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Foreigners pile into Canadian securities Foreign investors are loving Canada. International investors snapped up a record $23.2 billion in Canadian stocks and bonds in May, Statistics Canada said today, eclipsing the previous high of $21.4 billion set in April of 2004. Driving May's showing were federal government bonds. Foreign buyers acquired $15.2-billion of bonds, among them $11.5-billion in federal paper covering a wide range of maturities, the federal statistics gathering agency said. "Geographically, U.S. investors dominated while investors from the United Kingdom and Asian countries also made large contributions to the inflows over the month," it said.
Canada's relatively stronger economic outlook compared to its peers, and its fiscal standing, have been pulling in foreign investors.
China becomes world's biggest energy consumer Already the world's biggest car market and the engine of global economic growth, China has become the biggest consumer of energy in the world, new numbers from the International Energy Agency show. The Paris-based group says China consumed almost 2.3-billion tons of oil equivalent last year, outpacing the United States by about 4 per cent, The Wall Street Journal quoted the agency as saying. Oil equivalents include oil, natural gas, coal, and nuclear and renewable energy.
The United States had been the biggest consumer for more than 100 years, and is still the largest on a per-capita basis. "The fact that China overtook the U.S. as the world's largest energy consumer symbolizes the start of a new age in the history of energy," IEA chief economist Fatih Birol told the newspaper.
Markets look past downgrade Global investors are taking sovereign credit downgrades somewhat more in stride these days. European markets rose today, and U.S. stock futures pointed to a higher open, despite two troubling signs from Europe, including a downgrade by Moody's Investor Service of Ireland's debt. Moody's cited a tepid economic outlook and swollen debt, as well as troubles at its banks, as it trimmed its ratings a notch. Separately, the IMF and the EU suspended talks over whether to lend more money to Hungary.
London's FTSE 100, the German DAX and the CAC-40 in Paris all rose 0.5 per cent, while Dow Jones industrial average and S&P 500 futures were both up in the same range after Friday's selloff.
"On a week when the results of the European bank stress tests are due, and on the back of the single currency's best week in over a year, the last thing the politicians needed was something to puncture that mood, however Hungary provided it after the IMF and the European Union withdrew a €20-billion financing deal over the weekend in response to concerns over the Hungarian government's budget plans," said CMC Markets analyst Michael Hewson. "... The recent shift in focus towards the problems in the U.S. doesn't change the fact that the recent optimism with respect to the results of Friday's stress tests could well be misplaced, given concerns about the stringency of the criteria being adopted to assess the banks financial health. Anyone who thinks that the euro's problems are now over only needs to look at Hungary, and the recent rally actually does nothing to resolve these problems in the peripheral countries, as it makes them all less competitive from an export point of view."
Markets eye Europe's banks The bank stress tests in Europe are fast becoming the issue of the week as markets await the results on Friday. The EU has said it will publish the results of checks on more than 90 banks on an individual basis. "The goal of these tests is to restore investor confidence, by highlighting strengths and weak spots as well as forcing action," Scotia Capital economists Gorica Djeric and Derek Holt said today. "Banks and government officials in a number of the region's countries have already made statements saying that they saw no major cause for concern. So far, not only has there been limited information released on the methodologies used, but the EU finance ministers themselves are vetting these measures, which does not seem to minimize the issue of contradicting incentives."
Onex, CPPIB eye Tomkins Here's something a bit different. Onex Corp. and the Canadian Pension Plan Investment Board are teaming up to consider a bid of £2.9-billion, or about $4.5-billion (U.S.), for British auto parts company Tomkins PLC. Tomkins said today that due diligence by the Canadian suitors is at an advanced stage. In a twist of sorts, Onex and CPPIB have the right to reduce the offer price if the board agrees, Tomkins said. Reuters noted that the move by the Canadian group is the latest example of North American suitors tryingt to take advantage of the softness of the pound.
Lockout sidelines Port of Montreal Shippers at the Port of Montreal have locked out about 900 longshoremen, halting virtually all operations but for grain silos. The Maritime Employers Association, which represents ship owners, operators and agents, stevedoring contractors and terminal operators, said last night it was taking the action given the union's "refusal to acknowledge the urgency of the matter as well as the need to radically amend the collective agreement." Union "pressure tactics," it said, were begin to affect the port's operations. The union said the lockout was "incomprehensible."
From today's Report on Business
- Bank of Canada poised to raise interest rates
- Canada expected to follow U.S. as economy slows
- At the Top: Out of retirement, into the fray
- The tyranny of the capital markets
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