Streetwise newsletter: Insurance stocks face a long slog; Banks versus Statscan, Avison goes global - Canadanewsmedia
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Streetwise newsletter: Insurance stocks face a long slog; Banks versus Statscan, Avison goes global

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Here are the top reads on deals and financial services over the last 24 hours,

Manulife, Sun Life face long slog to win over investors: After a decade spent enduring interest rates so low they were almost unimaginable, life insurers should finally be able to exhale. The global economy is on the upswing and rates are finally rising. Yet for all the recent momentum, something strange is happening: Canadian life-insurance stocks are not moving in lock step with interest rates. Story (Tim Kiladze, for subscribers)

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Banks weigh legal action to block Statscan’s plan to obtain consumer records: Canada’s banks are considering legal action to prevent Statistics Canada from obtaining their clients’ banking records without consent as the federal agency faced criticism from several fronts Thursday during a special Senate hearing. Statscan’s chief statistician, Anil Arora, pledged during the meeting that the plan will not go ahead until the federal privacy commissioner completes an investigation. Story (Bill Curry)

Avison Young stamps new global footprint via GVA acquisition: Commercial realtor Avison Young will buy large U.K.-based rival GVA, in a deal that helps double the Canadian company’s size and give it a significant presence in one of the world’s top property markets. The acquisition will add 1,500 real estate professionals in 15 offices throughout Britain, Ireland and Poland, as well as affiliated offices in other parts of Europe and Asia. “We have gone global in one transaction,” Avison’s chief executive Mark Rose said. Story (Rachelle Younglai, for subscribers)

London Metal Exchange applies for standing in Ontario: The London Metal Exchange, the world’s biggest and oldest market for industrial metals, is applying to Ontario’s regulator to be recognized as an exchange. In its application to the Ontario Securities Commission, the LME says it wishes to offer direct access to its trading facilities to participants in the province. Story (Alexandra Posadzki, for subscriber)

Bombardier sells $900-million in non-core assets, slashes 5,000 jobs: Bombardier Inc. is selling its Q400 turboprop business to west coast niche plane maker Viking Air and slashing 5,000 jobs as Canada’s biggest aerospace manufacturer unloads non-core assets and builds a future tied to luxury jets and trains. Montreal-based Bombardier announced the deal Thursday in tandem with third-quarter earnings, part of a series of measures that also includes the sale of its private aircraft flight training activities to CAE Inc. Story (Nicolas Van Praet, for subscribers)

Longview Aviation revenue set to take off with Bombardier Q400 turboprop acquisition: Victoria-based Longview Aviation Capital Corp. is set to become the continent’s largest commercial turboprop-aircraft manufacturer with the $300-million acquisition of Bombardier Inc.’s Q400 turboprop business and the storied de Havilland brand. While Bombardier is shedding employees and non-core assets, Longview Aviation, which owns Twin Otter maker Viking Air Ltd., will see annual revenue jump toward $1-billion from about $300-million as a result of the deal. Story (David Ebner, for subscribers)

MORE FINANCIAL SERVICES NEWS

Securities industry: Securities lending by investment funds has reached its highest level in a decade, as demand for corporate bonds surged more than 30 percent over the past 18 months and short selling of Tesla and Alibaba shares reaches a frenzy. Global money managers generated nearly $6-billion in revenue during the first half of the year, loaning out stocks and bonds that often land in the hands of short-sellers such as hedge funds. Story (for subscribers)

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MORE DEALS NEWS

LNG sector: Japan’s Toshiba Corp will exit its U.S. liquefied natural gas (LNG) business by paying China’s ENN Ecological Holdings Co more than $800-million to take over the unit as part of a plan to shed money-losing assets. Story

Media sector: DHX Media Ltd. has signed a deal to sell its Halifax animation studio to IoM Media Ventures. Financial terms of the deal were not disclosed. Story (for subscribers)

The Streetwise newsletter is Tuesday to Saturday. If you’re reading this on the web, or if someone forwarded this e-mail to you, you can sign up for Streetwise and all Globe newsletters on our signup page.

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City to provide update on LRT launch

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We're expecting to get another update on the launch of Light Rail Transit in the capital on Wednesday morning. 

The $2.1 billion project was expected to be up and running by November 2 but in early September the city learned the Rideau Transit Group would not be making the handover date. 

This put the city in a position to deduct $1 million from the next payment to the RTG, which will come once they achieve substantial completion. 

In September, the city said they were hoping to see LRT up and running by the end of Q1, or by the end of March. 

An update from the city manager in October, revealed there was still significant construction work required at Rideau Station. 

They were also keeping a close eye on Parliament Station, other west end stations and the ability to have multiple trains running along the line at the same time. 

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Gas prices could drop as low as 99 cents a litre on Thursday, expert says

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Attention Ontario drivers: don't gas up on Wednesday, wait until Thursday, when gas prices are forecast to fall.

That's the word from Dan McTeague, senior petroleum analyst at GasBuddy.com, a website that monitors gas prices throughout North America. McTeague says average gas prices on Thursday in the province could be the lowest since Oct. 5, 2017.

And some gas retailers could drop the price even lower, charging as low as 99 cents a litre, he predicted.

"Gas prices will be falling, anywhere you are, net four cents a litre. Not just the GTA, but pretty much all of Ontario," McTeague said on Wednesday.

The average price of a litre of gas in the GTA, currently $1.159, is expected to fall at midnight by four cents to $1.119 a litre.

Dan McTeague, a senior petroleum analyst for GasBuddy.com, said: 'the best advice would be, not to fill up today, but wait until tomorrow. You will save an average of a 4 cents a litre.' (CBC)

"We are going to see, as a result of yesterday's deep losses on energy markets, a net four cent decrease for motorists who will be filling up," he said.

"The best advice would be, not to fill up today, but wait until tomorrow. You will save an average of a 4 cents a litre. And of course, that could mean at many stations in the Toronto area, prices will be at or perhaps even below a dollar a litre."

McTeague, based in Toronto, said many gas retailers will charge below $1 a litre because they will shed their "operating margins," which could be 10 or 11 cents a litre, as part of "deep discounting."

He said motorists haven't seen the "magical number" of 99 cents in over a year.

Low prices expected to stay for next several days

McTeague said the markets are rattled because the price crude oil has dropped more than $20 a barrel in a month.

He said it's hard to say how long gas prices will stay this low.

"For now, it looks like this might be as good as it gets for the next several days."

McTeague said the drop is unexpected and it is in response to the rapid drop in the price crude oil. On Tuesday, crude oil dropped nearly eight per cent in value, he said.

"Consumers are now benefiting from that decrease."

For average drivers who use 60 litres a week, the decrease represents a savings of up to $15 a week, he added.

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Canadian oil producers hurt by double whammy

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Canada’s oil producers can’t catch a break.

Even as local production cuts help alleviate pipeline bottlenecks, heavy crude plunged below $18 a barrel for the first time since 2016 – dragged down by global oil prices.

“The differentials are holding to modestly improving but the global prices are sliding,” said Kevin Birn, a director on the North American crude oil markets team at IHS Markit. “We called it a double whammy.”

Oil sands producers including Canadian Natural Resource, Devon Energy, Cenovus Energy and Athabasca Oil have announced curtailments that may total 140,000 barrels a day or more, after a localised glut sent heavy Western Canadian Select (WCS) crude plunging to a $50 discount to West Texas Intermediate futures, the widest in Bloomberg data going back a decade.

Since then, WCS’s discount has narrowed to about $42 a barrel, but the absolute price has plunged along with world crude benchmarks amid concerns of oversupply. The US has granted eight nations waivers to continue buying Iranian oil, while Opec and Russia have boosted production. WTI futures dropped for a tenth straight day on Friday, falling briefly below $60 a barrel.

“Lower global oil demand growth estimates and soaring US production have all fed into this bearish crude picture,” Joan Pinto, an energy specialist at Canadian Imperial Bank of Commerce, said in a note. “The WCS differential has actually held in remarkably well, all things considered.”

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Adding to the Canadian oil woes, two pipeline projects that would eventually help producers get their crude to markets are facing court delays. At the weekend, a US court ruled that an environmental assessment of TransCanada’s Keystone XL pipeline was inadequate, a decision that could delay the $8 billion project by eight months. Earlier this year, a Canadian court ruled that the planned expansion of the Trans Mountain pipeline to the Pacific would need to undergo further regulatory reviews.

Canada’s crude export pipelines are rationing space after a surge of new production from the oil sands came online late last year and early this year. Recent refinery maintenance in the US Midwest has also reduced demand for Canada’s oil. Currently, just one export pipeline project, Enbridge’s Line 3 expansion, is under construction and scheduled to begin operating by the second half of next year.

Oil companies may be curtailing production now in anticipation that they will get better prices later when access to rail cars or pipelines improves, Mr Birn said.

“There is a financial upside to their strategy,” he said.

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