This is a two-part series on small caps. This week, we look at historical small caps performance, recent small caps performance and the reasons behind the unexpected. Next week, we’ll dive into what this means for allocators and skeptics.

The case for a meaningful small-cap allocation in institutional portfolios

Small caps have just done something the textbook says they should not have. Since the Middle East conflict began at the end of February 2026, small caps have outperformed large caps on both sides of the Atlantic – through an oil-price spike, a sharp re-pricing of European front-end rates and deeply negative eurozone economic surprises. Inside those headline numbers, that is not the behaviour of an asset class to be avoided.

Source: Bloomberg

Small caps have outperformed large caps on both sides of the Atlantic for the last two years.

Source: Bloomberg

Crowded at the top, despite a universe of options

MSCI’s classification methodology defines small caps as roughly the bottom 14% of free-float market capitalization in each country it covers. This creates a universe that spans over 12,000 listed companies and the institutional allocation to that universe has, if anything, contracted. Even within the S&P 500, long-only funds remain overweight the largest quintile by market cap and underweight the smallest. The result is a public-equity allocation that, for all its sophistication, is structurally tethered to the same fifty or so mega-caps that everyone else owns.

As we observed in our September 2025 article, “Why small caps are built for what’s next,”* three of the four episodes of extreme S&P 500 top-ten concentration over the past century – the Go-Go conglomerate years, the Nifty Fifty, and the dot-com boom – were each followed by extended periods of small-cap leadership. Top-ten concentration at the dot-com peak reached 37.0%; today it stands at roughly 40%. The fourth episode, today’s AI-and-Mag-7 configuration, has not yet resolved. An allocator who treats the current setup as permanent is implicitly betting that this time is different, despite repeated historical evidence.
 

Why small caps matter through the cycle, not just at the turn

Small caps earn a place in the policy mix on three grounds independent of timing the next rotation.

1. Breadth of opportunity.
   The small-cap universe is where most listed companies actually live, offering diversified factor and theme exposure that a mega-cap-dominated large-cap book does not provide. Further, the sector composition is materially different from large caps; US small caps carry more industrials, financials and real estate than US large caps, against an underweight in technology.
2. Direct, undiluted exposure to the themes that matter.
   Reshoring, European fiscal expansion, defence, grid and AI-infrastructure build-out and Japanese corporate reform all get expressed more purely through small caps than through the large-cap index, because the pure-play, picks-and-shovels companies in these themes are typically not listed at large-cap market capitalizations.
3. Differentiated economic exposure.
   According to research by Kepler Cheuvreux, European small caps generate roughly 60% of revenues from within Europe, versus roughly 33% for the blue-chip 50. This domestic tilt has become a feature rather than a bug in a world of recurring trade frictions, and the pattern broadly extends across EAFE.Bloomberg data indicate that Japanese small caps generate roughly 65–75% of their revenues domestically, compared with about 45% for TOPIX large caps. That domestic exposure leaves them well positioned to benefit from the emerging global order.

Unexpected outperformance: How are small caps doing it?

The cyclical setup we identified previously – technological disruption, top-of-market concentration, valuations well above long-run averages – remains in place. The conditions since end-February 2026 have been textbook unfavourable for small caps. Per Kepler, European front-end rate expectations re-priced sharply higher, eurozone economic surprises turned deeply negative, and oil spiked before partially retracing. Kepler’s analysis of monthly relative returns since 1994 shows European small caps have, on average, underperformed large caps by roughly -0.29% per month in OECD-defined “downturn” phases and -0.43% per month in “slowdown” phases. That headwind has not materialized.

And yet, small caps are outperforming large caps. Two features of the outperformance are worth flagging:

1. Outperformance has been broad-based across sectors rather than carried by a narrow theme: Kepler’s sector-level data since February 27, 2026 shows positive median small-cap performance against negative median large-cap performance, with European small caps outperforming large caps in nearly every sector.
2. Small caps’ historical sensitivity to bond yields has visibly weakened – per Kepler, the relative performance of European small caps versus large caps has materially decoupled from the German Bund yield since early 2025, breaking a relationship that had held for most of the post-2021 period.

The asset class is no longer waiting for rate cuts.

The valuation picture is the cleanest piece of the case. On Kepler’s data, European large caps trade at roughly 15.2x forward earnings against a long-term average since 2009 of 13.2x. European small caps trade at 14.4x against an average of 14.8x. The US picture is similar: BofA Global Research reports the relative forward P/E of the Russell 2000 versus the Russell 1000 is approximately 0.82x, and historically the relative forward P/E explains roughly 46% of the variability in subsequent 10-year relative returns.
 

Next week: turning the case into allocation

Small cap performance has been unexpected, but not entirely surprising. As investment managers specializing small caps, we know what small caps are capable of. Now that this market segment is regaining the attention of investors, what does this information mean for portfolio allocations? How can allocators adjust their underweight? We’ll discuss those details in next week’s commentary.

Global Alpha was founded on the conviction that small caps are an inefficient asset class in which an experienced team can generate alpha across a full cycle. We are happy to discuss how a small-cap allocation can be sized within a particular plan’s constraints, and how our Global and International Small Cap strategies have navigated the recent environment.

* Contact us for a copy of this article.

The post Fixing the strategic underweight: Part 1 <br><h2>Think big. Buy small caps</h2> appeared first on Groupe financier Connor, Clark & Lunn ltée.

This is a two-part series on small caps. This week, we look at historical small caps performance, recent small caps performance and the reasons behind the unexpected. Next week, we’ll dive into what this means for allocators and skeptics.

The case for a meaningful small-cap allocation in institutional portfolios

Small caps have just done something the textbook says they should not have. Since the Middle East conflict began at the end of February 2026, small caps have outperformed large caps on both sides of the Atlantic – through an oil-price spike, a sharp re-pricing of European front-end rates and deeply negative eurozone economic surprises. Inside those headline numbers, that is not the behaviour of an asset class to be avoided.

Source: Bloomberg

Small caps have outperformed large caps on both sides of the Atlantic for the last two years.

Source: Bloomberg

Crowded at the top, despite a universe of options

MSCI’s classification methodology defines small caps as roughly the bottom 14% of free-float market capitalization in each country it covers. This creates a universe that spans over 12,000 listed companies and the institutional allocation to that universe has, if anything, contracted. Even within the S&P 500, long-only funds remain overweight the largest quintile by market cap and underweight the smallest. The result is a public-equity allocation that, for all its sophistication, is structurally tethered to the same fifty or so mega-caps that everyone else owns.

As we observed in our September 2025 article, “Why small caps are built for what’s next,”* three of the four episodes of extreme S&P 500 top-ten concentration over the past century – the Go-Go conglomerate years, the Nifty Fifty, and the dot-com boom – were each followed by extended periods of small-cap leadership. Top-ten concentration at the dot-com peak reached 37.0%; today it stands at roughly 40%. The fourth episode, today’s AI-and-Mag-7 configuration, has not yet resolved. An allocator who treats the current setup as permanent is implicitly betting that this time is different, despite repeated historical evidence.
 

Why small caps matter through the cycle, not just at the turn

Small caps earn a place in the policy mix on three grounds independent of timing the next rotation.

1. Breadth of opportunity.
   The small-cap universe is where most listed companies actually live, offering diversified factor and theme exposure that a mega-cap-dominated large-cap book does not provide. Further, the sector composition is materially different from large caps; US small caps carry more industrials, financials and real estate than US large caps, against an underweight in technology.
2. Direct, undiluted exposure to the themes that matter.
   Reshoring, European fiscal expansion, defence, grid and AI-infrastructure build-out and Japanese corporate reform all get expressed more purely through small caps than through the large-cap index, because the pure-play, picks-and-shovels companies in these themes are typically not listed at large-cap market capitalizations.
3. Differentiated economic exposure.
   According to research by Kepler Cheuvreux, European small caps generate roughly 60% of revenues from within Europe, versus roughly 33% for the blue-chip 50. This domestic tilt has become a feature rather than a bug in a world of recurring trade frictions, and the pattern broadly extends across EAFE.Bloomberg data indicate that Japanese small caps generate roughly 65–75% of their revenues domestically, compared with about 45% for TOPIX large caps. That domestic exposure leaves them well positioned to benefit from the emerging global order.

Unexpected outperformance: How are small caps doing it?

The cyclical setup we identified previously – technological disruption, top-of-market concentration, valuations well above long-run averages – remains in place. The conditions since end-February 2026 have been textbook unfavourable for small caps. Per Kepler, European front-end rate expectations re-priced sharply higher, eurozone economic surprises turned deeply negative, and oil spiked before partially retracing. Kepler’s analysis of monthly relative returns since 1994 shows European small caps have, on average, underperformed large caps by roughly -0.29% per month in OECD-defined “downturn” phases and -0.43% per month in “slowdown” phases. That headwind has not materialized.

And yet, small caps are outperforming large caps. Two features of the outperformance are worth flagging:

1. Outperformance has been broad-based across sectors rather than carried by a narrow theme: Kepler’s sector-level data since February 27, 2026 shows positive median small-cap performance against negative median large-cap performance, with European small caps outperforming large caps in nearly every sector.
2. Small caps’ historical sensitivity to bond yields has visibly weakened – per Kepler, the relative performance of European small caps versus large caps has materially decoupled from the German Bund yield since early 2025, breaking a relationship that had held for most of the post-2021 period.

The asset class is no longer waiting for rate cuts.

The valuation picture is the cleanest piece of the case. On Kepler’s data, European large caps trade at roughly 15.2x forward earnings against a long-term average since 2009 of 13.2x. European small caps trade at 14.4x against an average of 14.8x. The US picture is similar: BofA Global Research reports the relative forward P/E of the Russell 2000 versus the Russell 1000 is approximately 0.82x, and historically the relative forward P/E explains roughly 46% of the variability in subsequent 10-year relative returns.
 

Next week: turning the case into allocation

Small cap performance has been unexpected, but not entirely surprising. As investment managers specializing small caps, we know what small caps are capable of. Now that this market segment is regaining the attention of investors, what does this information mean for portfolio allocations? How can allocators adjust their underweight? We’ll discuss those details in next week’s commentary.

Global Alpha was founded on the conviction that small caps are an inefficient asset class in which an experienced team can generate alpha across a full cycle. We are happy to discuss how a small-cap allocation can be sized within a particular plan’s constraints, and how our Global and International Small Cap strategies have navigated the recent environment.

* Contact us for a copy of this article.

The post Fixing the strategic underweight: Part 1 <br><h2>Think big. Buy small caps</h2> appeared first on Groupe financier Connor, Clark & Lunn ltée.

Last month, we wrote to investors about how the outperformance of EM equities was the product of a very narrow rally driven by a boom in South Korean and Taiwan tech companies. We noted that despite parabolic moves in semiconductor stocks, valuations have actually become cheaper due to a massive acceleration in earnings growth underpinned by rising US hyperscaler investment seeking to power frontier AI models.

In the weeks since, tech stocks continued to surge in feverish trading led by leveraged retail investors in South Korea. Jefferies Global Head of Equity Strategies, Chris Wood, flagged in early April that margin lending in South Korea had doubled from W15.8 trillion at the end of 2024 to an incredible W32.7 trillion this year.

Korea margin loan balance (Kospi + Kosdaq)

Source: Jefferies Global Equity, April 2026.

Investors also rushed to gain exposure through passive vehicles including leveraged ETFs.

 CSOP SK Hynix daily 2X leveraged product

Source: Bloomberg

Among GEM managers, overweight positioning has been steadily rising since the beginning of 2025.

Source: NS Partners & EPFR (date to end-April 2026).

The only game in town

The acceleration in fundamentals for stocks in the AI supply chain has been so dramatic that it has swamped the broader EM investment universe. The economic drag created by the US–Iran conflict has hit markets with higher sensitivity to rising energy prices. As these markets weather the economic turbulence, AI looks increasingly like the only game in town. In response, many investors have sold down areas hit by these tailwinds to fund larger weightings in AI-exposed names.

This shift in allocation resembles Charlie Munger’s “Lollapalooza Effect,” where extreme, disproportionate outcomes arise when multiple cognitive biases and incentives converge and reinforce each other simultaneously. In this case, a shift by investors, attracted by a sharp acceleration in fundamentals, has been magnified by systematic strategies, passives and leverage chasing the momentum. As a result, the IT sector now accounts for over 40% of the benchmark.

Source: NS Partners & LSEG Datastream.

Deteriorating monetary backdrop another source of fragility

Our Chief Economist, Simon Ward, has been writing about a global monetary squeeze which began in the months leading up to Gulf War III. This was exacerbated by the war sending commodity prices and CPI momentum higher, leading to a slowdown in real money growth.

Deterioration in real money growth due to high CPI momentum

Source: Money Moves Markets, May 2026.

Nominal money expansion to counteract the liquidity squeeze is unlikely in the near term, with most major central banks now making more hawkish noises in response to price pressures. This means less liquidity support for markets, especially in pockets which have run hard such as semiconductors.

Broken story or a reset in overbought technicals?

In early June, crowded positioning and an itch to take profits collided with rising macro uncertainty arising from the release of strong US payroll data which topped market forecasts, igniting fears the US Federal Reserve would be forced into tightening monetary policy. It is also possible that forthcoming blockbuster IPOs of SpaceX, OpenAI and Anthropic placing a strain on market liquidity further unsettled investors sitting on large gains. This culminated in a sharp selloff on the 5^th of June, with winning trades in the tech sector suffering the most.

Source: Bloomberg data

Behavioural discipline

As noted in last month’s commentary, Rallying EM equities reflect an AI-powered earnings surge, we had been trimming AI exposure into strength on a view that parabolic stock moves would inevitably run into a pullback. We have also been re-allocating within our IT exposure (a modest c.3% overweight as at the end of May), from companies where stock performance risks becoming detached from reality and into niches benefiting from the same demand drivers but where investor enthusiasm has not been so frenzied.

Over the past few years, we have worked to sweat our risk budget within the AI-supply chain, tweaking the portfolio as data and conviction changes by rotating through a number of segments outlined below.

AI exposure across layers

Source: NS Partners, June 2026.

The aim of this activity is to maximise risk-adjusted returns by maintaining a healthy exposure to AI supply chain companies, but in an allocation that is cheaper, less crowded, more positively skewed and with more independent catalysts than a static allocation to the original winners.

The post Semiconductor lollapalooza stumbles appeared first on Groupe financier Connor, Clark & Lunn ltée.

Last month, we wrote to investors about how the outperformance of EM equities was the product of a very narrow rally driven by a boom in South Korean and Taiwan tech companies. We noted that despite parabolic moves in semiconductor stocks, valuations have actually become cheaper due to a massive acceleration in earnings growth underpinned by rising US hyperscaler investment seeking to power frontier AI models.

In the weeks since, tech stocks continued to surge in feverish trading led by leveraged retail investors in South Korea. Jefferies Global Head of Equity Strategies, Chris Wood, flagged in early April that margin lending in South Korea had doubled from W15.8 trillion at the end of 2024 to an incredible W32.7 trillion this year.

Korea margin loan balance (Kospi + Kosdaq)

Source: Jefferies Global Equity, April 2026.

Investors also rushed to gain exposure through passive vehicles including leveraged ETFs.

 CSOP SK Hynix daily 2X leveraged product

Source: Bloomberg

Among GEM managers, overweight positioning has been steadily rising since the beginning of 2025.

Source: NS Partners & EPFR (date to end-April 2026).

The only game in town

The acceleration in fundamentals for stocks in the AI supply chain has been so dramatic that it has swamped the broader EM investment universe. The economic drag created by the US–Iran conflict has hit markets with higher sensitivity to rising energy prices. As these markets weather the economic turbulence, AI looks increasingly like the only game in town. In response, many investors have sold down areas hit by these tailwinds to fund larger weightings in AI-exposed names.

This shift in allocation resembles Charlie Munger’s “Lollapalooza Effect,” where extreme, disproportionate outcomes arise when multiple cognitive biases and incentives converge and reinforce each other simultaneously. In this case, a shift by investors, attracted by a sharp acceleration in fundamentals, has been magnified by systematic strategies, passives and leverage chasing the momentum. As a result, the IT sector now accounts for over 40% of the benchmark.

Source: NS Partners & LSEG Datastream.

Deteriorating monetary backdrop another source of fragility

Our Chief Economist, Simon Ward, has been writing about a global monetary squeeze which began in the months leading up to Gulf War III. This was exacerbated by the war sending commodity prices and CPI momentum higher, leading to a slowdown in real money growth.

Deterioration in real money growth due to high CPI momentum

Source: Money Moves Markets, May 2026.

Nominal money expansion to counteract the liquidity squeeze is unlikely in the near term, with most major central banks now making more hawkish noises in response to price pressures. This means less liquidity support for markets, especially in pockets which have run hard such as semiconductors.

Broken story or a reset in overbought technicals?

In early June, crowded positioning and an itch to take profits collided with rising macro uncertainty arising from the release of strong US payroll data which topped market forecasts, igniting fears the US Federal Reserve would be forced into tightening monetary policy. It is also possible that forthcoming blockbuster IPOs of SpaceX, OpenAI and Anthropic placing a strain on market liquidity further unsettled investors sitting on large gains. This culminated in a sharp selloff on the 5^th of June, with winning trades in the tech sector suffering the most.

Source: Bloomberg data

Behavioural discipline

As noted in last month’s commentary, Rallying EM equities reflect an AI-powered earnings surge, we had been trimming AI exposure into strength on a view that parabolic stock moves would inevitably run into a pullback. We have also been re-allocating within our IT exposure (a modest c.3% overweight as at the end of May), from companies where stock performance risks becoming detached from reality and into niches benefiting from the same demand drivers but where investor enthusiasm has not been so frenzied.

Over the past few years, we have worked to sweat our risk budget within the AI-supply chain, tweaking the portfolio as data and conviction changes by rotating through a number of segments outlined below.

AI exposure across layers

Source: NS Partners, June 2026.

The aim of this activity is to maximise risk-adjusted returns by maintaining a healthy exposure to AI supply chain companies, but in an allocation that is cheaper, less crowded, more positively skewed and with more independent catalysts than a static allocation to the original winners.

The post Semiconductor lollapalooza stumbles appeared first on Groupe financier Connor, Clark & Lunn ltée.

Rack Attack, a Banyan Capital Partners portfolio company, today announced its partnership with RealTruck, bringing RealTruck products and expertise to all 45 Rack Attack retail locations. The partnership is designed to expand customer access to premium truck accessories, supported by in-store expertise and installation services.

“The launch of official RealTruck store-in-store retail shops within our Rack Attack locations will elevate our partnership and create the ultimate customer experience. Together, we are offering truck owners and outdoor enthusiasts the greatest choice of products, combined with the best service across all our markets in North America,” says Alexander Welbers, CEO, Rack Attack.

The post Rack Attack and RealTruck announce retail partnership across North America appeared first on Groupe financier Connor, Clark & Lunn ltée.

Global manufacturing PMI new orders edged down in May from April’s four-year-plus high. The expectation here has been for a further decline in H2, reflecting a slowdown in global six-month real narrow money momentum from a February peak – see previous post.

Two recent releases support this forecast. First, one-month growth of the OECD’s G7 leading indicator fell again in May. Growth peaked in December and has led PMI new orders by three months on average historically, suggesting that April’s orders high will prove lasting – see chart 1.

Chart 1

Secondly, the PMI stocks of purchases index indicates that stockpiling of inputs accelerated further last month, likely marking a cycle peak – chart 2.

Chart 2

Growth in new orders is related to the rate of change of stockbuilding, implying a slowdown even in the unlikely event that the stocks of purchases index remains at its current extended level – chart 3.

Chart 3

The post More slowdown signals appeared first on Groupe financier Connor, Clark & Lunn ltée.

Global manufacturing PMI new orders edged down in May from April’s four-year-plus high. The expectation here has been for a further decline in H2, reflecting a slowdown in global six-month real narrow money momentum from a February peak – see previous post.

Two recent releases support this forecast. First, one-month growth of the OECD’s G7 leading indicator fell again in May. Growth peaked in December and has led PMI new orders by three months on average historically, suggesting that April’s orders high will prove lasting – see chart 1.

Chart 1

Secondly, the PMI stocks of purchases index indicates that stockpiling of inputs accelerated further last month, likely marking a cycle peak – chart 2.

Chart 2

Growth in new orders is related to the rate of change of stockbuilding, implying a slowdown even in the unlikely event that the stocks of purchases index remains at its current extended level – chart 3.

Chart 3

The post More slowdown signals appeared first on Groupe financier Connor, Clark & Lunn ltée.

AI infrastructure investment has moved upstream. The advent of ChatGPT, Claude and other AI applications fueled demand for semiconductor chips that enable the software to “think.” The demand concurrently brought about record capital expenditures to build out hyperscale data centres housing those chips. Now the bottleneck is even more basic: power. For AI, electricity is no longer a utility input; it is strategic infrastructure.

Data centre growth needs energy – a lot of it

That shift is colliding with a US grid whose expansion is constrained at multiple points: new generators are stuck in interconnection queues; interstate transmission still requires approvals across multiple jurisdictions; transformer shortages are delaying grid upgrades; and local opposition is increasingly slowing or cancelling data centre projects. North American Electric Reliability Corporation’s 2025 long-term reliability assessment warned that 13 of 23 North American assessment areas face resource-adequacy challenges over the next decade, underscoring that the issue is not only energy volume, but deliverability and reliability.

Electric Power Research Institute’s Powering Intelligence 2026 report makes the same point from the data centre side. Its “Generation and Capacity Impacts of Data Center Load” analysis finds that data centre growth could require large additions of generation and transmission capacity, but that supply-chain, siting and permitting constraints may limit how fast those additions arrive. In least-cost scenarios, incremental data centre load is met primarily by new and existing gas generation rather than carbon-free resources.

Getting power to where it’s hard to get

That naturally explains the recent order flow into large reciprocating engines. In April, the Finnish vessel engine manufacturer Wärtsilä Oyj Abp announced a 790 MW off-grid power solution for a new Texas data centre facility, using its 50SG natural gas engines. Wärtsilä explicitly framed the order around fast access to reliable power in a region where the grid cannot adequately meet urgent AI-infrastructure demand. Around the same time, the Korean shipbuilder HD Hyundai Heavy Industries Co. Ltd. disclosed that it had signed a US data centre power generation equipment contract based on its 20 MW-class HiMSEN engines, citing total capacity of 684 MW.

The appeal is straightforward. Large reciprocating engines are modular, dispatchable, fast-starting, scalable in increments and deployable closer to load than central-station plants. Compared with combined-cycle gas turbines, nuclear projects or major transmission upgrades, they can often be installed in shorter phases and avoid waiting years for grid interconnection. For a data centre developer, speed-to-power can be as important as cost-of-power.

Maintaining engine power at sea and on land

HD Hyundai Marine Solution Co. Ltd. (443060 KS) in our Emerging Markets Small Cap Strategy is the sole authorized provider of maintenance, repair and overhaul (MRO) aftermarket services to HiMSEN engines worldwide. As a HD Hyundai-affiliate, the company benefits from having HD Hyundai Heavy Industries – the world’s second largest shipbuilder and the largest manufacturer of medium-speed 4-stroke vessel engines – as a captive market. Of approximately 17,000 HiMSEN units in operation globally (most of them generating power for over 4,000 ships at sea), roughly 2,000 units are generating power on the ground.

Could data centres move offshore?

Mitsui O.S.K. Lines and Karpowership’s Kinetics have already signed a memorandum of understanding to develop what they describe as the world’s first integrated floating data centre platform, hosted on a retrofitted vessel and supplied by a powership capable of using LNG. In that scenario, vessel-engine makers are also powering the physical layer of AI.

The post From sea to shore: Vessel engines enter the AI infrastructure race appeared first on Groupe financier Connor, Clark & Lunn ltée.

AI infrastructure investment has moved upstream. The advent of ChatGPT, Claude and other AI applications fueled demand for semiconductor chips that enable the software to “think.” The demand concurrently brought about record capital expenditures to build out hyperscale data centres housing those chips. Now the bottleneck is even more basic: power. For AI, electricity is no longer a utility input; it is strategic infrastructure.

Data centre growth needs energy – a lot of it

That shift is colliding with a US grid whose expansion is constrained at multiple points: new generators are stuck in interconnection queues; interstate transmission still requires approvals across multiple jurisdictions; transformer shortages are delaying grid upgrades; and local opposition is increasingly slowing or cancelling data centre projects. North American Electric Reliability Corporation’s 2025 long-term reliability assessment warned that 13 of 23 North American assessment areas face resource-adequacy challenges over the next decade, underscoring that the issue is not only energy volume, but deliverability and reliability.

Electric Power Research Institute’s Powering Intelligence 2026 report makes the same point from the data centre side. Its “Generation and Capacity Impacts of Data Center Load” analysis finds that data centre growth could require large additions of generation and transmission capacity, but that supply-chain, siting and permitting constraints may limit how fast those additions arrive. In least-cost scenarios, incremental data centre load is met primarily by new and existing gas generation rather than carbon-free resources.

Getting power to where it’s hard to get

That naturally explains the recent order flow into large reciprocating engines. In April, the Finnish vessel engine manufacturer Wärtsilä Oyj Abp announced a 790 MW off-grid power solution for a new Texas data centre facility, using its 50SG natural gas engines. Wärtsilä explicitly framed the order around fast access to reliable power in a region where the grid cannot adequately meet urgent AI-infrastructure demand. Around the same time, the Korean shipbuilder HD Hyundai Heavy Industries Co. Ltd. disclosed that it had signed a US data centre power generation equipment contract based on its 20 MW-class HiMSEN engines, citing total capacity of 684 MW.

The appeal is straightforward. Large reciprocating engines are modular, dispatchable, fast-starting, scalable in increments and deployable closer to load than central-station plants. Compared with combined-cycle gas turbines, nuclear projects or major transmission upgrades, they can often be installed in shorter phases and avoid waiting years for grid interconnection. For a data centre developer, speed-to-power can be as important as cost-of-power.

Maintaining engine power at sea and on land

HD Hyundai Marine Solution Co. Ltd. (443060 KS) in our Emerging Markets Small Cap Strategy is the sole authorized provider of maintenance, repair and overhaul (MRO) aftermarket services to HiMSEN engines worldwide. As a HD Hyundai-affiliate, the company benefits from having HD Hyundai Heavy Industries – the world’s second largest shipbuilder and the largest manufacturer of medium-speed 4-stroke vessel engines – as a captive market. Of approximately 17,000 HiMSEN units in operation globally (most of them generating power for over 4,000 ships at sea), roughly 2,000 units are generating power on the ground.

Could data centres move offshore?

Mitsui O.S.K. Lines and Karpowership’s Kinetics have already signed a memorandum of understanding to develop what they describe as the world’s first integrated floating data centre platform, hosted on a retrofitted vessel and supplied by a powership capable of using LNG. In that scenario, vessel-engine makers are also powering the physical layer of AI.

The post From sea to shore: Vessel engines enter the AI infrastructure race appeared first on Groupe financier Connor, Clark & Lunn ltée.

Crestpoint Real Estate Investments is pleased to continue its partnership with Vestcor and Anthem Properties on King + Park, a landmark mixed-use masterplan at the gateway to Burnaby. Joined by the Mayor of Burnaby and other guests, Crestpoint, Vestcor and Anthem celebrated the project’s ceremonial groundbreaking on June 1, 2026.

Situated in a transit-oriented setting, the full King + Park masterplan includes:

• 724 rental homes in two towers over a shared podium (Phase 1 now under construction)
• Restoration of the iconic Boot Office Tower
• 512,350 sq ft of retained and restored office space (the Boot)
• 43,402 sq ft of commercial space delivered across all phases
• 1,559 strata homes (future phase)

As Max Rosenfeld, Executive Vice President and Head of Asset Management at Crestpoint, noted, King + Park is “a distinct opportunity to honour heritage and reimagine a site simultaneously,” and Crestpoint is thrilled to be partnering on a vision that will have a positive, lasting impact.

The post Crestpoint, Vestcor and Anthem break ground on King + Park appeared first on Groupe financier Connor, Clark & Lunn ltée.