SciTechDaily