MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING FRIDAY, NOVEMBER 19, 1997 (1)
Saturday, November 22, 1997
THE FINANCIAL POST
Skittish Dow ends higher. Wall Street closed higher after a volatile session as investors wrestled with fresh jitters over Japan's economy. Bay Street rose, buoyed again by the major banks
The Dow Jones industrial average rose 54.46 points, or 0.7%, to 7881.07, following a late selloff on reports that Japan's fourth largest brokerage, Yamaichi Securities Co., may close its doors because of heavy debt.
Volume on the New York Stock Exchange was 597.9 million shares, compared with Thursday's 607.9 million shares. For the week the index rose 308.59 points or 4.1%.
The renewed concern about the state of Japan's economy sent investors rushing to safety, which boosted bonds. The Yamaichi report also underscored fears about the impact of a regional downturn on U.S. corporate profit in coming quarters.
The Dow's advance was led by large consumer non-durable stocks, known as "defensive" issues because of their more predictable earnings compared with companies whose results are linked to swings in the economic cycle.
Pharmaceutical maker Merck & Co. (MRK/NYSE) rose US$2 to US$94 9/16 and Procter & Gamble Co. (PG/NYSE) rose 11/16 to US$76 3/4.
Technology stocks, however, did not take part in the day's gains. Dell Computer Corp. (DELL/Nasdaq) lost US$2 5/16 to US$83 3/8. Compaq Computer Corp. (CPQ/NYSE) fell US$2 13/16 to US$63 11/16.
The Nasdaq composite index fell 5.81 points, or 0.4%, to 1620.75, for a gain on the week of 37.24 points or 2.4%. The Standard & Poor's 500 composite index rose 4.11 points, or 0.4%, to 963.09, for a gain of 34.74 points, or 3.7%, from last Friday.
The Toronto Stock Exchange 300 composite index climbed 10 points, or 0.2%, to 6773.93, for a gain of 47.75 points, or 0.7%, from a week ago.
Volume on the TSE was 125.2 million shares, compared with Thursday's 110.3 million shares. On the week, Toronto's benchmark index gained 47.75 points or 0.7%.
The stock market ended slightly higher after a mid-afternoon decline, supported by the financial services and gold and precious minerals sectors. The TSE 300 began the session with a solid rally, climbing to an intraday high of 6792.04, but dipped into negative territory later before ending flat.
Investors should get used to the volatility, said Irwin Michael, portfolio manager of ABC Funds. He expects trading volume to start normally next week but to ease as U.S. Thanksgiving approaches on Thursday. Many U.S. investors will also take Friday off, Michael said, which could increase the volatility as portfolio managers dress up their holdings for the end of the month.
The heavily weighted banking group was the biggest advancer, up 1.3%, as investors celebrated the beginning of fourth-quarter earnings reports. Toronto-Dominion Bank (TD/TSE) led the group, rising $1.45 to $54.40, on the heels of Thursday's strong earnings report. Royal Bank of Canada (RY/TSE) climbed $1.20 to $80.70.
The gold subindex also helped push up the TSE 300, gaining 0.7%. On the Comex division of the New York Mercantile Exchange, the gold price rose US$2.20 to $305.50 an ounce. Gold royalty company Franco Nevada Mining Corp. (FN/TSE) gained 70› to $29.35.
The other major Canadian markets closed higher. The Vancouver Stock Exchange composite index rose 5.14 points, or 0.8%, to 690.77, for a loss of 23.19 points, or 3.2%, on the week. The Montreal Exchange market portfolio climbed 4.85 points to 3406.73, for a gain of 48.5 points, or 1.4%, since last Friday.
The major overseas markets closed higher.
London: Strong gains in Asia's markets and a reassuring start on Wall Street catapulted Britain's leading stock index to a one-month closing high. The FT-SE 100 index rose 77.4 points, or 1.6%, to 4985.8, a rise of 244 points, or 5.1%, on the week.
Frankfurt: German shares closed just inside positive territory. The Dax index rose 43.75 points, or 1.1%, to 3959.69, a gain of 228.75 points, or 6.1%, from last Friday's close.
Tokyo: Japanese stocks ended a volatile week with a solid gain as hopes that the government will use public funds to clean up Japanese banks' bad loans continued to buoy the market. The 225-share Nikkei average rose 413.09 points, or 2.5%, to 16,721.58, up 1639.06 points, or 10.9%, on the week.
Hong Kong: Stocks stormed higher, boosted by positive local and regional factors. The Hang Seng index rose 497.52 points, or 5%, to 10,548.2, up 590.87 points, or 5.9%, on the week .
Sydney: Australian stocks raced ahead in afternoon trade in tandem with the Nikkei's rally, as brokers took heart from talk that Australia's key export markets in northern Asia may be able to pull themselves out of the mire. The all ordinaries index rose 47 points, or 1.9%, to 2482.7, up 3.6 points from last Friday's close.
Hot Stocks
Brookfield Properties Corp. (BPC/TSE), up 25› to $24.75, on volume of 5.6 million shares. Brookfield instalment receipts (BPCir/TSE), up $1.30 to $18.50, on volume of four million receipts. Brookfield stock and instalment receipts were the two most active Toronto Stock Exchange issues, with several stockbrokers trading matching blocks of the two securities. For example, CIBC Wood Gundy Securities Inc. crossed Brookfield blocks of 1.4 million shares and 1.38 million shares, both at $24.75 each, and blocks of 1.4 million receipts and 1.38 million receipts, both at $18.25 each. The instalment receipts are convertible into stock with a $6.50 payment next February, making the two issues interchangeable, said Brian Shaw, Woody Gundy managing director of institutional equities. Clients were exchanging holdings of the two, either as an arbitrage play or to manage their cash, preferring to lay out $18.50 now and $6.50 next year, or vice versa, he said. But another block of almost 1.8 million shares crossed by Wood Gundy represented a new purchase, he said. Nesbitt Burns Inc. also crossed a block of 667,000 shares at $25 each and a matching block of 667,000 receipts at $18.50 each.
Schneider Corp. (SCDa/TSE), up 50› to $19.75, on volume of 8,160 shares. Schneider common (SCD/TSE), up 25› to $20.25, on volume of 2,850 shares. Maple Leaf Foods Inc. (MFI/TSE), down 5› to $15.85, on volume of 3,360 shares. Schneider will respond to Maple Leaf's $19-a-share, $129-million takeover bid Monday.
TKO Resources Inc. (TK/VSE), down 22› to 15›, on volume of 1.2 million shares. Trading in the shares was halted July 15 when the Vancouver Stock Exchange said the company had apparently filed false private placement documents and had failed to make proper disclosures. Trading would not reopen until the company appointed a board acceptable to the VSE, terminated a management agreement with Fleming Financial Corp. and any other agreements with Donald Rutledge, and filed financial statements. Trading began again Friday after the company compliedwith the VSE requirements. The stock hit a 52-week high of $1.29 on June 3.
Boardwalk Equities Inc. (BEI/TSE), down 75› to $36.75, on volume of 11,865 shares. The real estate company said it had signed eight contracts to buy 1,324 multi-family units for $60.8 million. The units are in Calgary, Edmonton, Regina and Saskatoon. The deals, scheduled to close before Jan. 30, 1998, will be financed with current cash, by assuming existing mortgages and placing new mortgages. The 1.1 million square feet in the properties will increase Boardwalk's portfolio to more than 13,700 units, with a net rentable area of more than 11.7 million sq. ft.
Anvil Range Mining Corp. (ARO/TSE), up 10› to $1.35, on volume of 54,200 shares. The mining company has been struggling, but after the market closed Thursday, it said it had lined up short-term financing to operate the Faro, Yukon, lead-zinc mines until late March and had a buyer for the output.
Toronto-Dominion Bank (TD/TSE), up $1.45 to $54.40, on volume of 1.4 million shares. On Thursday the bank reported a profit of almost $1.1 billion ($3.54 a share) for the fiscal year ended Oct. 31, compared with $914 million ($2.95) a year earlier. The bank stock gained $2.85 on the week.
Philip Services Corp. fell 0.40 to 22.75 after the company said it was committed to its $27 per share bid for U.S.-based Safety-Kleen. Laidlaw Environmental Services Inc. sweetened its bid for Safety-Kleen to $30 a share Thursday.
Noranda Inc. (NOR/TSE), up 40› to $24.70, on volume of 1.3 million shares. Norcen Energy Resources Ltd. (NCN/TSE), up 30› to $34.95, on volume of 63,129 shares. Norcen said it has retained Goldman Sachs & Co. and Trilon Securities Corp. to advise it following Noranda's announcement that it plans to sell its 49% stake in Norcen.
Prudential Steel Ltd. (PTS/TSE), up $1 to $17.35, on volume of 72,910 shares. The stock started trading on the basis of a three-for-one split which will take effect on Nov. 28 for shareholders of record at the close of business Nov. 25.
Cott Corp. (COTTF/Nasdaq) rose 3/16 to US$9 1/8. In the midst of shopping its operations around for possible sale, Cott Corp. has made the biggest acquisition in its history. The Toronto-based private label pop maker said Friday it will pay up to $162 million to buy Hero Drinks Group (U.K.) Ltd. from Hero AG, a Swiss fruit juice company. The payment by Cott's British subsidiary will be made in two stages. On closing, Cott will pay œ47 million ($113 million). It will then pay up to œ20.5 million over five years, depending on the future profitability of the combined businesses. Analysts said the acquisition, which will double Cott's volume in the British take-home market to 18% and rival that of PepsiCo Inc., could make it more attractive to a buyer.
TrizecHahn shares (TZH/TSE) closed Friday at $33.20, up 35›. Peter Munk's TrizecHahn Corp. has beaten out two of the largest U.S. real estate investment trusts to buy the landmark Sears Tower in Chicago, industry sources say. The deal comes on the heels of news that TrizecHahn is a finalist in the bidding for the Prudential Center in Boston, a 1.8-million square foot tower worth about US$1 billion. TrizecHahn is also rumored to be bidding on the 77-storey Chrysler Building in New York, industry sources say. The Sears Tower was the world's tallest building until last year when it was overshadowed by the twin Petronas Towers in Kuala Lumpur. At 110 storeys, the property is huge, with about 3.7 million square feet of space. The property carries a mortgage of about US$850 million, held by Metropolitan Life Insurance Co. The price being paid is not known, but Reuters reports it could be as much as US$1 billion.
Shares in BioChem (BCH/ME) closed Friday at $38.35, up 35›. Combivir, the first product to combine two AIDS therapies in one pill, is a step closer to winning European approval, BioChem Pharma Inc. said Friday. The European Union committee for proprietary medicine products has recommended approval of the tablet, which combines BioChem's 3TC with Glaxo Wellcome PLC's AZT. Outside Canada, the Montreal-based biotech company has licensed 3TC to Glaxo and receives a royalty on sales. The European Commission still must approve the drug. Approval would mean the drug could be marketed throughout the EU. The U.S. Food & Drug Administration approved Combivir in September. The twice-daily pill could cut the number of drugs taken by an AIDS patient by up to six pills a day, or between 700 and 2,000 a year, the company said. AIDS patients typically follow complex regimens involving carefully timed consumption of many drugs.
Shares of Co-Steel (CEI/TSE) closed down 45› to $20.55. Toronto-based Co-Steel Inc., one of the world's largest minimill steel producers, has won a bidding competition for New Jersey Steel Corp., significantly boosting its capacity in the northeastern U.S. New Jersey Steel's controlling shareholder, Swiss-based Von Roll Holding AG, has agreed to sell its 60% stake to Co-Steel for US$23 a share in cash. Other shareholders have been made the same offer. Co-Steel's purchase price of US$136 million for the stock represents a 45% premium to the market value of New Jersey Steel's shares before the deal was announced. The stock (NJST/NASDAQ) jumped US$613/16 on Friday to US$227/16.
Shares of Western Copper Holdings (WTC/TSE) dropped to $2.55, down $1.45 from Thursday, after a trading halt was lifted late in the market day. Shares tumbled Friday, after the release of eagerly awaited assay results from a single drill hole on a property in Mexico. The results showed economic grades of copper and zinc, but only in a 28-metre section of the hole. A further 132.8 metres of drill core showed uneconomic grades, said a Vancouver mining analyst who has followed the project closely. The exploration project is operated by Teck Corp. of Vancouver, which owns 55%. Western Copper, also based in Vancouver, owns the remaining 45%. Western Copper's stock shot from 98› to $3.25 Nov. 11, after the companies said drill hole SAL-25 on the jointly held El Salvador project had intersected a 163-metre-deep area of "massive sulfide" mineralization. On Nov. 14, the shares peaked at $5.25.
Cambior shares (CBJ/TSE) closed Friday at $9.75, down 10›. Shares of Metallica (MR/TSE) finished up 28› to $1.90 in light trading. Cambior Inc. is to be the operator of a Mexican gold project expected to commence mining in early 1999. Montreal-based Cambior said Friday it has reached an agreement with Metallica Resources Inc. of Littleton, Colo., to acquire 50% of its Cerro San Pedro project in central Mexico. A feasibility study by Kilborn International Inc. concluded a mine on the property could produce 190,000 ounces of gold
equivalent - a measure that takes into account the value of the silver also extracted - annually for eight years. The mine will be an open pit and will use heap leaching to remove gold and silver from the ore. Its cash cost of production is estimated at US$220 an ounce. Cambior will pay US$20 million toward the project's estimated US$70-million cost and will lend Metallica up to US$60 million toward the project. It will also buy about 8% of Metallica's common shares, through a direct purchase and share swap.
Oshawa Group Ltd. shares (OSHa/TSE) closed Friday at $25.60, up 30›. The company said Friday that operating earnings increased 56% in the latest quarter, but added it will take a $13-million charge to develop new computer systems in the next quarter that will result in staff cuts. The company will merge its five retail and wholesale divisions into one - called Agora Food Merchants - to lower operating costs and
improve purchasing. "We're focusing more narrowly on retail/wholesale food and food service divisions, and in the process making them as efficient as possible," said chief financial officer Bob Boyd. For the quarter ended Nov. 1, Oshawa Group posted earnings of $9.9 million (26› a share). That compares with $10.3 million (27›) for the year-earlier period, which included a $5.5-million gain from the sale of real estate assets. Included in this year's third-quarter earnings was a $7.2-million after-tax contribution from the sale of the Pharma Plus Drugmarts Ltd. chain, and a $11.7-million charge for the closing of distribution facilities in Quebec and Ontario. Earnings from continuing operations jumped 56%, to $18.6 million from $11.9 million. "We're very encouraged by this increase," Boyd said.
Bombardier shares (BBDb/TSE) closed Friday at $29.85, up 35›. Aerospace and transportation equipment maker Bombardier Inc. said on Friday it received orders totaling $470 million from two customers for its de Havilland Dash 8 turboprop aircraft. The orders came one day after the Montreal-based company announced $375 million in new orders for its 50-seat Canadair Regional Jet from Comair Holdings Inc. of Cincinnati and Atlantic Coast Airlines Inc., of Dulles, Va. Bombardier said Seattle-based Horizon Air firmed up an order for 10 Dash 8Q Series 200 planes. The $120 million order came as Bombardier's Toronto based de Havilland unit delivered its 500th Dash 8, which also went to Horizon.
|
