Monthly commentary - Mackenzie Greenchip Team

May 31, 2025

Portfolio Manager Monthly Insights

Key takeaways

Environmental indexes and the Greenchip strategy both outpaced broader market gains in May.

Greenchip benefitted from continued European outperformance, especially from integrated electric utilities and from one of their major equipment suppliers, Siemens Energy. In addition, UK-based Johnson Matthey, a supplier of catalysts for auto emissions controls and recycler of platinum-group metals, gained more than 30% after announcing that it would be selling its catalyst technologies business to Honeywell for a very attractive price.

On the downside, solar and wind equipment suppliers and US-based renewable energy developers were under pressure as Trump’s ‘big beautiful budget’ bill sought to aggressively dial back incentives and undermine Chinese investments in the US.

Macroeconomic recap

While May saw further policy and tariff whiplash emanating from Washington, global equity markets increasingly dismissed associated risks by rising steadily throughout the month amid reduced volatility. A mutually agreed 90-day retreat from triple-digit tariffs between China and the US was celebrated in asset markets but quickly followed by renewed deterioration in this most important bilateral relationship. While the US accused China of moving slowly on its commitments, they in turn attempted to strong-arm other regions from using Chinese tech, banned exports of certain US tech to China, and threatened to revoke student visas for a large number of Chinese nationals at US universities. US-European trade relations were also subject to an about face of unprecedented speed, with a new Trump threat of 50% tariffs—delayed only two days later. As China, EU, and much of the rest of the world contend with volatile policy and posture from Washington, and as prospects for peace in Ukraine and the Middle East grow more distant, the global economy and trade is likely to face disruptions and higher costs no matter how intent equity markets are to ignore these risks. And meanwhile the much larger—and in many respects more important—global currency and bond markets seem to be paying closer attention. As Trump’s ‘big beautiful budget’ bill makes its way through Congress asking for another $4 trillion of debt to be added to the pile, challenges to the dollar and treasuries should only grow.

Current positioning and Outlook

Environmental indexes and the Greenchip strategy both outpaced broader market gains. The FTSE Environmental Opportunities index that we report on was led, once again, by Tesla which remains arguably the poster child for irrational exuberance in investment markets. With average trading volumes of more than $30b per day, the stock rose more than 20% in May even as analysts’ estimates for company earnings continued their inexorable decline, now 70% lower than they were three years ago. Greenchip benefitted from continued European outperformance, especially from integrated electric utilities and from one of their major equipment suppliers, Siemens Energy. In addition, UK-based Johnson Matthey, a supplier of catalysts for auto emissions controls and recycler of platinum-group metals, gained more than 30% after announcing that it would be selling its catalyst technologies business to Honeywell for a very attractive price that could lead to a cash distribution to shareholders of more than half of what the company was valued at before the deal. On the downside, solar and wind equipment suppliers and US-based renewable energy developers were under pressure as the aforementioned draft budget bill sought to aggressively dial back incentives and undermine Chinese investments in the US.

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