Rising Bond Yields to Lower Equity Valuations

The electric vehicle space continues to be the most actively discussed among retail investors. We also noted a decline in discussion on cannabis stocks.

Global equity markets retreated last week primarily due to rising yields from a major sell-off in the bond market, amid expectations of an economic rebound and rising inflation expectations. Rising yields typically result in lower equity valuations (from higher discount rates), and higher borrowing costs. The P/E ratio of S&P 500 is currently 22.2x vs the long-term average of 15.3x (Source: Refinitiv). As we do not expect an economic recovery until H2-2021, we expect a market correction, and the P/E ratio to revert to its historic average.

Although we expect base metal prices to exit 2021 at lower prices, we are raising our 2021 average price forecasts due to their near-term strength. We are maintaining our forecasts for gold and silver.

Companies Mentioned:

Noram Ventures Inc. , Gran Colombia Gold Corp. , Voyageur Pharmaceuticals Ltd. ,Falcon Gold , Cora Gold Limited ,Diginex Limited ,Elys Game Technology , Hello Pal International Inc. ,Kingman Minerals Ltd. , Inner Spirit Holdings Ltd. ,FinCanna Capital Corp. , Namaste Technologies Inc. ,