Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Crazy Fools LightHouse -- Ignore unavailable to you. Want to Upgrade?

To: ms.smartest.person who wrote (2500)	5/20/2007 10:28:27 PM
From: ms.smartest.person	Respond to of 3198

'Greatest merger wave in history' is lifeblood of TSX JOHN HEINZL theglobeandmail.com May 18, 2007 Everyone knows takeovers have given a big lift to stocks, particularly on Canada's resource-heavy market. But just how big? Now we can answer that question. According to CIBC World Markets, mergers and acquisitions accounted for a staggering 44 per cent of the S&P/TSX composite's 2,000-point increase in the 12 months to May 12. How did it come up with this figure? The brokerage calculated valuation changes for takeover targets and acquirers, as well as for other companies in the same sector whose share prices rose when a deal was announced. The amount of value created through M&A was then expressed as a percentage of the stock market's total gains over the one-year period. It's hard to say if deriving nearly half the market's winnings from M&A is a good thing or a bad thing. As long as the boom continues, it's great. But if the frenetic pace of deal making slows - and goodness knows this can't go on forever - one has to wonder how stocks can possibly keep charging higher, especially if earnings growth cools and interest rates rise. While some folks worry the M&A frenzy may signal a market top, CIBC World Markets expects the game of let's-make-a-deal to continue, driven by low interest rates, strong corporate cash flows and high commodity prices. "Investors are witnessing the greatest merger wave in history," Jeff Rubin, chief economist and chief strategist at CIBC World Markets, said in a note yesterday. It's one reason he expects the S&P/TSX to hit 15,000 by year-end, up 6.4 per cent from yesterday's close of 14,100.71. Takeover premiums have been especially rich in this country, reflecting the preponderance of resource-related acquisitions spurred by high commodity prices. Premiums in Canada over the past 12 months have averaged 30 per cent - some have been as high as 70 per cent - compared with about 20 per cent globally. The dollar figures are equally impressive. So far in 2007, companies globally have announced about $2-trillion (U.S.) of deals, up 60 per cent from the same period a year earlier. Canada has generated $177-billion (Canadian) of M&A in 2007, about double last year's pace. The growing clout of private-equity players and pension funds in the M&A game also points to more deals ahead, Mr. Rubin said. While that may be true, at some point the pace of takeovers is bound to slow, and Canadian investors who have watched the stock market post sizzling gains for the past four years will have to lower their expectations. Copper gets tarnished As if anyone needed a reminder that commodity prices don't always go up, copper suffered its biggest drop in three months yesterday. And the metal - which has plunged 12 per cent in the past two weeks - could have further to fall. The trigger for the latest tumble was a report from the International Copper Study Group that supplies of the metal will outstrip demand by 280,000 tonnes this year, reflecting increased mine production. In another sign of plentiful copper supplies, last week copper stockpiles monitored by the Shanghai Futures Exchange jumped 26 per cent to a three-year high. With more than enough copper to go around, no wonder the price is falling. Yesterday in New York, copper futures for July delivery fell 11.6 cents or 3.4 per cent to $3.3065 (U.S.) a pound - the lowest close since April 2. Still, thanks to a surge in the price of oil, the benchmark S&P/TSX composite index managed to shake off its early lossesto finish up 75.68 points at a record 14,100.71. On the New York Mercantile Exchange, crude oil for June delivery jumped $2.31 or 3.7 per cent to $64.86 a barrel, reflecting concerns that refiners - whose aging equipment has been plagued by maintenance-related shutdowns - won't be able to produce enough gasoline to meet demand during the peak-summer driving season. Oil and gas companies dominated the list of top contributors to the S&P/TSX's gain, led by Suncor Energy, up 2.9 per cent, and EnCana, ahead 1.7 per cent.