MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING MONDAY, FEBRUARY 16,1998 (1)
Tuesday, February 17, 1998
Toronto stocks edged ahead in a quiet trading session as investors preferred to sit on the sidelines without key direction from Wall Street, which was closed for the Presidents' Day holiday
The Toronto Stock Exchange 300 composite index rose 13.15 points, or 0.2%, to 6985.16 after falling as low as 6956.80 early in the session.
ÿ
Shares were weighed down early by renewed concern that a slump in Asian stocks and currencies may cut demand for Canadian exports and the profits of manufacturers and raw material producers.
ÿ
Trading was much less active than usual. About 61 million shares changed hands on the TSE, down from 107 million shares traded on Friday.
ÿ
Laidlaw Inc. (ldm/tse), which provides public transit services, gained 45› to $21.55 after its 66% owned U.S. unit Laidlaw Environmental Services Inc. announced it now controlled 54.2% of the outstanding shares of Safety-Kleen Inc., a provider of auto-service station clean-up services.
ÿ
Laidlaw also extended its takeover offer to 5 p.m. E.S.T. Thursday. "Fifty-four percent of the stock for their tender puts Laidlaw ahead of Philip [Services Corp.] and in the running to make the acquisition," said Philip Strathy, a portfolio manager with Strathy Investment Management Ltd. "It looks very positive for Laidlaw."
ÿ
Under the agreement, Safety-Kleen shareholders will receive US$18 in cash and 2.8 Laidlaw Environmental shares for each of their shares. Philip Services had made an alternative US$27 a share all-cash offer for Safety-Kleen.
ÿ
Still, Philip Services (phv/tse) gained 65› to $14.20, after The Financial Post reported the company will announce a US$60-million after-tax inventory shortfall resulting from trading losses on copper futures and not from theft or inflated inventory prices.
ÿ
The metal scrap processor announced a charge Jan. 26 of US$200 million, including US$80 million to reflect the difference in the carrying value of inventory and the actual amount of scrap found at two Hamilton, Ont., facilities.
ÿ
BCE Inc. (bce/tse), which represents 5.5% of total market capitalization of the TSE 300, gained 25› to $48.35. Telecommunications equipment maker Northern Telecom Ltd. (ntl/tse) fell 40› to $67.35, liquor and entertainment company Seagram Co. (vo/tse) dropped 50› to $54.15 and forest products company Abitibi-Consolidated Inc. (a/tse) slipped 10› to $20.30.
Toronto-Dominion Bank, the most active issue on the TSE, and Canadian Imperial Bank of Commerce tempered gains after the two banks denied merger speculation.
ÿ
TD shares (td/tse) fell $1.45 to $60, with more than 1.3 million shares changing hands, and CIBC shares (cm/tse) fell 15› to $45.85 on volume of 892,532 shares.
ÿ
"Given the rumors surrounding Toronto Dominion and CIBC have been denied we will see some erosion in the [bank] sector," said Fred Ketchen, a senior trader with Scotia-McLeod Inc. "Still, the market is marginally ahead, although most people are sitting on the sidelines."
ÿ
"The market is saying the rumors of a merger talk between CIBC and TD may be overblown, and investors are taking back any gains made on Friday," said Norman Duncan, a broker with C.M. Oliver & Co.
ÿ
Bank of Montreal (bmo/tse) fell 50› to $74.35 and National Bank of Canada (na/tse) slipped 30› to $23.45 while Royal Bank of Canada (ry/tse) rose 10› to $83.45.
ÿ
Finance Minister Paul Martin was reported during the weekend as saying a government ruling on whether to allow the Royal-B of M merger may not be made until next year.
ÿ
Other Canadian markets ended mixed.
ÿ
The Montreal Exchange portfolio fell 4.1 points to 3606.96.
The Vancouver Stock Exchange rose 2.66 points, or 0.4%, to 636.61.
For a scorecard of trading activity on all Canadian Stock Exchanges, go to:
quote.yahoo.com .
REFERENCE: Canadian Market Summary
canoe2.canoe.ca
ÿ
Major international markets closed mixed.
ÿ
London: The FT-SE 100 index ended slightly higher at 5619.9, up 37.6 points or 0.7%.
ÿ
Frankfurt: Germany's blue-chip Dax index ended slightly firmer after spending a day trapped in directionless trading. The Dax closed at 4520.64, up 18.16 points or 0.4%.
ÿ
Tokyo: Japanese stocks closed marginally weaker after a day of extremely thin trade. The 225-share Nikkei average fell 15.49 points to 16,775.52.
ÿ
Hong Kong: Stocks tumbled as the debate surrounding Indonesia's plans to adopt a fixed currency system spread gloom in some regional markets, but local prices were well off their lows by the close. The Hang Seng index closed at 10,124.03, down 150.57 points or 1.5%.
ÿ
Sydney: Weaker Asian markets and concern over Indonesia's economic woes pulled the Australian share market lower, with the all ordinaries index off 31.8 points, or 1.2%, at 2621.2.
********************************************************************************
Tuesday, February 17, 1998 -- By DAVID THOMAS - Economics Reporter The Financial Post
ÿ
Stronger than expected shipments of manufactured goods in December suggest the economy has bounced back from its poor performance in November.
ÿ
Manufacturers' shipments rose 2% to $37.65 billion, buoyed by a return to full production in the auto industry after two months of shutdowns and production delays. The increase exceeded economists' expectations of a 0.8% gain.
ÿ
"Despite the dampening effect of the East Asian downturn on domestic manufacturing and exports, the overall outlook remains upbeat," said Adrienne Warren, an economist at Bank of Nova Scotia.
ÿ
The gain in shipments for all of 1997 was 6.9%, compared with increases of 2.4% in 1996 and 12.5% in 1995. Though led by motor vehicle sales (up 2%), the advance was broadly based, with 19 of 22 industries showing gains.
ÿ
The value of shipments in 1997 climbed to $434.71 billion in 1997 from $406.57 billion in 1996, Statistics Canada said.
ÿ
Along with the jump in motor vehicle shipments, there was a 12.8% gain in aircraft and parts shipments, a 3.9% gain in electrical parts shipments and a 5.7% increase in machinery shipments.
ÿ
"The strength offers further evidence that the Canadian economy roared back in December from a 0.3% drop in November gross domestic product," said Sherry Cooper, chief economist at Nesbitt Burns Inc.
ÿ
As well as being affected by lower output from the auto industry, November's GDP was hit by strikes by postal workers and Ontario teachers. December's GDP numbers are scheduled to be released March 2.
ÿ
The data also point to "a nice rebound in the monthly trade surplus," said analyst Mario Angastiniotis of MMS International, Standard & Poor's Corp.'s forecasting unit.
ÿ
The trade balance rebounded to $1.03 billion in November but has been weak in recent months, exacerbating a huge deficit in the current account. That measure includes trade in goods and service as well as investment flows.
ÿ
MMS estimates the current account deficit will swell to $28 billion for 1997. Some economists project it could climb above $30 billion.
ÿ
Despite the rebound in December's shipment numbers, there were a few signs of slowdown in the economy, which continues to benefit from strong demand in the U.S., Warren said. "New orders slipped back sharply for the second consecutive month, while the backlog of unfilled orders edged down for the first time in six months."
ÿ
However, the falling C$ is making up for some of the decline in demand from Asia, she added. "Over the past year, rising shipments south of the border have offset declining overseas shipments by a factor of almost eight to one."
**********************************************************************************
Mutual funds losing favor -- Sales lag well behind last year's record levels as season end nears -- By SUSAN HEINRICH -- Mutual Funds Reporter --ÿThe Financial Post
ÿ
Mutual fund sales have fallen far behind last year's record levels with less than two weeks left in RRSP season for most Canadians.
ÿ
And analysts say sales at several banks have been hit hard as some customers consider investments other than funds or wait on the sidelines until the final days.
Net fund sales totalled $3.4 billion in January, down 36% from net sales of $5.34 billion in the same month last year, according to the Investment Funds Institute of Canada.
ÿ
(Net sales were $3.1 billion excluding distributions which most investors automatically reinvest.)
ÿ
And some banks are badly lagging the outstanding sales levels they had last year.
ÿ
Sales are notably slower at "Scotiabank, Bank of Montreal and CIBC compared to last year," said Peter Loach, senior mutual fund analyst at Midland Walwyn Inc. in Toronto.
ÿ
IFIC does not release sales figures for individual companies, but based on sales of individual funds, Loach estimates "CIBC is down about 85% from last year.
ÿ
"Scotia is probably down about 80% and Bank of Montreal is down about 84%."
Woodrow Pelley, vice-president, mutual funds at Scotiabank, agrees sales are down and attributes it to the situation in Asia and bank customers playing wait-and-see with the possibility of more interest rate hikes. But sales are stronger in February, he said. ÿ"I think this year in particular there is a lag. But the latter part of last week the numbers are starting to ratchet up," he said.
ÿ
"For our clients, if you're close to your target return with GICs, a lot of people wait. Now they ... are starting to move in [as the RRSP deadline approaches]."
ÿ
"You're really seeing a situation where cashable GICs at a level of 3.5% became very attractive," said Dan Richards, president of Toronto-based Marketing Solutions.
ÿ
Richards said investors who are uncertain about where to invest buy them to get RRSP credits and move the money to a more permanent investment later.
ÿ
Overall, the banks had 24.8% or $71.70 billion of the total $219.42 billion invested in mutual funds at January's end. A year earlier they had 25.9% of total assets.
ÿ
Fund assets rose 2.1% in January versus the previous month.
ÿ
Investors continued to pour money into Canadian equities, to the tune of $1.03 billion. And they favored balanced and fixed-income funds, which saw respective net sales of $829.3 million and $595 million.
ÿ
Analysts also described the $240.8 million in net redemptions of money market funds unusual. Often in times of market ups and down, investors choose them as a safe haven. But they are unsure if the bulk of that money has been transferred to other fund types or into other investments such as GICs.
*********************************************************************************
********************************************************************************* |
