Barlow’s Research Roundup: Scotiabank analyst sees upside ahead for Apartment REITs

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

Apartment REITs treading water

Scotiabank analyst Mario Saric forecasts upside for apartment REITs starting in the fall of 2026,

“OUR TAKE: Neutral. Today’s Rentals.ca March asking rent data fell 1.1% m/m, a bit better than the February -1.3%, but worse than -0.8% 3-month rolling avg. and +1.5% last year; National 1-and-2 BR fell 1.6% and 1.0% respectively. That said, Specific REIT markets (which we est. = ~65% of Canada) …show flat avg. asking rent, ranging from KMP (+0.5%) to MI (-0.3%), with Vancouver, Montreal and GTA West = best performing. This implies to us that major markets are handily outperforming smaller markets, or there is a lot of noise in the data. Flat asking rents align with flattish implied cap rates vs. last month, though spreads to 10YR remain mostly tighter-than-avg. We accept sounding like a broken record. Coming into the year, we assigned 50/50 odds of a positive asking rent inflection over the Spring, which we lowered to 25% a couple of months back. We think the 2H/27+ Apartment demand vs. supply outlook is very good, but we may have to wait until the Fall’26 or Spring’27 for a true rebound in market rents, the primary asset class sentiment catalyst, in our view (barring more takeouts). KMP remains our only SO [sector outperform] , but it too remains a 2H/26+ story, in our view”

Upside catalyst for banks

BMO bank analyst Sohrab Movahedi believes capital markets activity is a sustainable upside catalyst for the domestic banks,

“Capital Markets — A Potential Source of Sustained Upside for the Canadian Banks. The Capital Markets segment accounted for ~23% of “Big 6” earnings over the past 12 months with a strong start to 2026. Conditions remain supportive of markets-related revenues whether trading or deal pipelines, suggesting earnings momentum could persist. Periods of sustained Capital Markets outperformance—both in absolute terms and relative to other segments—have historically coincided with premium bank valuations. During such periods, the Canadian bank index has traded at ~81% of the S&P/TSX Composite forward P/E, versus ~82% over the past six months and a long-term average of ~77%.

“Given the inherent volatility of markets-related businesses, we take a more conservative approach to forecasting, typically leaving greater scope for upside vs. downside revisions. We model modest growth in “Big 5” (ex. BMO) Capital Markets earnings of $13.7B (+6% y/y) in FY26 and forecast $13.3B (-3% y/y) in FY27. Outperform-rated names remain TD, NA, RY, and CM”

Market zeitgeist

BofA Securities investment strategist Michael Hartnett’s weekly Flow Show report remains bearish and punchy,

“Zeitgeist: “I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody,” James Carville, 1993. The Biggest Picture: it’s the stock market now, James… markets stop panicking when policymakers start panicking, and policy easing has quickly reversed Wall St bears & corrections since GFC (SPX just 4% “oversold” on ceasefire announcement); stocks “too big to fail”, no one short until policy fails (US$/bond collapse, credit event), why inflows to stocks in ’26 on course for record year. The Price is Right: Trump approval 41%, on economy 37%, on inflation 33%, new lows (still above ’22 Biden lows of 37%, 32%, 28% respectively); why post-war policy easing to address Main St affordability (+ve consumer stocks), why temporary trade détente likely Trump-Xi summit in May, why Fed won’t be raising rates before midterms. Tale of the Tape: trader sentiment was “sell the rip”, now “new highs by May”; bull mojo driven by “X-factors… DXY US$ ([U.S. trade-weighted dollar index] liquidity tell) back below 100, BKX banks (recession tell) held 150, new high SOX semis (PMI tell), new highs XBI biotech (duration tell); bulls in charge so long as SOX, XBI, GNR (commodities) hold highs; but bears back in charge if bond yields fall and HY bonds & private credit still can’t catch bid”.

Bluesky post of the day

Diversion

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