TSX adds to losses Monday

Toronto stock market dips on weakness in the energy and financials sectors TSX gets lift from financials, U.S. markets rise to highest since March Keywords Marketwatch The Toronto stock market lost ground for a fourth session Monday after a big disappointment on U.S. job creation raised worries about the pace of the American economic recovery and sent commodity prices lower. The S&P/TSX composite index closed down 84.61 points at 12,018.5, while the TSX Venture Exchange dropped 32.39 points to 1,448.65. Share this article and your comments with peers on social media The commodity sensitive loonie closed down 0.27 of a cent at 100.35 cents US. The currency was off early lows after a Bank of Canada survey suggested that business optimism in Canada is rising sharply as the gloom of the winter months appears to be giving way to better expectations for sales, hiring and investment. The quarterly survey of senior management from 100 representative firms, conducted over four weeks in February and March, found the outlook for future sales among the most positive since the recession. New York markets were also in the red after the U.S. Labour Department reported Friday, while markets were closed for a holiday, that the American economy added only 120,000 jobs last month, widely missing economist expectations for gains of about 205,000. The Dow Jones industrial index lost 130.55 points to 12,929.59. The Nasdaq composite index dropped 33.42 points to 3,047.08 and the S&P 500 index slid 15.88 points to 1,382.2. The wide miss on March job creation followed three consecutive months of employment gains in excess of 200,000. The negative start to the trading week followed five straight weeks of losses on the TSX, which left the Toronto market up only about 1.2% year to date. The resource-heavy TSX had run up almost 14% from the lows of last October to the most recent highs of early March. But the rally has run out of steam amid worries about growth in China and other emerging economies. The market has also been buffeted by worries about the European debt crisis and apprehension about the upcoming first quarter corporate earnings season, which starts this week in the U.S. where traders are braced for lower earnings. “Estimates are still being revised lower and most of the comments that you are getting from companies are more guarded,” said Norman Raschkowan, North American strategist at Mackenzie Financial Corp. “And there are two reasons: no one is really clear on how the sort of seasonal factors may have been influenced by the weather, by the fact we had such a mild winter. But also people are unclear about what the prospects really are in Europe or in Asia.” China, in particular, has been an important force in helping the global economy recover from the 2008 financial crisis and recession. Its fast growing economy has had a huge appetite for commodities and this has benefited oil and metal prices and share prices of resource companies on the TSX. But Chinese growth has slowed lately as the government deals with high inflation. On Monday, the Chinese government reported that the country’s inflation rate edged up to 3.6% in March compared with a year earlier. That was up from February’s 3.2% but below the government’s four per cent target for the year as Beijing shifted from containing price rises to shoring up flagging growth in the world’s second-largest economy. Analysts believe China’s economic growth, which has declined steadily over the past year, to fall to a new low of about eight per cent for the three months ended in March, down from 8.9% in the final quarter of 2011. Official data are due to be reported this week. Demand concerns pressured oil and metal prices on Monday. The base metals sector was off 1.9% as May the copper contract on the Nymex shed eight cents to US$3.72 a pound. Teck Resources (TSX:TCK.B) was down 72 cents to C$34.44 and Ivanhoe Mines (TSX:IVN) fell 28 cents to $13.48. The energy sector was 1.15% lower with the May crude contract on the New York Mercantile Exchange down 85 cents to US$102.46 a barrel. Cenovus Energy (TSX:CVE) backed off 44 cents to C$33.89 while PetroBakken Energy (TSX:PBN) gave back 45 cents to C$16.12. Blue chips also gave up ground as the financial sector lost 0.75%. Manulife Financial (TSX:MFC) shed 41 cents to $12.73 and National Bank (TSX:NA) fell 67 cents to $78. The industrial sector was also down, off 0.83% with WestJet Airlines (TSX:WJA) declining 15 cents to $13.68 and Finning International (TSX:FTT) down 39 cents to $26.55. Finning is the world’s biggest dealer in Caterpillar products, which are widely used in the resource sector. TSX losses were limited by a gain of about 0.7% the gold sector as bullion prices advanced $13.80 to US$1,643.90 an ounce. Barrick Gold Corp. (TSX:ABX) ran up 28 cents to C$40.79 and Goldcorp Inc. (TSX:G) rose 30 cents to $40.90. In corporate news, AOL Inc. (NYSE:AOL) will get US$1.06 billion in cash by selling more than 800 patents to Microsoft Corp. (Nasdaq:MSFT) following a “robust auction” of the intellectual property. AOL says it will return a “significant portion” of the proceeds to its shareholders once the deal closes. AOL stock soared 43.16% to $26.37. Facebook announced it will spend US$1 billion to buy the photo-sharing software company Instagram. The deal comes days after the service began offering a version for Android phones. The payment will be in cash and Facebook stock. Facebook is expected to complete its initial public offering of stock next month. Facebook LinkedIn Twitter Related news Malcolm Morrison S&P/TSX composite hits highest close since March on strength of financials sector read more

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Sun Life suspending third-party sales of GMWB product

Share this article and your comments with peers on social media The combination of low interest rates and high capital requirements caused to insurer to put an immediate halt on the sales of its segregated funds, which wasn’t ideal but necessary, says Paul Fryer, vice president, individual business management for Sun Life Financial Canada, based in Waterloo, Ont. “We don’t like to suspend products and we always want to grow product sales through both sales forces — independent and career force, but it was necessary to take action with rising capital requirements.” The insurer is currently working with Toronto-based CI Financial Corp. to make modifications to SunWise’s existing product line-up, adds Fryer. “We are aiming to have a modified version of the funds available by the end of the year.” Sun Life is the fourth insurer to suspend its GMWB option this year. When offering clients a guaranteed minimum withdrawal benefit product, independent advisors will now have to cross Sun Life Financial Inc. off their list. As of May 11, Sun Life will be suspending new sales of its SunWise Essential Series, a segregated fund series with a GMWB benefit, through its third party advisor channels. Clients can still purchase the products through a Sun Life advisor. Insurers retooling retirement vehicles Olivia Glauberzon Empire Life reboots GMWB product Facebook LinkedIn Twitter Tackling longevity risk Related news Keywords Guaranteed Minimum Withdrawal BenefitCompanies Sun Life Financial Inc. read more

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Tax Ombudsman calls on CRA to treat all Canadian students fairly

Facebook LinkedIn Twitter Ontario to provide parents with new round of support payments Keywords Tax credits,  EducationCompanies Canada Revenue Agency, Taxpayers’ Ombudsman Related news Government help during Covid-19: a summary The Office of the Taxpayers’ Ombudsman received complaints from students at universities outside Canada who said their applications for the tuition tax credit were unfairly denied by the CRA. The Ombudsman’s investigation found that the CRA does not always assess claims based on the criteria in the Income Tax Act, but instead relies on its internal lists of eligible institutions. The Ombudsman also heard that students receive inconsistent information from the CRA about these lists and how they can obtain a copy. “The Government of Canada offers this tax credit to encourage young Canadians to seek post-secondary education,” said Dube. “Canadian students who choose to study abroad should be entitled to the same level of service and fairness from the CRA.” Share this article and your comments with peers on social media IE Staff Canada’s Taxpayers’ Ombudsman, Paul Dubé, Monday called on the Canada Revenue Agency (CRA) to determine students’ eligibility for tuition tax credits according to the legislation, and not solely on its own internal procedures. “Canadian students attending university are eligible to apply for a tax credit for their tuition costs, even if that university is outside Canada,” said Dubé in a release. “I recommend the CRA take steps to help ensure that students attending university outside Canada are treated fairly when they apply for the tuition tax credit.” Ontario introduces home improvement tax credit for seniors for 2021 read more

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Inflation falls to 1.2% in May

Statistics Canada says annual inflation tumbled to 1.2% last month, the lowest consumer price index reading in almost two years. Economists had expected the consumer price index to fall to 1.5% in May from the previous month’s 2% due to declining gasoline prices from a year ago. Gasoline prices did indeed fall in May, by 2.3% from last year at this time, the first year-over-year decline in 23 months. Companies Statistics Canada Facebook LinkedIn Twitter Meanwhile, Statistics Canada says decreases in women’s clothing and slower prices at auto dealerships were also factors. On a month to month basis, prices slipped 0.1% from April. Bank of Canada governor Mark Carney said this week that he expected prices to dip below the bank’s 2% target in the short term, given the recent tumble in world oil prices. In comparison, oil had been rising at this juncture last year. The softening trend in inflation removes most of the pressure on Carney to hike interest rates in the short term. Share this article and your comments with peers on social media Canadian Press read more

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Many Canadians relying on lady luck for their financial future

Keywords Consumer borrowing and saving One third of Canadians admit winning the lottery or receiving a large inheritance is part of their plans for a secured financial future, according to a recent survey commissioned by Credit Canada Debt Solutions and Capital One Canada. At the same time, more than two thirds have felt anxious or lost sleep thinking about their financial situation over the past year. Facebook LinkedIn Twitter One in five Canadians will need to liquidate an asset to pay for debt: survey Share this article and your comments with peers on social media More than half of U.S. millennials actively contribute to retirement accounts: survey Related news Canadians more focused on saving than paying down debt: survey IE Staff “It’s troubling to see so many Canadians putting more trust in the lottery than sound financial planning — but I see the effects every day in our agency,” said Laurie Campbell, CEO, Credit Canada Debt Solutions. “Canadians need to recognize that there is no magic solution to gaining control of their finances. It means hard work and sticking to a budget determined by income.” More than two-thirds of those surveyed revealed they spend beyond their monthly budget. Most admitted temptation and reward were the biggest reasons they overspent. The biggest temptation mentioned by respondents was food. Three-quarters of Canadians confess to overspending on groceries, and more than half blow the bank on eating out. “Overspending is a real issue for many Canadians and even though they know what to do, a quarter of us are still not confident we can stick to a monthly budget. These types of findings exemplify why Capital One continues to invest in financial literacy initiatives,” said Rob Livingston, president, Capital One Canada. “We all deserve a treat sometimes and if we plan for it in advance, we are better positioned to stay with our financial means.” They survey also revealed gender traits around spending and overspending: women are more likely than men to overspend on groceries, clothing and personal care products, whereas men are more likely to overspend on bigger ticket items like education, shelter and vehicles; in the past year, 40% of women felt anxious about not being able to pay their bills, as compared to 28% of men; and in planning for a secure future, men are more likely to hope for a salary increase at their current job, whereas women are more likely to hope for a new job that pays significantly more. In September 2012, Credit Canada Debt Solutions and Capital One Canada commissioned a survey of 822 Canadians who have made a resolution regarding their spending behaviours. The survey respondents were equally distributed across the 4 major regions of Canada (West, Ontario, Quebec and East) and the margin of error is +/- 3.4%, 19 times out of 20. read more

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Ontario to review mortgage act

James Langton Equifax launches model to assess near-prime borrowers Mortgage Alliance allows consumers to self-select their own terms, privileges and rates The government says that the review, which will include public consultations, “will focus on ways to strengthen the already substantial consumer protection provisions in the act.” The consultations are expected to begin in late summer, and final recommendations are to be submitted to the Ministry of Finance by early 2014. Securities legislation is long overdue for its own five-year review, with the final report of the most recent review delivered back in 2003. In response to a legislative committee recommendation, the government at the time promised to commission the next review by 2007, but that still hasn’t happened. Share this article and your comments with peers on social media The Ontario government has announced its first-ever five-year review of the legislation governing mortgage brokers. Finance minister Charles Sousa Friday announced that he has appointed parliamentary assistant, Steven Del Duca, to lead the first five-year review of the Mortgage Brokerages, Lenders and Administrators Act. Keywords Mortgage brokers Mortgage Alliance introduces SmartMortgage Related news Facebook LinkedIn Twitter read more

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National regulator aims to get other provinces on board by January

National regulator effort effectively dead James Langton Even if the other provinces agree (which remains an open question) there are a lot of moving parts that must come together to make that happen. The agreement between B.C., Ontario and the feds, lays out the steps they envision to get the new arrangement off the ground. First, it calls for agreements with each of the participating jurisdictions by Jan. 31, 2014, setting out the terms and conditions of the co-operative system. It plans to publish the initial draft regulations of the co-operative legislation for public comment by March 31, 2014; and, by May 30, 2014, it aims to secure an agreement with each participating province that would set out their individual terms and conditions for integrating their existing regulator into the new authority. And, it imagines each province enacting provincial legislation, along with the complementary federal legislation by December 31, 2014. In order to fund the transition, the federal government is pledging to “make payments to participating jurisdictions that will lose net revenue as a result of the transition to the co-operative system on a transparent basis.” That has always been seen as a pre-condition for any national regulator to get off the ground, particularly as regulation is a source of revenue in some provinces. The federal government would also lend money to the new authority to cover its initial funding needs during the transition period to get it operational; and, it has also agreed to pay the salaries of provincial staffers that are seconded to the new implementation organization for 24 months following the signing of the agreement (up to a certain limit to be established by the federal government). Share this article and your comments with peers on social media Keywords National securities regulator Morisset’s term as CSA chair extended The initiative to develop a common, co-operative securities regulator aims to get the other provinces on board by the end of January, in order to get the new regulator up and running by mid-2015. The deal that was announced Thursday between British Columbia, Ontario, and the federal government, to move toward a co-operative regulator imagines that the new structure would be in place by July 1, 2015. (See Investment Executive, Feds create co-operative securities regulator, September 19, 2013.) Facebook LinkedIn Twitter Budget promises funding for national regulator effort Related news read more

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Canadian debt and equity issuance up over last year

Related news Both debt and equity issuance are up through the first nine months of 2013, according to the latest data from Thomson Reuters. The firm reports that overall debt market issuance is up by almost 14% in the year to date, totalling $127.2 billion. However, third quarter issuance was down by 4.3% from the second quarter, it notes. Share this article and your comments with peers on social media Government and agency debt makes up about half of the new issuance (49%), followed by financials at 34%. The energy & power sector is a distant third with a 6% market share. The top debt underwriter so far this year is RBC Capital Markets, which Thomson Reuters reports placed first in both the overall Canadian debt league tables, and for Canadian domestic corporate debt. National Bank Financial ranked first in the Canadian government debt rankings, on a full credit basis, while CIBC World Markets took the top spot measured on a true economics basis, it says. On the equity side, issuance was also up year over year. Thomson Reuters reports that Canadian equity & equity-related issuance totalled $21.5 billion in the first nine months of 2013, representing a 3.9% increase in total proceeds from the same period last year. Again, proceeds were down in third quarter however, dropping 18.6% from the second quarter. Canadian secondary offerings made up the bulk of new issuance, the firm says, with $16.3 billion worth so far this year; although, this is down by 4.7% from the same period last year. Issuance of retail structured products and preferred securities is down even more dramatically year over year, off by 28% and 30%, respectively. The energy sector has been the biggest source of new equity so far this year, with a 22% market share; followed by real estate at 21%, and healthcare with 13%, it says. The top equity underwriter of the first nine months of the year was BMO Capital Markets, Thomson Reuters says, as it ranked number one in the Canadian equity & equity-related, common stock and secondary offerings rankings. RBC ranked first in the initial public offering and preferred securities rankings, and CIBC led the way in retail structured products. James Langton Facebook LinkedIn Twitter The IPO market is booming SPAC deals reach record levels: Refinitiv Keywords Underwriting,  Investment dealers Sustainable bond issuance set record in Q1: Moody’s read more

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U.S. proxy voting system too complex: report

first_img ISS unveils proxy voting guidelines for 2020 Facebook LinkedIn Twitter A new report finds that the proxy voting system in the U.S. is too complex, and it calls for reforms to make voting more accurate and transparent. The Securities Transfer Association (STA) released a report Tuesday that examines industry efforts to improve the proxy voting system in the U.S.It notes that an industry-led working group has helped develop new communications portals and share reconciliation procedures designed to improve the accuracy of shareholder votes. However, it also concludes that the system is still too complicated, and it suggests that more substantive reforms are necessary to make proxy voting more transparent and accurate. Related news Share this article and your comments with peers on social media Keywords Proxy voting center_img ISS to boost Canadian board diversity benchmarks “While progress has clearly been accomplished in providing investors with the ability to receive electronic confirmation that their votes were cast as directed, more work needs to be done,” the report says. “The end result of vote confirmation cannot be accomplished with complete accuracy until other proxy voting issues within the street name system are addressed.” According to the report, the most important of issues involve reconciliation of the entitlement of each investor to vote a share position as of the record date. It says that reconciliation needs to occur at both the nominee level and at the beneficial owner level. And, it suggests that the proxy voting system would be improved “through reconciliation of the vote entitlement at the beneficial owner level before a proxy distribution is made. This reconciliation would determine eligible voters and share positions in a uniform manner for broker-dealers and banks holding street name shares.” At the same time, the STA says that reconciliation at the nominee level needs equal attention “to ensure that all of a nominee’s shares entitled to be voted have been accounted for.” The STA also says that it believes that as many processing tasks as possible should be standardized and automated, to limit the amount of manual processing required. And, longer term, the report suggests that the U.S. Securities and Exchange Commission (SEC) should also move to “simplify the system by adopting substantive reforms to make proxy voting more transparent and to ensure a higher level of accuracy in the vote count.” Canadian regulators have been grappling with many of these same issues. Earlier this year, the Canadian Securities Administrators (CSA) held a roundtable to examine issues such as improving vote reconciliation, and adopting end-to-end vote confirmation. That session followed a consultation paper issued last year by the CSA on proxy voting issues in Canada. CIBC chief executive Victor Dodig compensation down last year compared with 2018 James Langton last_img read more

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Make tax planning a yearlong activity

first_img Keywords Tax planning Facebook LinkedIn Twitter Ontario moves to shut down insurance side account loophole Tax planning needs to be an ongoing process, however, says Waters, because by the time it comes time to file a return there is little that can be done in regards to tax savings. “When we actually sit down to do our tax returns in April,” says Waters, “by and large that’s just a record keeping process.” Yet 31% of Canadians feel that the only time they need to consider their taxes is during the traditional “tax season” between January and April, according to BMO. As well, 36% of survey participants say they have their taxes under control while another 23% don’t believe taxes should be a yearlong priority. Twenty-one per cent of surveyed individuals say they are already aware of their eligibility for tax credits and therefore don’t need to give the matter another thought. While clients may not think it’s a priority, advisors would do well to make sure their clients are up to date regarding tax changes. Says Waters: “[Keep] an ear to the ground in terms of what’s happening.” For example, recent changes clients are likely to want to know more about include the federal government’s income splitting initiative, Ontario’s new tax rates, the increase to the Universal Child Care Benefit in 2015 and changes to the foreign investment form T1135. Advisors can keep clients thinking about taxes throughout the year by alerting them to changes, such as the ones above, when they occur or during the annual review. As well, clients will also want to hear about the tax implications of various investments before making their final decision on what product to buy. Survey results were compiled from 1,002 online interviews of adult Canadians between December 1-4. Related news 2021 TFSA limit announcedcenter_img Time for tax-loss selling Fiona Collie Advisors need to be active in keeping clients aware of tax changes throughout the year, according to John Waters, vice president, head of tax and estate planning, BMO Nesbitt Burns Inc., as few Canadians think about their taxes except when its time to file their returns. According to a survey by Toronto-based BMO Nesbitt Burns Inc., 87% of Canadians are unaware of end-of-year tax saving practices, such as tax-loss selling and charitable donations. Furthermore, the study, which was released on Wednesday, found that only 27% of Canadians believe tax planning is a yearlong activity. Share this article and your comments with peers on social medialast_img read more

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