|
|
| Market News: News Archive : Morning News Call Week ending |
|
|
Jul 3, 2009
|
|
|
FRIDAY, JULY 3, 2009 CANADIAN EDITION
TOP STORIES
• Canada has no plans to add to stimulus - Flaherty
• Teck to sell 17 pct stake to China for $1.7 bln
• Carlyle, Primus among bidders for AIG unit
• Rio wraps up rights issue, Australia demand strong
• Globe and Mail reaches tentative deal with union
BEFORE THE BELL
Toronto’s main stock index could open lower on Friday as oil and metal prices fall dragging the resource heavy index. Trade is expected to be thin with U.S. markets closed for the Independence Day holiday weekend. European and Asian shares were down as investors pulled back from commodities and resource-linked shares after a big drop in U.S. employment. Oil eased below US$67 a barrel, after a nearly 4 percent fall in the previous session, pressured by a stronger dollar and investor concern about the economic outlook and energy demand.
STOCKS TO WATCH THIS MORNING
• Antrim Energy Inc. (AEN). The company on Friday said it has been offered additional North Sea block- Block 21/24B on a 100 percent working interest basis, the block is in Fyne Field in the Central North Sea.
• Centamin Egypt Ltd. (CEE). The gold producer said on Friday it will raise gross proceeds of $29.6 million from a private placement of 19 million shares. Centamin plans to use the net proceeds for continued exploration activities and general corporate purposes.
• CI Financial Corp. (CIX). The fund manager on Thursday reported June net long-term fund sales of $500 million and assets under management increased to $60.1 billion as on June 30, 2009.
• Compton Petroleum Corp. (CMT). The company on Thursday said it completed annual renewal of its reserve-based credit facility worth $383 million with a syndicate of four banks. The credit facility supports operating and capital needs and recapitalization objectives, the company said in a statement.
• Gabriel Resources (GBU). The miner said on Thursday it had been dealt another setback in its attempt to develop its Rosia Montana gold deposit in Romania. The company also said a Bucharest appeal court rejected a challenge to a requirement that Gabriel acquire an "urbanism certificate" as part of the process for obtaining an environmental permit for the 10-million-ounce project.
• Golden Band Resources Inc. (GBN). The company on Thursday said it would sell $30 million gold-based debenture as private placement to fund production start on La Ronge gold project. The company also said a minimum of 15,000 units and up to a maximum of 30,000 units will be offered.
• Quebecor World Inc. (IQW). The commercial printer said on Thursday its U.S. and Canadian plans of reorganization have been approved by a U.S. bankruptcy court and the Quebec Superior Court. The approvals follow hearings held jointly in Quebec and New York on June 30 that sanctioned Quebecor's reorganization plans.
• SNC-Lavalin Group Inc. (SNC). The engineering company said on Thursday it will invest US$70 million for a 20 percent stake of Astoria Energy II, which is developing a natural gas power plant in New York City.
• Teck Resources Ltd. (TCKb). The miner said on Friday it will sell a 17.2 percent equity stake to state-owned China Investment Corp through a private placement that will raise $1.74 billion and help the company pay down debt.
ANALYST RECOMMENDATIONS
• Pacific Rubiales Energy (PRE) price target raised to $13.50 from $11.00; rating kept outperform at Raymond James
• Savanna Energy Services (SVY) price target raised to $6.80 from $6.50; rating kept hold at Canaccord Adams
Note: All values in Canadian currency, unless otherwise stated
"This publication is not, nor is it to be construed as, a solicitation or recommendation to investors to purchase, sell or hold any of the securities referred to in this publication. Global Securities Corporation is a member of the Canadian Investor Protection Fund"
|
|
|
|
|
|
INSIGHT
Canadian IPOs seen picking up as crisis eases
The dry spell for Canadian IPOs has started to ease as investors cautiously return to the market for new equity issues after the global financial crisis kept many of them out of harm's way over the past year.
In the past week three companies came to market with well-received initial public offerings, and bankers see more on the near horizon. The fresh appetite for risk has slowly surfaced in tandem with an overall rise in stock prices during the spring.
Most of the Canadian new issues are likely to be in the mining and energy sectors due to strong commodity prices. But no matter what the industry, guaranteed revenue streams are likely to be a common denominator for the coming IPOs, experts say.
"You definitely saw over the past year a lot of cash moving to the sidelines, moving into government debt and other fairly low-return but stable investments, and now I think it has been moving back into the markets," said Nick Einhorn, a research analyst at Renaissance Capital, a U.S.-based IPO think tank.
Last week Canada's Magma Energy Corp, a geothermal power company active in the western United States and South America, raised $100 million. The offering was briefly the biggest in Canada in 13 months.
It was topped twice on Monday, first by a Capital Power Corp IPO priced to raise about $500 million, and then by mortgage insurance company Genworth MI Canada, which priced an offering to raise some $850 million.
"All three of these transactions show that there is money to be deployed for quality names," said David Skurka, an investment banker at Bank of Nova Scotia, which co-led the Genworth deal.
Shares of all three companies will begin trading next week.
GLOBAL SURGE
Canadian IPOs in June alone far outstripped the $702 million raised by Canadian companies in 18 IPOs last year. The spate of deals is part of a global trend that took root in the second quarter as new issues reached record highs, and top bankers forecast a further pick-up in IPOs by yearend.
Last week VisaNet, the Brazilian affiliate of credit card network Visa Inc raised about US$4.3 billion in that country's largest-ever IPO.
Investors still smarting from last year's crash in equity markets are moving increasingly into resource companies with guaranteed cash flow, especially gold, a safe haven against a weaker dollar and potential hyperinflation scenarios.
"It's still early to say this is the start of the next big wave of IPOs, but it's definitely an improvement and there are definitely signs that people are willing to invest in IPOs again," said Renaissance's Einhorn.
Investment bankers say corporate quality, rather than specific sectors, will determine which companies attract investors in the current climate.
"While this is the outcome of renewed confidence in the markets, I wouldn't say the Canadian IPO market is wide open," said Ted Larkin, managing director for equity capital markets for UBS Canada. "It certainly is open for the right story."
All three of the issues in the past week stand out.
The Magma IPO was spearheaded by one of Canada's best-known mining entrepreneurs, Ross Beaty, and was three times oversubscribed.
The Capital Power Corp IPO will create Canada's second-largest publicly traded pure-play generation company after TransAlta Corp.
Genworth will raise nearly $1 billion in its IPO if the overallotment is fully subscribed. That would represent the most generated by a Canadian IPO since Franco-Nevada Corp raised US$1.3 billion in a 2007 offering, according to Thomson Reuters data.
"The Canadian IPO is the result of our extensive review of alternatives that could provide additional capital flexibility as we move through this economic cycle," Peter Vukanovich, president and chief operating officer of Genworth Canada, said by e-mail.
What the three companies have in common is a track record, whether it be Beaty's famous eye for money-making trends, or the solid revenue streams offered by Capital Power and Genworth.
"People are looking for companies that are stable, have a visible revenue model, have control over pricing and over customers' demands and have a good competitive position," Renaissance's Einhorn said.
Skurka said the Genworth IPO was marketed to institutional investors in Canada and the United States, with 75 one-on-one meetings with top investors across the continent. Few investors declined to review the IPO.
--- Pav Jordan, Reuters News
About Thomson Reuters: The unique insights of Thomson Reuters drive productivity and performance by helping our clients generate investment and business ideas, gain fresh perspectives on the markets, and, ultimately, make more money.
|
|
|
|
Jul 2, 2009
|
|
|
THURSDAY, JULY 2, 2009 CANADIAN EDITION
TOP STORIES
• China's BAIC drafts Opel bid to counter Magna
• Air Canada machinists reject pension deal, union says
• Quebecor World gets court OKs on reorganization
• Exelon raises hostile bid for NRG to US$7.4 billion
• Flagstone makes competing US$1.88 bln bid for IPC
BEFORE THE BELL
Toronto's main stock market index could open lower on Thursday, as weaker oil and gold prices weigh on the resource-heavy market. Traders will be closely watching U.S. non-farm payrolls data that is expected to show a loss of 363,000 jobs in June compared with 345,000 job losses in May, while the unemployment rate is forecast to edge up to 9.6 percent from 9.4 percent, according to Reuters polls. European shares fell, as investors await the European Central Bank President Jean-Claude Trichet's news conference after it left key rates on hold at 1 percent. Asian markets were mixed with strength concentrated in the technology and materials sectors. Oil was down at US$68.30 a barrel after data showed a bigger than expected rise in U.S. gasoline stocks.
STOCKS TO WATCH THIS MORNING
• BlackWatch Energy Services Corp. (BWT). The company said on Wednesday Bank of Nova Scotia (BNS) has agreed to extend maturity of senior credit facility to December 31, 2009. The amount available under facility is $9 million, of which company has currently drawn about $4.75 million
• Bombardier Inc. (BBDb). The company said on Tuesday signed a contract with Toronto Transit Corporation of about $851 million to supply 204 low-floor streetcars and said an addition of 400 vehicles could be ordered at a later date. Separately, Bombardier Transportation said on Wednesday it will supply another 22 BOMBARDIER TALENT 2 trains to Deutsche Bahn AG valued about US$140.
• Caledonia Mining Corp. (CAL). The company on Wednesday said Mitsubishi Corporation withdrew from proposed participation in the Rooipoort and Mapochsgronde Platinum Projects in South Africa.
• Crombie Real Estate Investment Trust (CRR_u). The company on Tuesday announced the appointment of Donald E. Clow as President and CEO, effective August 6, 2009.
• EXFO Electro-Optical Engineering Inc. (EXF). The company on Tuesday posted a wider-than-expected third-quarter loss, hurt by a goodwill impairment charge and foreign exchange losses, and forecast a weak fourth quarter. The company also said it cut 65 jobs, and would incur pre-tax charges of about US$1.3 million in the fourth quarter.
• Mano River Resources Inc. (MNO). The company and African Aura Resources Ltd signed an agreement on a proposed merger, under which Mano River will offer 1.57 shares for every share of African Aura.
• Orvana Minerals Corp. (ORV). The company on Tuesday extended its offer to acquire Kinbauri Gold Corp till July 13 and said all other terms of the offer remain unchanged.
• Potash Corp of Saskatchewan (POT). The fertilizer maker said on Tuesday its export consortium Canpotex has signed a contract with Japanese customers covering potash shipments for the second half of 2009. The company said the new contract was priced at over US$700 a tonne on a delivered basis.
• Profound Energy Inc. (PFX). The oil and natural gas company on Tuesday said president and CEO William Davis and COO Nicholas Wemyss have resigned.
• Quebecor World Inc. (IQW). The commercial printer on Tuesday gained approval of its bankruptcy reorganization plan from judges in the United States and Canada, clearing the way for the company to exit bankruptcy protection.
• Vangold Resources (VAN). The company is seeking oil and gas exploration rights for Rwanda's Lake Kivu following successful air and satellite surveys.
• Winalta Inc. (WTAa). The producer of manufactured and modular homes on Tuesday reported second-quarter loss of 15 cents a share, on revenue of $6.9 million.
ANALYST RECOMMENDATIONS
• Canadian Pacific Railway (CP) price target raised to $48 from $50; rating cut to market perform from outperform at Raymond James
• Canadian National Railway (CNR) price target cut to $52 from $55; rating cut to market perform from outperform at Raymond James
• Medical Facilities Corp. (DR_u) price target of $9.50; rating start with sector perform at RBC
• Cirrus Energy Corp. (CYR) price target raised to $3.50 from $2; rating outperform at BMO
• Denison Mines (DML) rating raised to outperform from market perform; price target raised to $2.50 from $1.90 at Raymond James
• Exfo Electro-Optical (EXFO) price target cut to $3.50 from $4; rating hold at Genuity
• Opti Canada (OPC.) price target cut to $2.50 from $3; rating market perform at Raymond James
• Ritchie Bros (RBA) rating raised to outperform from market perform; price target raised to $26.50 from $25.50 at Raymond James
EXDIVIDENDS
• Bank of Nova Scotia (BNS). Amount US$0.4365
• Transcontinental Inc. (TCLa). Amount $0.08
Note: All values in Canadian currency, unless otherwise stated
"This publication is not, nor is it to be construed as, a solicitation or recommendation to investors to purchase, sell or hold any of the securities referred to in this publication. Global Securities Corporation is a member of the Canadian Investor Protection Fund"
|
|
|
|
|
|
INSIGHT
POLL - Forecast raised for U.S. payroll losses in June
The U.S. economy likely shed 363,000 non-farm jobs in June, a steeper estimate than originally forecast, while the unemployment rate hit a 26-year high, but for a nation mired deep in recession that may be good news.
The U.S. Labor Department's report due on Thursday is expected to depict an economy still wallowing in recession, the deepest since at least World War Two. But the report will likely confirm the pace of job loss has slowed, suggesting the 18-month-old recession is easing its grip.
The report, which will be dissected by financial markets for clues on the economy, is expected to show the unemployment rate rose to 9.6 percent -- its highest since June 1983 -- from 9.4 percent in May, according to a Reuters poll of economists.
The initial estimate for payroll losses was 355,000 non-farm jobs last month, according to the median forecast of 62 economists.
But an updated poll this week of 76 economists raised the figure to 363,000 jobs. The department said in May 345,000 positions were eliminated by employers.
However, the drop still reflects a sharp slowing in job losses for an economy that shed an average of 691,000 jobs a month in the first quarter.
Although employers will have shed workers for 18 straight months, the trend has been moderating since job losses totaled 741,000 in January.
In a separate report, ADP Employer Services said on Wednesday U.S. private employers cut 473,000 jobs in June, more than expected but down from the 485,000 jobs lost in May. June's job loss was the smallest since October.
The Reuters poll on the Labor Department report estimated the pace of job cuts in the hard-hit manufacturing sector likely slowed to 148,000 in June from a 156,000 loss the previous month.
If it comes in close to the median forecast, or if job losses are even smaller, the report will likely be viewed as the latest sign the recession, the longest since the Great Depression, was winding down.
Heartened by a spate of relatively upbeat reports, economists have become increasingly convinced the recession will lift in the second half of the year.
Adding to optimism was a drop in planned layoffs in June, the fifth straight month.
Planned job cuts at U.S. firms fell 33 percent in June to 74,393, the lowest since March 2008, according to a report by Challenger, Gray and Christmas, Inc, the consulting firm. Even if the economy is close to a turn, the unemployment rate is expected to continue to march higher, with many economists expecting it to peak around 10 percent.
Wage gains have weakened along with the labor market. Economists said they expect average hourly earnings rose just 0.1 percent in June, the same as in May. The length of the average workweek is expected to hold at 33.1 hours.
--- Nancy Waitz, Reuters News
About Thomson Reuters: The unique insights of Thomson Reuters drive productivity and performance by helping our clients generate investment and business ideas, gain fresh perspectives on the markets, and, ultimately, make more money.
|
|
|
|
Jun 30, 2009
|
|
|
TUESDAY, JUNE 30, 2009 CANADIAN EDITION
TOP STORIES
• Magna-Opel deal in doubt; Qatar targets Porsche
• BG pays US$1.3 bln for U.S. shale gas JV with Exco
• Aeroplan makes $100 mln loan to Air Canada
• Navistar set to slash staff, production in Canada
• JPMorgan mulling pay rise for bankers - report
• Airlines lost US$3 billion in first quarter - IATA
BEFORE THE BELL
Toronto's main stock index could open higher on Tuesday as higher commodity prices lift the resource heavy index. U.S. stock futures point to a flat start on Wall Street ahead of a batch of new data that may give investors insight into the state of the recession-hit economy on the last day of the second quarter. European shares gave up early gains to turn negative in choppy trade, with weaker food producers and retailers outpacing positive energy and pharmaceutical shares. Asian stocks rose as investors added to trades based on a rebound in economic activity. Oil prices gave away early gains, easing towards US$71 a barrel, ahead of U.S. inventory data which is expected to show a rise in oil product stocks.
COMPANIES REPORTING EARNINGS
• Exfo Electro-Optical Engineering (EXF). Expected to report Q3 loss of 7 U.S. cents a share, according to Reuters Estimates
STOCKS TO WATCH THIS MORNING
• Akela Pharma Inc. (AKL). The company said on Tuesday it will pay Finnish funding agency Tekes about 956,000 euros plus interest to settle a demand for repayment of certain grants.
• Capital Power Corp. (CPX). An IPO by the company is being marketed to investors in Canada, the U.S. and Europe, and is expected to close on July 9, when the issue will start regular trading on the Toronto Stock Exchange. It will be Canada's largest initial public offering of the year, creating the second-largest pure-play power company in the country and signaling a rebirth in the nearly moribund Canadian IPO market.
• Groupe Aeroplan Inc. (AER). The company which operates Air Canada’s (ACa) frequent flyer program, has agreed to lend the cash-strapped airline up to $100 million, both parties said on Monday.
• Magna International (MGa). General Motors is close to a deal with Belgium-based RHJ International to sell a stake in Opel, after talks with preferred bidder Magna hit snags, the FT reported on Tuesday. The report also said holding company RHJ and GM could sign a memorandum of understanding this week, and noted GM was seeking bids from rival suitors despite a preliminary deal with Canadian auto parts group.
• Nortel Networks Inc. (NTL_pf). A U.S. bankruptcy judge on Monday approved procedures for the company to put most of its network carrier business up for auction in July.
• Northgate Minerals Corp. (NGX). The company said on Monday three-year collective agreement was ratified at Northgate'S Fosterville gold mine, replacing Australian workforce agreements and temporary Greenfield agreement.
• Patheon Inc. (PTI). JLL on Tuesday announced extension of its offer to acquire Patheon and said the offer will expire ten days from the mailing of a formal notice.
• SFK Pulp Fund (SFK_u). The pulp producer said on Monday it got a two-week temporary waiver from its lenders on a covenant breach and was in talks for a permanent amendment to its credit agreement.
ECONOMIC CALENDAR
08:30 GDP by industry mm for April: Prior -0.3% Expected -0.1%
08:30 Producer prices mm for May: Prior -0.5% Expected -0.5%
08:30 Raw materials mm for May: Prior -0.5% Expected 2.0%
CORPORATE EVENTS
10:00 Whiterock Real Estate Investment Trust (WRK_u). Annual and special meeting of unitholders
17:00 Exfo Electro-Optical Engineering (EXO). Q3 earnings conference call
ANALYST RECOMMENDATIONS
• Aeterna Zentaris (AEZ) rating start with buy; price target of $6.50 at Versant Partners
• Jazz Air Income Fund (JAZ_u) rating start with buy; price target of $6.25 at Genuity
• Manulife Financial (MFC) rating cut to hold from buy at Genuity
• Petro Andina Resources (PAR) price target raised to $12.50 from $12; rating kept at outperform at Raymond James
• Romarco Minerals (R) rating start with outperform; price target of $1.40 at Macquarie
• Victoria Gold (VIT) price target cut to 70 cents from 80 cents; rating kept at strong buy at Raymond James
• WestJet Airlines (WJA) rating raised to outperform from market perform at Raymond James
Note: All values in Canadian currency, unless otherwise stated
"This publication is not, nor is it to be construed as, a solicitation or recommendation to investors to purchase, sell or hold any of the securities referred to in this publication. Global Securities Corporation is a member of the Canadian Investor Protection Fund"
|
|
|
|
|
|
INSIGHT
Wall Street's fear gauge suggests the worst is over
Growing confidence that the U.S. economy is putting the worst recession in decades behind it has pushed the index known as Wall Street's fear gauge to its lowest level since just before Lehman Brothers collapsed last September.
The CBOE Volatility Index, known as the VIX, provides investors with portfolio insurance against fluctuations in the S&P 500 index . It soared to historic highs in the weeks after Lehman's rapid failure pushed financial markets to the brink and left an already crippled economy in tatters.
But amid numerous signs the economy is on the edge of a recovery, coupled with the best quarter for stocks in more than 10 years, the VIX has begun to look like its old self again.
"Investors see a lesser need for protection going forward; it looks like they don't see a revisit to the March lows," said Andrew Wilkinson,
senior market analyst at Interactive Brokers Group in Greenwich, Connecticut.
The VIX, which is calculated from Standard & Poor's index options, tracks the market's expectations of volatility over the next 30 days. It often moves inversely to the S&P benchmark and goes up as options premiums are raised.
The S&P 500 hit a more than 12-year low in early March, down more than 57 percent from the record high it set in October 2007, after the bursting of the housing bubble spiraled into a credit crisis and then into a global recession.
The VIX hit an intraday record high of 89.53 in late October, but on Monday it closed at 25.35, its lowest level since Sept. 11, 2008, before the weekend when Lehman collapsed.
"The path forward appears a less treacherous one according to what the VIX is telling us," Wilkinson added.
Stabilization of key economic indicators such as payrolls, home prices, bond yields and consumer confidence, as well as the Obama administration's plan to reactivate the recession-hit economy, have boosted bets on the economy's outlook. Investors are looking forward to this week's key housing and job market data on expectations that it will show further signs that the worst is over.
"I think (the VIX) is down primarily because the expectation is the economy is going to recover and we've started a bull market," said Hugh Johnson, chief investment officer of Johnson Illington Advisors in Albany, New York.
The S&P 500 has risen up to 40 percent from its March lows, and is on path to close its best quarter since the fourth quarter of 1998. But even as some market players expect a correction in the near term, the reading of the VIX suggests that that correction may not happen.
"The bears are beginning to throw in the towel on expecting a substantial stock market decline, so investors are beginning to sell implied volatility," Wilkinson said. "Investors do not perceive there's going to be another big crash."
But although the VIX has returned to levels similar to those seen before financial markets imploded, analysts said that does not mean the economy has recovered from the hit it took last year.
"We've gone through such a change in the economy that has required such drastic steps from both the Federal Reserve and the government that it is going to create a very different landscape going forward," added Wilkinson. "We can't relate (today's) VIX measures to were we've come from."
--- Rodrigo Campos, Reuters News
About Thomson Reuters: The unique insights of Thomson Reuters drive productivity and performance by helping our clients generate investment and business ideas, gain fresh perspectives on the markets, and, ultimately, make more money.
|
|
|
|
Jun 29, 2009
|
|
|
MONDAY, JUNE 29, 2009 CANADIAN EDITION
TOP STORIES
• Madoff can expect de facto life term at sentencing
• Tim Hortons files to restructure as Canadian
• Nortel creditors file objections to unit's sale
• Anglo may seek Brazil partner, not defence move
• CNOOC, PetroChina eye stake in InterOil gas project
• UBS to pay up to US$4.6 bln to close tax probe - report
BEFORE THE BELL
Toronto's main stock index could open higher on Monday as rising commodity prices support the resource heavy index. The Wall Street is poised for a flat open on a day when Bernard Madoff will be taken to court to hear his sentence for running Wall Street’s biggest and most brazen investment scheme. U.S. investors will also be looking for new data later in the holiday-shortened week for clues over the direction of the recession-hit economy. European shares rose today, led by energy companies and financials, and as data showed economic outlook in the euro zone has improved. However, Asian markets retreated, dragged by energy stocks, even as many investors stuck to the sidelines as the second quarter wound down. Oil rose towards US$70 a barrel after Nigeria's main militant group said it attacked a Royal Dutch Shell oil platform, outweighing a fairly bearish report from the International Energy Agency. Gold rose to US$942 per ounce, clinging to recent gains in choppy trade as the dollar cut earlier gains.
STOCKS TO WATCH THIS MORNING
• Alexis Minerals Corp. (AMC). The company on Friday said there is no minority interest related to the joint venture associated with the VMS properties as previously disclosed, and is restating first-quarter financial statements.
• Canadian National Railway Co. (CNR). The company on Friday announced a tender offer for US$300 million aggregate principal amount of 4.25 percent notes due 2009.
• CryptoLogic Ltd. (CRY). The software developer and supplier for the Internet gaming market on Monday said it signed multi-year deal to provide at least 10 of popular online slot games to UK’s Victor Chandler Group.
• Forbes Energy Services Ltd. (FRB). The oilfield services contractor said on Friday it dismissed Pricewaterhousecoopers LLP as its public accounting firm.
• Nortel Networks (NT). Creditors and suppliers of the bankrupt telecom equipment maker filed a series of objections on Friday to the proposed sale of a unit of the company to Nokia Siemens Networks.
• Sure Energy Inc. (SHR). The oil and gas explorer said on Monday it agreed to acquire a private oil and gas company for $8.8 million in cash and stock to boost its presence in Alberta.
• Tim Hortons Inc. (THI). The fast food retailer filed an application with U.S. regulators on Monday to reorganize as a Canadian company and warned that the move could affect its results for the remainder of the year.
• TransAlta Corp. (TA). The company’s 406-megawatt Unit 4 at the Sundance coal-fired power plant in Alberta shut on June 27, the Alberta Electric System Operator said in a report on Monday.
CORPORATE EVENTS
09:00 Etruscan Resources Inc. (EET). Shareholders meeting
10:00 SFK Pulp Fund(SFK_u). Annual general meeting
12:00 Crescent Point Energy Trust (CPG_u). Annual general meeting and special meeting
ANALYST RECOMMENDATIONS
• Addax Petroleum (AXC) price target raised to $52.80 from $50; keeps outperform rating at Raymond James
• Crombie REIT (CRR_u) coverage resumed with market perform rating versus prior underperform rating at Raymond James
• Golden Star Resources (GSC) price target raised to $3.25 from $3.10; rating outperform at Macquarie Research
EXDIVIDENDS
• E-L Financial Corp. (ELF). Amount $0.125
• Winpak Ltd. (WPK). Amount $0.03
• Laurentian Bank of Canada (LB). Amount $0.34
Note: All values in Canadian currency, unless otherwise stated
"This publication is not, nor is it to be construed as, a solicitation or recommendation to investors to purchase, sell or hold any of the securities referred to in this publication. Global Securities Corporation is a member of the Canadian Investor Protection Fund"
|
|
|
|
|
|
INSIGHT
Google's China rift hints at challenges ahead
The tension between Google Inc and Beijing is more of a nuisance than a financial blow for now, but it's a taste of the challenges that lie ahead as the world's largest Internet search engine strives to expand in China.
On Thursday, a Chinese official accused Google of spreading obscene content over the Internet. The comments came a day after Google.com, Gmail and other Google online services abruptly became inaccessible to many users in China.
Analysts said the service disruptions are unlikely to have major financial repercussions on Google given its presence in China, but may prompt the company to tweak its operations in the world's single largest Internet market by subscribers.
"China itself is a rounding error for Google. It's a high growth opportunity for them, but it's not a major contributor today," said RBC Capital Markets analyst Ross Sandler.
Google, which gets 52 percent of its revenue from outside the United States, does not divulge China-related income. Sandler estimates Google's annual revenue from China at US$200 million to US$300 million, or about 1.4 percent of the US$21.8 billion in revenue the company recorded in 2008.
"There's a lot of volume in China, but the monetization of the traffic, the online advertising, isn't as far along as it is in U.S. and Europe," said Richard Fetyko, an analyst with Merriman Curhan Ford.
Google's share of the Chinese search market lags Baidu, the country's home-grown Internet powerhouse which analysts believe has upwards of 60 percent market share.
But with more than 200 million Internet users, China represents a market Google cannot overlook.
"It's an important growth region for them," said Fetyko. "So they can't just ignore it and walk away from it."
The Chinese government has not acknowledged whether it had a hand in the recent Google service outages. Google said it is investigating the incidents but would not comment on whether it has had any contact with Chinese authorities.
ANTI-PORN DRIVE?
Beijing's criticism of Google comes as the government steps up a campaign against Internet pornography, but it isn't clear why the search engine has been singled out by Chinese officials.
China has required all PC makers pre-install special "Green Dam" software to filter out objectionable material like online pornography. Critics, including U.S. Commerce Secretary Gary Locke and U.S. Trade Representative Ron Kirk, say the software can also be used to enforce broader censorship.
Last week, Beijing ordered Google to block overseas sites with "pornographic" or "vulgar" content from being accessible through the Chinese language version of its search engine.
Google said it met with Chinese government officials and was taking necessary steps to ensure that the search results on its Chinese language site complied.
That pragmatic approach is common among U.S. Internet companies doing business in China. On Thursday, Yahoo Inc CEO Carol Bartz answered a question about Chinese censorship at the company's annual shareholder meeting by saying that Yahoo was not created to "fix China."
"We have worked better, harder and faster than most companies to respect human rights and try to make a difference," said Bartz.
"But it's not our job to fix the Chinese government."
Given the longer term importance of doing business in China, analysts said Google is now likely to figure out how to stay in the good graces of the Chinese authorities.
"There's nothing that Google can do to get around it but make peace with the Chinese government," said RBC's Sandler.
Google maintains a Chinese language website, Google.cn, which the company says complies with the local laws. The company's flagship, English language site Google.com does not adhere to China's rules.
The Chinese government's comments on Thursday were aimed at Google's English language Web site, suggesting that the authorities may be trying to exert a broader level of control over its operations.
It's unlikely that Google would alter search results on its international sites to conform to Chinese standards, said Sanford Bernstein's Jeff Lindsay. But he said the company could devise ways to address China's concerns, such as routing all Chinese Internet traffic going to Google.com through its Chinese infrastructure.
According to Google, the English site Google.com has suffered from outages in China before, such as in October 2007. YouTube, the video sharing site that Google own, has been inaccessible in China since March.
Sanford Bernstein's Lindsay said Beijing appears to be trying to exert more control over the Internet during a politically sensitive period, with the country marking the 20th anniversary of the Tiananmen Square protests.
And the role of the Internet in the recent protests in Iran, following that country's disputed elections, could also have been a factor, Lindsay said.
Last week, the U.S. Department of State urged microblogging service Twitter to delay an upgrade to its technology that would have disrupted daytime service to people in Iran.
Google accelerated the release of a Persian translation version of its online service last week to "improve access to information" for people inside and outside of Iran.
"Probably what sparked (the Chinese crackdown on Google), or made it particularly relevant at the moment, is the U.S. government and U.S. Internet companies being seen as having some kind of role in prolonging the unrest in Iran," Lindsay said.
--- Alexei Oreskovic, Reuters News
About Thomson Reuters: The unique insights of Thomson Reuters drive productivity and performance by helping our clients generate investment and business ideas, gain fresh perspectives on the markets, and, ultimately, make more money.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Please note Canadian quotes are delayed 15 min)
|
|
