Fairmont Le Chateau Montebello is seen in Montebello, Que., on Thursday, Sept. 23, 2021.
Justin Tang/The Globe and Mail
Canada’s largest pension funds and banks have limited direct ties to the Evergrande Group debt crisis, a review of their investment holdings shows, but there’s little question the Chinese company’s collapse would have painful knock-on effects, even if those indirect reverberations are difficult to quantify.
It would be “naive to think that the turmoil in the market doesn’t have the potential to have second-order and third-order impact,” Noel Quinn, chief executive officer of HSBC Holdings PLC, told a conference Wednesday. “Clearly with the changes that are taking place in the Evergrande situation, it’s concerning.”
Also Wednesday, after Evergrande’s inability to meet interest payments sent global markets tumbling, the company reached an agreement with domestic bond holders that appeared to ease investor concerns about contagion. Meanwhile, China’s central bank injected US$18.5-billion in liquidity into the banking system, which brought further calm.
Canadian banks have no direct lending exposure to Evergrande or to China’s real estate sector, and the Big Six banks have less than 1 per cent of their equity capital – about $1.4-billon combined – in legal entities in China, according to a research note by Sohrab Movahedi of BMO Nesbitt Burns Inc.
Banks could have indirect exposure to counterparty risk in capital markets or to equity markets through wealth management, “but we estimate these to be insignificant to balance sheet and/or the earnings profile of the banks,” he wrote.
Life insurers have no direct exposure to Evergrande’s debt or real estate and the risk from contagion is limited, Mr. Movahedi said. Investments in China account for only about 10 per cent of Manulife Financial Corp.’s $1.9-billion in invested fund assets in Asia, for example.
Some pension funds such as Canadian Pension Plan Investment Board and Caisse de dépôt et placement du Québec have held small equity stakes in Evergrande, and in other Chinese real estate companies such as China Vanke Co. Ltd. But some of the holdings Canadian asset managers held in Evergrande were required to satisfy index funds.
A subsidiary of Royal Bank of Canada, British-based BlueBay Asset Management, held a small number of bonds issued by Evergrande worth tens of millions of dollars, but sold some of those bonds this year and has immaterial exposure as of July 31, according to data from Refinitiv.
An RBC spokesperson declined to comment on specific fund holdings.
With Evergrande on the hook for US$305-billion to banks, homebuyers and suppliers, the majority of which are in China, the company has been scrambling in recent weeks to unload assets to raise cash.
In addition to managing 565 million square metres of land in nearly 300 cities in mainland China and Hong Kong, according to its latest annual report, Evergrande has its fingers in a sprawling array of industries, from bottled water to electric vehicles.
Much of it is now on the block, which begs the question of how long it will be before Evergrande puts a for sale sign up at its lone Canadian holding, the Fairmont Le Château Montebello.
Evergrande snapped up the historic hotel two hours west of Montreal in 2014, marking its first foray into Canada, leaving many to wonder if China’s second-largest developer was about to join the influx of other Chinese real estate companies reshaping this country’s largest cities.
With Evergrande now buckling under its debt load, roiling global markets this week with fears its collapse could touch off a global credit crisis, it’s no small measure of relief the property giant went no further in Canada than owning the world’s largest log cabin.
Guests arrive by the entrance archway leading to the Fairmont Le Chateau Montebello in Montebello, Que., on Sept. 23, 2021. The chateau is the lone Canadian holding of Evergrande Group.
Justin Tang/The Globe and Mail
Genevieve Dumas, general manager of Château Montebello, said she had no knowledge of what Evergrande’s plans for the hotel might be, and directed questions to the company’s representatives in China. Evergrande didn’t respond to a request for comment.
Several hotel industry watchers said they had not heard of any move to sell the Fairmont property. They also said new investment in the Canadian industry from China has been sparse.
“We haven’t seen any meaningful inbound capital from China and in fact have seen some repatriation,” said Alam Pirani, executive managing director with Colliers’s hotel division.
There are also some indications Chinese investors were already reducing their exposure to Canada.
Jia Wang, interim director of the China Institute at the University of Alberta, said Chinese investment in Canada was already coming down before the Evergrande crisis and before Beijing started trying to discourage property developers from borrowing too heavily.
Last year, Chinese investment and purchases in Canada totalled $1.98-billion, down from $4.05-billion in 2019, according to the institute, which tracks all Chinese investment in Canada, though that also reflects the pandemic-related slowdown. The institute also said the true value of investment is likely much higher since many investors do not publicly report deal values.
Other Chinese developers that have also been caught up in the Evergrande downdraft have played a much bigger role in North American real estate markets.
Greenland Holding Group, which is developing two major condo projects in downtown Toronto, is under pressure to refinance its debt. On Thursday, Moody’s Investors Service revised its outlook on Greenland to “negative” from “stable” and said the company will “face uncertainty in issuing new offshore bonds at reasonable funding costs to refinance its maturing debt over the next 6-12 months.”
Although the credit rater expects Greenland to have enough resources to repay its US$2.87-billion bonds that are maturing between September and December, 2022, it said the repayment will reduce funding for Greenland’s operations in the near term.
The company did not respond to a request for comment.
Greenland, like Evergrande, has crossed at least one of the “three red lines” that Chinese regulators put in place last year to cap borrowing to tamp down speculation. Companies that fail to comply with the limits, which govern metrics around asset, equity and debt levels, face restrictions on new borrowing.
In the U.S., Greenland, along with Oceanwide Holdings and China Vanke, which have also fallen short of Beijing’s new rules, are all struggling to develop projects in San Francisco, Los Angeles and New York.
Andy Yan, director of the city program at B.C.’s Simon Fraser University, said the nature of real estate finance means untangling the funding sources and relationships of heavily indebted Chinese developers is like trying to find “poisoned sausage meat” that’s mixed up in the global real estate marketplace.
If credit conditions worsen in China and lending continues to tighten, it is unclear if that will force developers in Canada that rely on money from China to pull back.
Thomas Davidoff, director of the UBC Centre for Urban Economics and Real Estate, said on the one hand a hit to wealth and liquidity in China could lead Chinese investors to retrench from a city like Vancouver. But with Chinese property developers in turmoil, “Chinese investors might want to relocate their investment of out China, possibly here.”
That mixed picture will take time to sort out.
David Ho, a Vancouver-based executive with real estate service CBRE, said some Chinese real estate developers in Canada sold their properties after Beijing imposed new rules in 2017 to keep capital in the country.
“There is an interest to entertain a sale,” Mr. Ho said. “They are making moves to liquidate or divest their interest, in some cases prematurely,” he said.
Mr. Ho leads a team in charge of bringing Asian capital to Vancouver, Toronto and other major North American cities. He said high-net-worth individuals in Hong Kong are now more open to investing in Canada. Ten years ago, he said his Hong Kong clients would tell him, “I can get an Evergrande bond with a 10-per-cent return so why would I invest in a shopping mall in Canada?” Now with Evergrande’s troubles and other turmoil in the Chinese economy, Mr. Ho is seeing more interest in Canadian real estate.
“We are doing deals,” he said.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.
Most job search advice is cookie-cutter. The advice you’re following is almost certainly the same advice other job seekers follow, making you just another candidate following the same script.
In today’s hyper-competitive job market, standing out is critical, a challenge most job seekers struggle with. Instead of relying on generic questions recommended by self-proclaimed career coaches, which often lead to a forgettable interview, ask unique, thought-provoking questions that’ll spark engaging conversations and leave a lasting impression.
Your level of interest in the company and the role.
Contributing to your employer’s success is essential.
You desire a cultural fit.
Here are the top four questions experts recommend candidates ask; hence, they’ve become cliché questions you should avoid asking:
“What are the key responsibilities of this position?”
Most likely, the job description answers this question. Therefore, asking this question indicates you didn’t read the job description. If you require clarification, ask, “How many outbound calls will I be required to make daily?” “What will be my monthly revenue target?”
“What does a typical day look like?”
Although it’s important to understand day-to-day expectations, this question tends to elicit vague responses and rarely leads to a deeper conversation. Don’t focus on what your day will look like; instead, focus on being clear on the results you need to deliver. Nobody I know has ever been fired for not following a “typical day.” However, I know several people who were fired for failing to meet expectations. Before accepting a job offer, ensure you’re capable of meeting the employer’s expectations.
“How would you describe the company culture?”
Asking this question screams, “I read somewhere to ask this question.” There are much better ways to research a company’s culture, such as speaking to current and former employees, reading online reviews and news articles. Furthermore, since your interviewer works for the company, they’re presumably comfortable with the culture. Do you expect your interviewer to give you the brutal truth? “Be careful of Craig; get on his bad side, and he’ll make your life miserable.” “Bob is close to retirement. I give him lots of slack, which the rest of the team needs to pick up.”
Truism: No matter how much due diligence you do, only when you start working for the employer will you experience and, therefore, know their culture firsthand.
“What opportunities are there for professional development?”
When asked this question, I immediately think the candidate cares more about gaining than contributing, a showstopper. Managing your career is your responsibility, not your employer’s.
Cliché questions don’t impress hiring managers, nor will they differentiate you from your competition. To transform your interaction with your interviewer from a Q&A session into a dynamic discussion, ask unique, insightful questions.
Here are my four go-to questions—I have many more—to accomplish this:
“Describe your management style. How will you manage me?”
This question gives your interviewer the opportunity to talk about themselves, which we all love doing. As well, being in sync with my boss is extremely important to me. The management style of who’ll be my boss is a determining factor in whether or not I’ll accept the job.
“What is the one thing I should never do that’ll piss you off and possibly damage our working relationship beyond repair?”
This question also allows me to determine whether I and my to-be boss would be in sync. Sometimes I ask, “What are your pet peeves?”
“When I join the team, what would be the most important contribution you’d want to see from me in the first six months?”
Setting myself up for failure is the last thing I want. As I mentioned, focus on the results you need to produce and timelines. How realistic are the expectations? It’s never about the question; it’s about what you want to know. It’s important to know whether you’ll be able to meet or even exceed your new boss’s expectations.
“If I wanted to sell you on an idea or suggestion, what do you need to know?”
Years ago, a candidate asked me this question. I was impressed he wasn’t looking just to put in time; he was looking for how he could be a contributing employee. Every time I ask this question, it leads to an in-depth discussion.
Other questions I’ve asked:
“What keeps you up at night?”
“If you were to leave this company, who would follow?”
“How do you handle an employee making a mistake?”
“If you were to give a Ted Talk, what topic would you talk about?”
“What are three highly valued skills at [company] that I should master to advance?”
“What are the informal expectations of the role?”
“What is one misconception people have about you [or the company]?”
Your questions reveal a great deal about your motivations, drive to make a meaningful impact on the business, and a chance to morph the questioning into a conversation. Cliché questions don’t lead to meaningful discussions, whereas unique, thought-provoking questions do and, in turn, make you memorable.
Nick Kossovan, a well-seasoned veteran of the corporate landscape, offers “unsweetened” job search advice. You can send Nick your questions to artoffindingwork@gmail.com.
CALGARY – Canadian Natural Resources Ltd. reported a third-quarter profit of $2.27 billion, down from $2.34 billion in the same quarter last year.
The company says the profit amounted to $1.06 per diluted share for the quarter that ended Sept. 30 compared with $1.06 per diluted share a year earlier.
Product sales totalled $10.40 billion, down from $11.76 billion in the same quarter last year.
Daily production for the quarter averaged 1,363,086 barrels of oil equivalent per day, down from 1,393,614 a year ago.
On an adjusted basis, Canadian Natural says it earned 97 cents per diluted share for the quarter, down from an adjusted profit of $1.30 per diluted share in the same quarter last year.
The average analyst estimate had been for a profit of 90 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Oct. 31, 2024.
CALGARY – Cenovus Energy Inc. reported its third-quarter profit fell compared with a year as its revenue edged lower.
The company says it earned $820 million or 42 cents per diluted share for the quarter ended Sept. 30, down from $1.86 billion or 97 cents per diluted share a year earlier.
Revenue for the quarter totalled $14.25 billion, down from $14.58 billion in the same quarter last year.
Total upstream production in the quarter amounted to 771,300 barrels of oil equivalent per day, down from 797,000 a year earlier.
Total downstream throughput was 642,900 barrels per day compared with 664,300 in the same quarter last year.
On an adjusted basis, Cenovus says its funds flow amounted to $1.05 per diluted share in its latest quarter, down from adjusted funds flow of $1.81 per diluted share a year earlier.
This report by The Canadian Press was first published Oct. 31, 2024.
/cloudfront-us-east-1.images.arcpublishing.com/tgam/GVJYNLYNZNGQ5LYNOA5XRX4SQY.JPG)
