|
|
| Market News: News Archive : Morning News Call Week ending |
|
|
Dec 4, 2009
|
|
|
|
|
|
FRIDAY, DECEMBER 4, 2009, CANADIAN EDITION
TOP STORIES
• Canada November job gains beat expectations
• RBC Q4 profit rises, matches expectations
• Cisco gets Tandberg shares after battle
• Goldman likely to pay annual bonus in stock - report
• BofA board to meet on CEO search next week - report
BEFORE THE BELL
Toronto's main stock index could open in the negative on Friday, as lower oil and gold prices may offset gains from the large banks that turned in another solid quarter. Meanwhile, the jobs report from Statistics Canada came out favorable earlier on the day, showing the economy added far more jobs than expected in November. Wall Street is set for a higher open ahead of the crucial jobs data. The U.S. employers are expected to have trimmed 130,000 jobs in November, which would be the smallest decline since July last year, after reducing payrolls by 190,000 in October, according to a Reuters poll. Investors would also keep a close eye on the November unemployment rate, which is expected to be steady at 10.2 percent, while the October factory orders are expected to remain unchanged. European shares were down, dragged by banking and energy stocks. Most Asian markets were also negatively impacted. Oil prices fell below US$76 a barrel and gold eased towards US$1,200 an ounce.
STOCKS TO WATCH THIS MORNING
• Air Canada (ACa). The airlines said on Thursday it plans to more flights between China and the two busiest Canadian hubs after Canada received "approved destination status," clearing the way for Chinese group tours to the country.
• Amica Mature Lifestyles Inc. (ACC). The designer of luxury homes on Thursday appointed Arthur Ayres as the CFO and corporate secretary of the company, effective December 16.
• Brookfield Asset Management Inc. (BAMa). The asset manager and Simon Property Group Inc have bought some of General Growth Properties Inc's bank debt and bonds to position themselves for a bid for the bankrupt mall owner, the WSJ reported on Thursday.
• CI Financial Corp. (CIX). The independent mutual fund manager said on Thursday it has agreed in principle with senior management of the capital markets operations of Blackmont Capital Inc to sell that business to a group of employees.
• Inscape Corp. (INQ). The company on Thursday reported second-quarter loss of 3 cents a share, on sales of $16.8 million. The company also said it appointed Madan Bhayana as its CEO.
• Peregrine Diamonds Ltd. (PGD). The company on Friday reported microdiamond results for kimberlites and commenced 50 tonne mini-bulk sample processing for diamonds. The company also said three of the four kimberlites were found to be diamondiferous.
• Royal Bank of Canada (RY). Canada's largest bank said on Friday its fourth-quarter profit rose about 10 percent as strong wealth management and domestic banking offset losses in the lender's big U.S. operations.
ECONOMIC CALENDAR
10:00 Ivey PMI for Nov: Expected 60.0 Prior 61.2
CORPORATE EVENTS
08:00 Royal Bank Of Canada (RY). Q4 earnings conference call
08:30 Inscape Corp. (INQ). Q2 earnings conference call
10:00 Cossette Communications (KOS). Q4 earnings conference call
• Cameco Corp. (CCO) price target raised to $38.50 from $37.50; rating market perform at Raymond James
• National Bank of Canada (NA) price target raised to $58 from $56; rating neutral at Credit Suisse
• Suroco Energy Inc. (SRN) price target raised to 80 cents from 60 cents; rating outperform at Raymond James
• TD Bank (TD) price target raised to $61 from $57; rating neutral at Credit Suisse
EXDIVIDEND
• Maple Leaf Foods (MFI). Amount $0.04
• Pacific Northern Gas Ltd. (PNG). Amount $0.25
Note: All values in Canadian currency, unless otherwise statedANALYST RECOMMENDATIONS
|
|
|
|
INSIGHT
BofA TARP repayment piles pressure on PNC, Wells
Bank of America Corp's surprise move to repay government bailout funds may pressure rivals to follow suit, but don't expect many big banks in the near term to repay all the funds they've borrowed.
Most big banks that still have to repay the government are either not strong enough to do so or do not want to issue another round of shares and dilute current investors.
Two of the healthiest major banks that still have to repay the government -- Wells Fargo & Co and PNC Financial Services Group -- may have the ability to repay soon but have said that they do not want to issue more shares and dilute their shareholders.
"Government capital is still relatively inexpensive, so if you can stand being talked about, it doesn't make sense to be in a hurry to repay," said Walter Todd, portfolio manager at Greenwood Capital.
PNC and Wells Fargo also have less incentive to repay the government than Bank of America Corp. B of A received US$45 billion of funds from the Troubled Asset Relief Program, making it one of the few banks to get multiple rounds of bailout money. Those extra rounds gave the U.S. government more say in the bank's day-to-day affairs, including compensation for top employees.
"Bank of America really needed to get that monkey off their backs," Greenwood's Todd added.
A PNC spokesman said the bank will repay TARP in a shareholder-friendly manner by the end of 2010, subject to approval from regulators. The spokesman declined to comment on whether the bank is in discussions with regulators about returning the funds.
Wells Fargo is not changing its position on TARP repayment, a spokeswoman said. The bank will work closely with regulators to determine the appropriate time to repay TARP, while maintaining strong capital levels, the spokeswoman wrote in an email earlier this week.
Despite the denials, concern about dilution weighed on both PNC and Wells Fargo, with the former down 6.4 percent, making it the biggest decliner in the KBW Bank index. Wells Fargo, down 3.5 percent, also lagged the index.
WHO CAN REPAY?
A few key metrics may determine which banks have an appetite to repay TARP funds. One is tangible book value per share, a measure of a bank's net worth that strips out assets that may end up having no value, such as goodwill.
If a bank's share price is below its tangible common equity levels, any share issuance will hurt its tangible book value per share, effectively destroying value for common shareholders.
Several investors cited that as a reason for Citigroup, the third-largest U.S. bank, to be reluctant to issue shares now to repay the US$27 billion of Citigroup trust preferred securities that the U.S. government owns.
The government also has about a third of Citigroup's common shares, which it can sell when it cares to.
PNC and Wells Fargo's shares both trade at more than twice their tangible book value.
Capital levels are another key metric in determining which banks might choose to leave TARP. On this basis, Citigroup looks stronger. For example, it has a tier one common capital ratio of 9.1 percent, compared with 8.5 percent for Bank of America after the share offering. Wells Fargo's tier one common capital ratio is 5.2 percent, and PNC's is 5.5 percent.
Profitability is also an issue, because banks that are generating losses could eat into their capital levels in the future, investors said.
Citigroup has not yet generated profits from its main banking operations this year. And some other banks that still have TARP money outstanding, such as SunTrust Banks Inc, have posted big losses.
A spokesman for SunTrust said, "We have consistently said we have desire and liquidity to repay TARP. That continues to be the case."
Experts in Washington and New York said other banks are pressing to leave TARP soon, which will likely only intensify with Bank of America receiving permission.
"To have Bank of America beat them to the punch will really put pressure on them to repay as soon as possible," said Jaime Peters, analyst at Morningstar in Chicago, speaking about Wells Fargo. "Shareholders are going to start getting impatient for them to take action."
But even with shareholder pressure on management, and management pressure on regulators, there is not likely to be a large group of banks ready to leave now, analysts said.
"We could see a trickle -- there will be others -- but it won't be a torrent," said Ralph Cole, portfolio manager at Ferguson Wellman Capital Management in Portland, Oregon.
--- Elinor Comlay and Dan Wilchins, Reuters
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.
|
|
|
|
|
|
|
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
|
Dec 3, 2009
|
|
|
|
|
|
THURSDAY, DECEMBER 3, 2009, CANADIAN EDITION
TOP STORIES
• TD Bank posts flat Q4 profit
• CIBC Q4 profit rises 48 pct
• National Bank Q4 profit triples on market gains
• Comcast, GE unveil NBC Universal deal
• Bombardier Q3 profit falls 26 pct
BEFORE THE BELL
Toronto's main stock index may open higher on Thursday as a surge in gold and oil prices will help the resource-heavy index. Investors will also digest corporate results of some of the major banks in Canada. Wall Street is also set for a higher open as investors take cues from November's same-store sales. Bank of America would be in the spotlight after it said it would repay US$45 billion of taxpayer bailout funds. European shares were up building on gains in the previous two sessions and Asian stocks advanced as the appetite for risky assets remained strong. Oil edged above US$77 a barrel. Gold rallied to fresh record highs and was trading at around US$1,217 an ounce, as the dollar slid towards a 16-month low against the euro.
COMPANIES REPORTING RESULTS
• Inscape Corp. (INQ). Expected to report Q2 loss of 2 cents a share, according to Thomson Reuters I/B/E/S
STOCKS TO WATCH THIS MORNING
• Air Canada (ACa). The airlines will start charging economy-class passengers for a second checked bag on flights between Canada and several key international destinations, the company said on Wednesday, matching a growing industry trend.
• Bombardier Inc. (BBDb). The commercial aircraft maker reported a 26 percent drop in third-quarter profit on Thursday as the slump in the aerospace sector outweighed a strong performance by the company's rail transportation segment.
• Canadian Imperial Bank of Commerce (CM). The fifth-largest bank on Thursday said its fourth-quarter profit rose 48 percent, driven by gains related to its structured credit run-off business, volume growth in retail products and lower trading-related interest expenses.
• LAB Research Inc. (LRI). The pharmaceutical research service provider expects a stronger backlog at the end of the fourth quarter as the company is attracting new clients, its CEO said on Wednesday.
• National Bank of Canada (NA). The sixth-largest bank said on Thursday its fourth-quarter profit more than tripled, helped by stronger financial markets-related profit and fewer writedowns.
• Nortel Networks Inc. (NRTLQ). Bankruptcy courts cleared on Wednesday Ciena Corp's (CIEN) acquisition of a unit of bankrupt Nortel for US$769 million after fighting off a legal challenge by Nokia Siemens Networks.
• RDM Corp. (RC). The company on Thursday reported fourth quarter EPS of 1 cent, on revenue of $5.7 million.
• Suncor Energy Inc. (SU). The oil company on Thursday said its oil sands production during November averaged about 314,000 bpd and targets average oil sands production of 290,000 to 305,000 bpd in 2009.
• Toronto Dominion Bank (TD). The second-largest bank on Thursday posted flat fourth-quarter earnings and said its Canadian personal and commercial banking division saw strong volume growth across its products and its wholesale banking business swung to profitability.ANALYST RECOMMENDATIONS
CORPORATE EVENTS
08:00 Canadian Imperial Bank of Commerce (CM). Q4 earnings conference call
10:00 Bombardier Inc. (BBDb). Q3 earnings conference call
13:30 National Bank of Canada (NA). Q4 earnings conference call
15:00 Toronto Dominion Bank (TD). Q4 earnings conference call
16:30 Canadian Western Bank (CWB). Q4 earnings conference call
• Anvil Mining (AVM) price target raised to $5.50 from $5, rating outperform at RBC
• BCE Inc. (BCE) rating cut to sector perform from outperform at National Bank
• Canadian Oil Sands Trust (COS_u) started with outperform rating, price target of $35 at Macquarie
• Canadian Western Bank (CWB) price target raised to $22 from $21.50, rating neutral at Macquarie
• Legacy Oil Plus Gas Inc. (GLMa) price target raised to $15.50, rating outperform at National Bank
• Teck Resources (TCKb) rating cut to sector perform from outperform at RBC
• Quadra Mining (QUA) rating raised to sector perform from underperform at RBC
EXDIVIDEND
• ATCO Ltd. (ACOx). Amount $0.25
• Saputo Inc. (SAP). Amount $0.145
Note: All values in Canadian currency, unless otherwise stated
|
|
|
|
INSIGHT
GM board dominance, pay caps may hurt CEO search
Not long ago, General Motors as the biggest company in the U.S. could have attracted a legion of CEO candidates, but the automaker only looked within.
Now that it appears to be ready to look outside the company for a chief executive, analysts say the job may not attract the top talent needed to steer it.
"Bringing in an outsider is often the best way to get a quick and decisive turnaround," said Renny Ponvert, head of Management CV, an executive research firm.
"That said, it is rarely pretty. It is almost always the most expensive solution in terms of the pay packages -- which is ironic since we know that GM's largest shareholder, the U.S. government, has said that no such pay packages are going to be awarded while we are the largest shareholder."
Base cash salaries are limited to US$500,000 for more than 90 percent of GM's top 25 executives under new guidelines set by U.S. Treasury pay czar Kenneth Feinberg. Salaries above US$500,000 must be paid in company stock that must be held long-term.
Plus, cash bonuses based on short-term performance are banned, and "golden parachute" severance payments are limited.
In comparison, Ford's top executive Alan Mulally's cash salary from Ford for this year is US$1.4 million, although that is down 30 percent from last year. Most of his 2008 compensation of about US$13.7 million was in company stock. Shares of Ford closed at US$9.01 on Wednesday, up more than 500 percent from its 52-week low US$1.50 reached on Feb. 20.
Mulally continues to fly on private aircraft for personal and business travel, unlike his Detroit counterparts who have agreed to fly commercial as part of the government bailouts.
Also unlike his Detroit counterparts, he did not seek U.S. taxpayer money for a bailout.
"The new offer (for the GM CEO) is: Go run a global enterprise. Here's your commercial coach ticket," AutoNation Chief Executive Mike Jackson said on CNBC on Wednesday. "And if you turn this baby around, here's a modest government payoff."
GM's 68-year-old chairman, Ed Whitacre, acknowledged earlier this month the pay cap was a problem in finding outside talent, and he urged the Obama administration to allow more wiggle room for GM.
Whitacre, now acting CEO, is hunting for a new chief executive following the abrupt resignation of Fritz Henderson on Tuesday, the second chief executive to depart in eight months.
Henderson became CEO in March after Rick Wagoner was forced out by the Obama administration as part of the U.S. government-funded restructuring of GM.
"No one would take this job without a very strong termination agreement," said Logan Robinson, a long-time auto industry executive and professor at the University of Detroit Mercy School of Law. "Who would, with his right mind, take this job without strong protection after they fired two chief executives in eight months."
The company needs "a transformational leader, not an incremental leader who tinkers with the existing system," said Richard D'Aveni, professor of strategic management at the Tuck School of Business at Dartmouth College.
"You cannot break the mindset of people who have grown up in Detroit or Flint," D'Aveni said. "GM needs somebody who thinks much more like a consumer products organization than an automobile group."
GM Vice Chairman Bob Lutz, a long-time GM executive, said at the Los Angeles Auto Show on Wednesday he does not expect an impact on sales from Henderson's resignation, adding that cars, not one charismatic leader, will save GM.
"People buy cars, not management teams," Lutz said.
--- Soyoung Kim and Bernie Woodall, Reuters
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.
|
|
|
|
|
|
Dec 2, 2009
|
|
|
|
|
|
WEDNESDAY, DECEMBER 2, 2009, CANADIAN EDITION
TOP STORIES
• Canada maps out exit from stimulus plan, deficits
• Agrium to nominate slate to CF board
• Descartes Systems Q3 adj profit beats estimates
• Cisco has 84 pct of Tandberg, won't extend bid
• Dubai World to meet creditor panel on debt crisis
BEFORE THE BELL
Toronto's main stock index could open higher on Wednesday as gold touched a record high, boosted partly by expectations of a weak U.S. dollar, helping to lift shares of mining companies. Canada maintained its estimate of a record high 2009-10 budget deficit of $55.9 billion and said it would cut the deficit in half in two years just by winding down its economic stimulus plan. Wall Street is also set for higher open as recent economic data instill hopes for a sustainable recovery. European shares were flat, after notching up their biggest one-day gain in four and a half months in the previous session, as financial stocks offset gains from drugmakers. Asian markets were mostly up. Oil fell below US$78 a barrel after industry data showed a surprise build in U.S. crude stocks while gold rose above US$1,210 an ounce.
STOCKS TO WATCH THIS MORNING
• Agrium Inc. (AGU). The fertilizer maker which has been locked in a hostile battle to acquire its U.S. rival CF Industries said on Wednesday it plans to nominate a slate of directors to stand for election at CF's 2010 annual stockholder meeting. The company said it has also challenged CF to remove its poison pill to allow CF stockholders to decide whether to accept Agrium's offer.
• Canadian National Railway (CNR). The railway offered a potential olive branch on Tuesday to striking Canadian locomotive engineers, who are angry about a change in the amount of time they have to work each month. The company said it would agree to binding arbitration on wage and benefit issues and roll back its demand for a higher cap on the number of miles the engineers must drive each month.
• Crocodile Gold Corp. (CRK). The company on Tuesday increased its bought deal financing, by an additional 3.9 million shares priced at $1.30 a share, and would use part of the proceeds to fund exploration activities in Australia.
• Descartes Systems Group Inc. (DSG). The logistics management software and services provider on Wednesday posted a third-quarter adjusted profit that beat estimates by a penny, helped by an increase in its services revenue.
• Hydrogenics Corp. (HYG). The fuel cell maker Wednesday said its Belgium-based operating subsidiary, Hydrogenics Europe N.V., has secured a EUR 3.5 million operating facility from Dexia Bank S.A., a Belgium-based financial institution and said to use the facility to finance working capital requirements.
• Lucara Diamond Corp. (LUC). The company on Tuesday said it would issue 100 million in a private placement at $1 each.
• Platmin Ltd. (PPN). The development stage natural resources company on Wednesday appointed Tom Daleto as CEO. The company also said it is changing its financial year-end to December 31 in each calendar year.
• Sandvine Corp. (SVC). The broadband network solutions provider on Wednesday said it won six new mobile service provider customers and two new DSL operator customers who come from the U.S., Southern Europe, Central America, Australia and Southeast Asia.
• Sino-Forest Corp. (TRE). The company said on Tuesday it commenced an offering of up to $400-million convertible senior notes due 2016, plus a 15-per-cent overallotment option, and a contemporaneous offering of common shares.
• TVI Pacific Inc. (TVI). The company on Wednesday completed its ninth shipment of copper concentrates produced at the Canatuan and expects to earn gross revenue of US$7.7 million from MRI Trading AG.
ECONOMIC CALENDAR
13:00 Finance Minister Jim Flaherty is scheduled to speak in Winnipeg, Manitoba.
• Avenir Diversified Income Trust (AVF_u) resumed coverage with outperform rating and $5.50 price target at Raymond James
• Baytex Energy Trust (BTE_u) price target raised to $28.50 from $26; rating market perform at Raymond James
• Petrobakken Energy (PBN) rating raised to outperform from market perform at Raymond James
EXDIVIDEND
• Cascades (CAS). Amount $0.04
• Computer Modelling Group Ltd. (CMG). Amount $0.18
• Imperial Oil Ltd. (IMO). Amount US$0.0926
Note: All values in Canadian currency, unless otherwise statedANALYST RECOMMENDATIONS
|
|
|
|
INSIGHT
U.S. credit card offers pick up for select few
U.S. credit card companies are targeting affluent consumers in a resurgence of marketing campaigns, as they recover from massive defaults by subprime borrowers in the past year.
"We have seen almost the entire mailbox skew towards prime and superprime consumers," said Andrew Davidson, senior vice president of research company Mintel Comperemedia.
Credit card promotional mail volume rose 34 percent in October from September, to 180 million pieces, the highest level since December 2008, according to a recent study by Mintel Comperemedia.
That was the largest month-to-month increase in credit card mail volume since 2004, when the industry was starting to recover from the 2001 recession.
A recent drop in credit card defaults from record highs may have made banks more comfortable with recruiting new clients, analysts said.
"We are seeing more spending in marketing initiatives now that signs of credit deterioration have eased somewhat," said Brad Ball, an analyst at Ladenburg Thalmann. "You've got more credit stability, less need for significant increases in loan loss provisions, and therefore more capital available to invest in new account acquisitions."
However, mail volume is still down 74 percent year-to-date, and is expected to end 2009 at the lowest level in at least 10 years, Credit Suisse analyst said in a recent note to clients.
The offers are not available to everyone. Unlike recent years when credit card offers were mailed to households of all income levels, lenders now target only affluent customers who are considered less risky.
"Chase and American Express are the two that really increased their activity," Davidson said.
JPMorgan Chase & Co ranked first in credit card mail offers in October -- more than doubling its volume from September -- as the largest U.S. issuer of Visa-branded credit cards promoted its new Sapphire card to the top 15 percent of households by income.
American Express Co ranked second, as the largest credit card company by purchase volume increased credit card and charge card promotions, aggressively competing with Chase for wealthy customers.
Together, JPMorgan and American Express issued two out of five credit card offers by mail. Both have also been advertising aggressively on television and in newspapers.
Chase's TV commercials show a young woman who spent all the reward points on a dress, while her husband was thinking of using them for a vacation. American Express is promoting its cards with dozens of original happy faces created with bags, umbrellas, or sofas.
American Express spent US$150 million more in marketing and advertising in the third quarter than the second quarter, and has said it expects to keep investing in marketing as loan losses decline.
But even some smaller rivals have started offering more credit cards. HSBC, hurt by its exposure to subprime borrowers, increased mail offers by almost 50 percent in October from September, while U.S. Bancorp doubled its promotions.
"There has been some abatement of pressures from credit, which has made some issuers a bit more comfortable originating in certain segments of the market," said Sanjay Sakhrani, an analyst at Keefe, Bruyette & Woods. "It's a starting point."
REWARDS
Credit card companies have been tightening lending in the last year as loan losses soared in the worst financial crisis since the Great Depression.
The industry, which quickly expanded from 2003 to 2007 among borrowers with weak credit ratings, was caught with billions of dollars of losses as the housing meltdown hit Main Street.
In the last 12 months, major credit card lenders have eliminated at least 20 million accounts, cut lending limits, and slashed membership rewards programs to cushion losses.
They have also raised fees and interest rates ahead of regulations that would limit them in three months. Zero percent balance transfer teaser rates are disappearing, and many companies are again starting to charge annual fees.
Such moves could backfire for some card issuers, though, as consumers may dump some plastic rather than pay for the privilege of carrying unused cards in their wallets.
"You are fighting for market share. It's all about being the No. 1 card in the wallet. The battle will intensify because you will only use one or two cards with the fee. You are not going to have four or five cards," Davidson said.
In this fight, rewards that are easy to cash in may be the key to court customers. For example, Capital One Financial Corp and Discover Financial Services are offering cash back at gas stations and groceries shops.
"It's all about offering compelling rewards. Consumers are more interested these days in more accessible rewards as opposed to VIP tickets," Davidson said.
--- Juan Lagorio, Reuters
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.
|
|
|
|
|
|
|
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
|
Dec 1, 2009
|
|
|
|
|
|
TUESDAY, DECEMBER 1, 2009, CANADIAN EDITION
TOP STORIES
• Barrick completes elimination of gold hedges
• Dubai World $26 bln plan soothes contagion fears
• Staples profit beats estimates but Q4 to weaken
• AIG closes debt for equity deal with NY Fed
• Smurfit-Stone files reorganization plan
BEFORE THE BELL
Toronto's main stock index may open higher on Tuesday as the resource-heavy market may benefit from firm commodity prices. Efforts by Dubai World to restructure about US$26 billion in debt out of the estimated US$59 billion it owes reassured investors that the emirate's debt problems can be contained, helping global markets edge higher. Wall Street is also poised for a higher open, ahead of slew of economic data. The ISM manufacturing index is expected to grow at a slower pace in November, while the pending home sales for October is expected to fall 0.8 percent, compared with a 6.1 percent rise in September, Reuters polls showed. European and Asian stocks rose, lead by banking and commodity stocks. Oil was up above US$78 a barrel, adding to the previous session's advance and gold hit a new record high and was trading at around US$1191.90 an ounce.
STOCKS TO WATCH THIS MORNING
• Barrick Gold Corp. (ABX). The gold producer said on Tuesday it has completed the elimination of all of its gold hedges as planned, a move that should remove what has been a big drag on its shares. The company added said it expects gold production in 2010 of 7.7 million to 8.1 million ounces at lower total cash costs than 2009.
• Canaccord Capital Inc. (CCI). The investment banker said on Tuesday it has renamed the company's name to Canaccord Financial Inc as part of a firm-wide rebranding initiative and the company's stock symbol will change to "CF" from "CCI".
• Enerflex Systems Income Fund (EFX_u). The company's board on Tuesday unanimously recommended unitholders to reject the unsolicited offer of Toromont industries (TIH) as the board believes Toromount does not offer full value for Enerflex.
• First Uranium Corp. (FIU). The company on Tuesday said it expects Gold Wheaton Corp transaction will close on or around December 7, 2009 as it received an approval notification of the transaction form the South African Reserve Bank.
• Freewest Resources Canada Inc. (FWR). The metal explorer, in its comments on the revised offer of Noront Resources (NOT), urged its shareholders not to tender their shares to Noront until it had studied the revised offer.
• Genco Resources Ltd. (GGC). The company on Monday said full access to La Guitarra Mine was restored, as the illegal roadblock was removed. The company said it will focus on resuming production from the underground resources.
• Husky Energy Inc. (HSE). The integrated oil and gas company on Monday acquired heavy oil properties in Alberta and Saskatchewan producing more than 6,000 barrels per day and containing as much as 20.5 million barrels of reserves.
• Nuvo Research Inc. (NRI). The company on Tuesday said its Vice- Chairman John London is appointed as co-CEO along with Dan Chicoine.
• Sandvine Corp. (SVC). The company, which helps broadband and telecom operators manage data traffic, said on Tuesday it has canceled stock options and said unamortized expense related to these options of $1.7 million will be immediately recognized.
• Sulliden Exploration (SUE). The company on Tuesday appointed Anna Ladd as its CFO.
• TransAlta Corp. (TA). The company's 406-megawatt Unit 4 at the Sundance coal-fired power plant in Alberta shut on Monday, the Alberta Electric System Operator said in a report.
• Alamos Gold Inc. (AGI) price target raised to $16 from $13.30; rating strong buy at Raymond James
• Anatolia Minerals (ANO) price target raised to $4.30 from $3.75; rating outperform at Raymond James
• Anvil Mining (AVM) price target raised to $5 from $4, rating outperform at Raymond James
• Detour Gold Corp. (DGC) price target raised to $22 from $18.75; rating outperform at Raymond James
EXDIVIDEND
• Alimentation Couche-Tard Inc. (ATDa). Amount $0.035
Note: All values in Canadian currency, unless otherwise statedANALYST RECOMMENDATIONS
|
|
|
|
INSIGHT
COLUMN - Dubai not a canary but another miner needing oxygen
Taken all in all, Dubai's debt crisis is the most significant financial development of 2007. Here in late 2009 it amounts to far less.
Back in the day it would have been a newsflash that apartments ultimately require occupants, that investment needs to be ratified by cash flows, and that debt, Sharia-compliant or garden variety, someday must be repaid.
Dubai's difficulties are being sold as the commercial real estate debacle somehow morphing into a sovereign debt crisis and it is true that the effective borrowing rates of the more raddled national borrowers such as Ireland have been driven up in recent days.
Dubai's government said on Monday that it is not responsible for the borrowings of Dubai World, a state-controlled development conglomerate saddled with huge debts amid a property market where the going rate has halved.
Dubai last week applied for, or imposed depending on your point of view, a six-month repayment freeze for Dubai World and its property developer Nakheel.
"Creditors need to take part of the responsibility for their decision to lend to the companies. They think Dubai World is part of the government, which is not correct," said Abdulrahman Saleh, director general of Dubai's department of finance.
Quite, and hopes that credit extended to Dubai World would be made good by the state of Dubai or by the richer emirate of Abu Dhabi seem to be foundering. This is bad news for those creditors, with the worst potential losses traceable to banks in Britain and Europe, but its probably just not that big of a deal.
For one thing, the amount potentially at issue, even if you allow for an extra 50 percent off balance sheet taking it to circa US$125 billion, is simply not big enough in the scale of things to tip significant players over the edge.
And it tells us very little about the state of the world or the likely outlook for real estate. It is very hard to call something a canary in the coal mine when you are already cleaning up after a mining disaster.
For a time the magical thinking behind Dubai, "build it and they will come", worked and despite it being remote, having an inhospitable climate and little inherent commercial reason for existing, the city boomed. It's a bit like having a feast so the harvest will be good rather than when it actually is, but it was effective for a time as prices rose and investment was attracted.
DUBAI WORLD MEETS MORAL HAZARD WORLD
The nub of the meme in financial markets is that this is about sovereign exposure and that creditors will be shocked if the state support they thought they had coming never arises.
But is it terribly bad news for the rest of us? Probably not. Investors should have seen it coming - there have been quite a few headlines recently about the real estate crash- and should not have conflated "implicit" with "explicit".
Dubai has made clear in its own bond prospectuses that it might lend support but that it was under no obligation to do so. Teaching investors the difference between "quasi-state" and "state" is a good thing.
So why then did the cost of borrowing for Greece and Ireland, as expressed in insurance contracts against default, go up?
Nothing about Dubai's predicament will have much of an impact on Irish or Greek tax revenues clearly, and the banks and the pool of lendable capital has not been diminished by much.
Nor is it easy to draw a new connection between Dubai and the emerging European countries which represent a much more substantial and potentially grave threat to banks in Europe.
Perhaps this is ultimately about moral hazard - risk taking under the belief that you are "insured" - as are all stories involving the words "quasi," "government," and "debt."
Fannie Mae and Freddie Mac's quasi-government status fed moral-hazard driven risk taking, as did Dubai World's, as is most certainly the case where government insurance allows for cheap borrowing.
Markets went down on Dubai because they have become addicted to moral hazard and anything that doesn't conform with the idea that all shall be bailed out is scary.
It is apparently terrifying that a government should say "hard luck" to anyone anywhere, no matter how difficult the government's situation is or how ill-founded the investors claim to relief.
None of this is to say that the commercial real estate crash isn't terrifying, or that countries like Ireland and Greece don't face difficult times and huge risks, but only that Dubai tells us little new about those things.
There is definitely a moral hazard trade out there, but Dubai is not the event which will cause it to unwind.
--- James Saft, a Reuters columnist. The opinions expressed are his own
(At the time of publication James Saft did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund.)
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.
|
|
|
|
|
|
Nov 30, 2009
|
|
|
|
|
|
MONDAY, NOVEMBER 30, 2009, CANADIAN EDITION
TOP STORIES
• Dubai govt won't back Dubai World debts - official
• US shoppers spent less over Black Friday weekend
• Nokia plans one Linux phone, no plant sales eyed
• Noront Resources boosts offer for Freewest
• Com Dev sees lower Q4 results
BEFORE THE BELL
Toronto's main stock index may open lower on Monday, as weak commodity prices could drag the resource-laden market. The markets will keenly follow the release of annualized GDP figures for the third-quarter, which is expected to show growth of 0.7 percent, according to Reuters poll. PPI for October is expected to have risen 0.3 percent, compared to a fall of 0.5 percent, in the previous month. Wall Street is also set for a lower open as fears on Dubai's debt default still loomed. The Dubai government will not guarantee Dubai World's debts, and creditors will be affected in "the short term" by the conglomerate's restructuring, a top Dubai government official said. European shares extended losses dragged by banking and oil stocks. Asian markets were up after recovering from last week's steep sell-off. Oil prices stabilized around US$76 a barrel, while gold eased towards US$1171 an ounce.
COMPANIES REPORTING RESULTS
• Exco Technologies Ltd. (XTC). Expected to report Q4 earnings of 1 cent a share, according to Thomson Reuters I/B/E/S
STOCKS TO WATCH THIS MORNING
• Arsenal Energy Inc. (AEI). The company on Monday entered into an agreement with Wellington West Capital Markets Inc to complete a private placement financing of up to 8 million shares, price at 50 cents each.
• Canadian National Railway (CNR). Locomotive engineers at Canada's largest railroad walked off the job on Saturday after talks broke down, but the company said it was using management and non-union staff to provide "the best possible service under the circumstances."
• Canadian Pacific Railway (CP). Animal fat, restaurant grease and vegetable oil will help power four of the company locomotives this winter to test if biodiesel fuel can stand up to a harsh Canadian winter.
• Com Dev International (CDV). The satellite technology company on Monday said it expects to post lower fourth-quarter results, hurt by weakness in two of its domestic government programs. The company expects to post net income of less than $1 million, down from $4.8 million last year.
• Khan Resources Inc. (KRI). AtomRedMetZoloto, a mining unit of Russia's state-owned uranium firm Rosatom, said on Monday it would bid for the miner, which has assets in Mongolia. Khan resources said on Friday it had been informed that ARMZ would make an unsolicited offer to purchase all shares of the Toronto-based miner for 0.65 dollars per share.
• Noront Resources Ltd. (NOT). The company on Monday boosted its offer to buy metals explorer Freewest Resources Canada Inc (FWR), topping a rival bid from U.S.-based mining company Cliffs Natural Resources Inc.
• Thomson Reuters Corp. (TRI). The news and financial data provider has purchased Swiss environmental, social responsibility and governance data provider ASSET4, the two companies said on Monday. The amount of the deal was not disclosed.
CORPORATE EVENTS
11:30 Exco Technologies Ltd. (XTC). Q4 earnings conference call
ECONOMIC CALENDER
08:30 GDP quarterly, annualized for Q3: Prior -3.4% Expected 0.7%
08:30 GDP q/q for Q3: Prior -0.9%
08:30 GDP Implicit PI q/q for Q3: Prior 0.3%
08:30 GDP by industry m/m for Sept: Prior 0.0 % Expected 0.4%
08:30 Producer prices m/m for Oct: Prior -0.5% Expected 0.3%
08:30 Producer prices y/y for Oct: Prior 6.1%
08:30 Raw materials m/m for Oct: Prior -1.1% Expected 3.3%
08:30 Raw materials y/y for Oct: Prior -21.4%
ANALYST RECOMMENDATIONS
• Canadian Western Bank (CWB) started with sector perform rating; price target of $25 at RBC
• Coastal Energy (CEN) started with outperform rating; price target of $7.50 at Macquarie
• Culane Energy (CLN) price target raised to $2.75 from $2.25; rating sector perform at RBC
• Laurentian Bank of Canada (LB) started with sector perform rating; price target of $47 at RBC
• Logibec Groupe (LGI) raised to outperform from sector perform at National Bank
EXDIVIDEND
• Biovail Corp. (BVF). Amount US$0.09
• Savanna Energy Services Corp. (SVY). Amount $0.025
• Suncor Energy (SU). Amount US$0.0951
Note: All values in Canadian currency, unless otherwise stated
|
|
|
|
INSIGHT
UAE Banks risk credibility loss on Dubai exposures
The credibility of the United Arab Emirates finance sector will suffer unless the authorities and lenders move quickly to assuage fears that Dubai's debt trouble are spiralling out of control, analysts and bankers say.
Dubai, one of the seven emirates that make up the UAE, said on Wednesday it planned to restructure one of its holding companies, a shock announcement that triggered global concerns about the emirate's ability to meet its debt obligations.
International banks' exposure related to Dubai World amounts to US$12 billion in syndicated and bilateral loans, banking sources told Thomson Reuters.
"I would say it is a huge shock for the UAE banking sector, and until we have some clarity the current situation will continue to cause damage," said Raj Madha, banking analyst at EFG Hermes.
Regional banks such as Emirates NBD and Mashreq Bank, which play a pivotal role in funding the UAE economy, have not made public statements yet on their exposure.
"Dubai World and its entities account for a very large chunk of the Dubai economy and its indebtedness and we expect Emirates NBD to have a full share of that," Madha said.
Officials at the Dubai-based bank could not be reached for comment.
UAE banks are exacerbating the situation by remaining silent on their exposures, said another banking analyst at a large international bank, who requested not be named.
"Unless there is clarity from banks, people will just make up numbers, which is worse," he said. "On the whole, the reputation has been damaged."
TRANSPARENCY
The region's financial services sector has already drawn criticism for its lack of disclosure and transparency but some analysts expect the Dubai debt crisis to spark a change.
"The way in which the UAE authorities handle the problem will clearly be important for investor confidence, as it will set a precedent for Dubai," Goldman Sachs analysts said in a note.
"Taking into view the huge reputational risks involved and also the amount of leverage that currently exists in the emirate we believe that the UAE authorities will be more likely to try and secure an orderly restructuring of outstanding liabilities of the two firms," the Goldman analysts said.
As a result of Dubai's debt struggle, banks will continue to face difficulties in the coming quarters.
"We expect asset quality to continue to deteriorate in the coming quarters and this trend could be exacerbated by the direct and indirect impact of a debt restructuring by Dubai World, which represents a major pillar of the Dubai economy," said Standard & Poor's credit analyst Mohamed Damak.
The UAE banks, however, will continue to be supported by the authorities, analysts said.
"I very much doubt that banks will be expected to bear the full burden of their exposure. I think at some level the assets would be or should be bought out by the federal government," EFG's Madha said.
Ratings agency Moody's also said it had no reason to believe that the federal government would abstain from supporting banks in Dubai or in other emirates.
--- Rachna Uppal and Nicolas Parasie, Reuters
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)
|
|
