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Alberta's Proposed Pivot To Petrochemicals: A Fresh Investment Landscape In The – Mondaq News Alerts



There have been a number of recent interesting economic and
legal developments aimed at generating greater investment in
Alberta-particularly in areas that will help diversify the
provincial economy and make it more resilient to energy commodity
price shocks and difficulties in accessing markets. Some of these
developments are directly related to the COVID-19 pandemic and the
adverse impact it has had on the economy generally and specifically
with respect to energy commodity prices. Other developments result
from pre-pandemic macroeconomic conditions, as well as the
provincial election in 2019. These developments may be of interest
to existing, new and potential investors in Alberta.

Part 1: Opportunities in Alberta’s petrochemical

At the heart of what the government calls the “New Alberta
Advantage” is a desire to expand the petrochemical industry in
Alberta. The government needs to seize this opportunity, given the
province’s skilled workforce and significant resource
endowments. The government has embraced a strategy to expand and
diversify the petrochemicals industry as part of its larger Natural Gas Vision and Strategy, announced on
October 6, 2020. The government proposes that supporting the
province’s capacity to produce petrochemicals is a means to
attract investment, capitalize on the education and skills of
Albertans, capture a larger share of the commodities value chain,
and to mitigate and avoid some of the market access challenges that
currently face crude oil, bitumen and natural gas.

Every day, people around the world use dozens of products that
are made with petrochemicals, including:

  • medical supplies, personal protective equipment, including face
    shields, masks and gloves, components for ventilators, and
    computers for X-rays and MRIs;
  • commercial fertilizers;
  • polyester fabric, televisions, cellphones, bicycle helmets,
    household appliances and computers;
  • car tires and automotive parts;
  • desks, chairs, carpets and office supplies; and
  • food packaging to keep food fresh and safe during transport and

Alberta already has a significant petrochemical industry, and is
Canada’s largest hub for refining and petrochemical production.
There are 36 chemical and petrochemical manufacturers currently
operating in central Alberta. In 2019, the production of industrial
chemicals contributed $12.1 billion to the province’s economy
and employed over 58,000 people directly and indirectly. Methane,
ethane, ethylene and propane, among others, are some of the
petrochemicals produced in Alberta which are used as the chemical
building blocks for manufacturing.

There are five petrochemical production hubs in Alberta, each of
which has rail access to export markets. Alberta has four
ethane-cracking plants, including two of the worlds largest, with a
combined annual capacity of 4.1 million tons per year of ethylene
output. These plants make plastics and other building block
chemicals from natural gas liquids. The National Energy Board of
Canada (now the Canada Energy Regulator) estimated that
Alberta’s ethane gathering system has an excess ethane supply,
which can be tapped to build new steam cracking capacity in the

Alberta produces significant volumes of petrochemical feedstocks
for manufacturing. The province currently produces an estimated 10
bcf/d of natural gas and 160,000 bbl/d of propane, both in excess
of domestic demand, with large quantities available for
petrochemicals applications. The province accounts for 68% of
Canadian natural gas production and is a major exporter of natural
gas and natural gas liquids. The in-Alberta price of petrochemical
feedstocks is often lower than the price in other markets and this
value differential supports the economics for investing in new or
expansions of existing petrochemical facilities in Alberta.

In addition to the availability of feedstock for petrochemical
production, Alberta has extensive infrastructure in place, which
can help to accommodate new petrochemicals production capacity.
Furthermore, Alberta’s existing carbon capture infrastructure
and geology make the province well-positioned to produce
petrochemicals with lower greenhouse gas emissions. The province
has the most comprehensive natural gas and natural gas liquids
transportation and processing capacity in Canada, with the Nova Gas
Transmission Line system, the Alberta Ethane Gathering System and
in-depth natural gas liquid extraction infrastructure integrating
upstream hydrocarbon production with downstream consumers.

Projects on the horizon

With global demand for petrochemicals expected to continue to
increase, there is great potential for expansion in Alberta’s
petrochemical sector. The government’s goal is to establish
Alberta among the world’s top ten petrochemical producers by
2030. The Alberta Industrial Heartland Association, a non-profit
group of municipalities near the Industrial Heartland area
northeast of Edmonton, estimates that there could be a further $30
billion of private-sector investment in the province’s
petrochemical industry by 2030.

The petrochemical industry in Alberta is considered an essential
service and has remained active through the COVID-19 pandemic.
Industry participants have adapted to the public health crisis and
petrochemical production has supported the increased demand for
products made from petrochemicals such as personal protective
equipment, acrylic shields, ventilators, and COVID-19 testing

The province will be home to Canada’s first two propane
derivatives plants, each of which will produce polypropylene (a
plastic product) from propane: the 525,000 tonne per annum
Heartland Petrochemical Complex, currently under construction by
Inter Pipeline Ltd., and the 550,000 tonne per annum complex to be
constructed by Canada-Kuwait Petrochemical Corporation, a joint
venture between Pembina Pipeline Corporation and Kuwait’s
Petrochemical Industries Company.

On May 11, 2020, two Canadian companies, NOVA Chemicals
Corporation, a prominent producer of chemicals and plastic resins,
and Enerkem Inc., a world-leading renewable fuels and chemicals
producer, announced the signature of a joint development agreement
to explore turning non-recyclable and non-compostable municipal
waste into ethylene. Enerkem Inc. is the first company in the world
to produce renewable methanol and ethanol from non-recyclable,
non-compostable municipal solid waste on a commercial scale. This
joint venture is a unique and cutting-edge component of
Alberta’s growing petrochemical industry. It has the potential
to unlock the potential of the “circular economy”, and
recover and recycle plastic initially created for single-use. The
government is encouraging of these initiatives, in alignment with
its goal of taking stewardship and accountability over plastics
management, and becoming the centre of excellence for plastics
diversion and recycling in Western North America by 2030.

New Petrochemical Incentives Program aims to maintain

As part of the province’s pandemic Recovery Plan, on July 9, 2020, the government
announced the Alberta Petrochemicals Incentive Program
(APIP), a 10-year program to attract multi-billion
dollar investments in the petrochemical sector. APIP is intended to
be a re-branding, improvement, and expansion of the province’s
2016 Petrochemicals Diversity Program (PDP). Under
APIP, the government does not intend to cap grants available to
petrochemical facilities developers, according to Samantha Peck,
the press secretary for the Ministry of Natural Gas and

APIP grants will be provided in line with typical investment
cycles, and are anticipated to give petrochemical developers the
ability to account for the full value of this incentive in their
project modeling, rather than trying to estimate the value of
royalty credits in an unpredictable market. On October 6, 2020 in
the press conference announcement of the Natural Gas Vision and
Strategy, Premier Jason Kenney indicated that APIP grants would
take the form of provincial income tax relief, once petrochemical
projects are commissioned and operational. In this way, APIP
differs from PDP with its more cumbersome system of marketable
royalty tax credits. The government pledged that APIP grants will
be provided to every project that applies and meets the criteria.
However, more specific terms of the grants are uncertain at this
time as the government continues its engagement with industry
stakeholders to finalize the technical design of the program. The
government’s announcement indicated that details about the
application process and program guidelines are in development and
will be made available at the official launch of APIP in fall 2020,
but we are still waiting for those details.

The government anticipates that growth in the petrochemical
sector through APIP could create more than 90,000 direct and
indirect jobs over the construction and operation periods of new
facilities, and more than $10 billion in revenue from corporate and
personal income taxes.

Part 2: Projects, programs and policies that can support
Alberta’s growing petrochemical industry through regulation,
environmental leadership and new infrastructure

(a) Legislative changes to promote


Corporate Income Tax reductions

Alberta is the most tax-competitive business jurisdiction in
Canada, and is among the most attractive investment destinations in
North America. The government announced its “Job Creation Tax
Cut” in 2019. Through the tax cut, the government was to
reduce Alberta’s corporate income rate from 12% to 8% by 1%
increments by January 1, 2022. These reductions have been
accelerated though the Recovery Plan, such that Alberta’s
corporate income tax rate was reduced to 8% effective July 1, 2020.
This does not affect the federal corporate income tax rate, which
applies across Canada.

“Red tape” reduction

As of June 2020, the government completed more than 200
initiatives to eliminate “red tape” that reduces
administrative efficiency and job creation. On June 11, 2020, the
government proposed to eliminate further procedural burdens and
bureaucratic barriers in order to create new jobs and bolster
economic growth in Alberta and tabled Bill 22, the Red Tape
Reduction Implementation Act,
2020 (Bill 22) to achieve this.
Bill 22 received Royal Assent on July 23, 2020 and will enact
changes to 14 statutes across six ministries; these changes come
into force upon proclamation.

The amendments that Bill 22 makes to the Business
Corporations Act
and the Partnership Act are aimed at
increasing investment in Alberta. The changes made to both statutes
seek to increase foreign and extra-provincial investment and reduce
barriers that both corporations and partnerships face when coming
to Alberta. Bill 22 does this by removing the requirement for
corporations to have directors who are residents of Canada and
substituting the requirement to have an “agent for
service” who is an Alberta resident. Bill 22 significantly
streamlines the process of forming limited partnerships in Alberta
(by reducing the public disclosure requirements), provides limited
partners with greater statutory rights, and makes it clear that the
laws of the jurisdiction of formation of an extra-provincial
limited partnership will apply to determine the limited liability
status of its limited partners. These changes are investor-friendly
and are intended to make Alberta laws as or more attractive than
the laws of other Canadian jurisdictions, such that Alberta either
has a competitive advantage or is on equal footing with those

Another change brought about by Bill 22 is a streamlining of the
approval process for new oil and natural gas projects, with a goal
of giving investors greater certainty that projects will be
approved, and will be able to proceed sooner. This acceleration can
be seen in both the Mines and Minerals Act and the Oil
Sands Conservation Act,
where the requirement for certain
Cabinet approvals of the Minister of Energy’s or Alberta Energy
Regulator’s (the AER) recommendations will be
removed. As a result, the Minister of Energy’s or AER’s
decision will be determinative in these situation without the
further review and approval by the Cabinet, saving time and

Bill 22 will also remove Cabinet oversight under the
Marketing of Agricultural Products Act and the
Municipal Government Act.

For more information on Bill 22, see our articles here and here.

Invest Alberta Corporation

On July 31, 2020, Bill 33, the Alberta Investment Attraction
, came into force. Through this new legislation, the
government has created Invest Alberta Corporation
(IAC), which has a mandate to work closely with
banks and investors globally to define and defend Alberta’s
leadership on environmental, social and governance standards across
all sectors, and to outline major capital investment opportunities
as the province recovers from the pandemic. IAC will coordinate the
work of Alberta’s 11 trade promotion offices around the world
and expand its footprint to include key foreign markets for
Alberta, beginning with establishing permanent staff in Houston,

Seven members have been appointed to IAC’s board of
directors, with diverse backgrounds and professional experience.
The board will determine IAC’s strategic direction and
announced on September 23, 2020 that it has appointed Dr. David
Knight Legg as IAC’s CEO. Dr. Legg was formerly the Principal
Advisor to the Premier of Alberta where his focus was on capital
markets, investment, tax, sector diversification, Indigenous equity
participation, and environmental, social and governance

Support for innovation in smaller enterprises

On July 22, 2020, the government introduced the Innovation
Employment Grant, which is intended to encourage economic growth by
supporting small and medium-sized businesses that invest in
research and development (R&D) with a grant
worth up to 20% of their qualifying expenditures. The Innovation
Employment Grant will be delivered through the corporate tax
system, and will provide up to $4 million in annual R&D
spending. The legislation governing the Innovation Employment Grant
will be introduced in the fall of 2020.

(b) Environmental leadership

Carbon pricing and capture

The Technology Innovation and Emissions Reduction
(TIER) Regulation came into effect on January 1,
2020. TIER replaces and updates Alberta’s Carbon
Competitiveness Incentive Regulation
. Through TIER, the
government aims to manage emissions without disrupting investment
through overregulation. TIER applies to any facility that emitted
100,000 tonnes or more of carbon dioxide equivalent
(CO2e) greenhouse gases in 2016, or any year
following. Facilities with fewer than 100,000 tonnes of CO2e green
house gas emissions may be eligible to opt into TIER. The ability
to opt in is available in respect of a facility that competes
against a TIER-regulated facility or that has greater than 10,000
of annual emissions “in an emissions-intensive, trade-exposed

TIER meets the federal government’s carbon pricing
requirements – and by opting in, operators of facilities may apply
to become exempt from the application of the federal Greenhouse
Gas Pollution Pricing Act
. TIER was designed to drive
continued reductions in emission intensity. It configures emissions
obligations by one of two approaches: a facility-specific approach
or a high-performance benchmark approach. The facility-specific
benchmark calls for a 10% reduction relative to a facility’s
average emissions intensity. The high performance benchmark, which
applies to facilities that have already made substantial progress
in reducing their emissions, is linked to the average emissions of
the most efficient facilities in the industry. TIER seeks to
achieve emissions reduction with a more cost-efficient approach
tailored directly to Alberta’s industries, while maintaining
robust regulation and upholding the highest environmental

Alberta was also the first jurisdiction in North America to
direct dedicated funding to implement carbon capture and storage
technology across industrial sectors. The province has committed
$1.24 billion through 2025 to fund two commercial-scale carbon
capture and storage projects. Both projects will help reduce the
C02 emissions from the oil sands and fertilizer sectors, and reduce
greenhouse gas emissions by 2.76 million per year.

Payments made through the TIER program are allocated into the
TIER fund, which will be used for research and investment in carbon
capture utilization and storage, and improved oil sands extraction.
On September 22, 2020 the government announced that it will spend
$750 million from the TIER fund to support projects across all of
Alberta’s industries reduce their carbon emissions, with a
particular focus on advancing carbon capture and sequestration
technology. The province’s $750 million investment will be
supplemented with money from industry and other sectors, for a
total investment of $1.9 billion in Alberta’s economy, which is
intended to create 3,400 jobs through the provincial funding, and
up to 8,700 jobs through partnerships with private enterprises who
collaborate with the province to make investments aimed at reducing

Methane emissions

In April 2020, the federal government announced a $750 million
emissions reduction fund that will help companies continue their
progress to reduce methane emissions. Canada’s oil and natural
gas industry has committed to a 45% reduction of methane emissions
by 2025. On August 17, 2020 the federal government announced that
eligible conventional and offshore oil and gas companies will be
able to apply to a new “repayable contribution program”,
which will provide repayable loans up to $675 million. The
remaining amount, up to $75 million, is for investments in
emissions reduction and research and development in the offshore
sector, and some of the federal government’s contributions in
the offshore sector may be non-repayable.

At the provincial level, the AER has developed requirements to
address the primary sources of methane emissions from Alberta’s
upstream oil and gas industry: fugitive emissions and venting. The
AER’s requirements are set out in Directive 060: Upstream
Petroleum Industry Flaring, Incinerating, and Venting
Directive 017: Measurement Requirements for Oil and Gas
. The methane reduction requirements in
Directive 060 came into effect on January 1, 2020, while
the requirements in Directive 017 went into effect
immediately upon the directive’s release in December 2018.


The emerging market for hydrogen is forecast to increase
ten-fold and be worth $2.5 trillion by 2050, offering a potential
solution for carbon-intensive sectors such as heavy industry and
freight. Alberta is one of the world’s largest hydrogen
producers, and produces it at the second-lowest cost worldwide,
after Russia. Both the federal and Alberta governments are seeking
to build on existing hydrogen and natural gas production, with a
goal of becoming the frontrunner producer for the world’s
hydrogen needs. Pure hydrogen can be burned to produce heat in a
furnace or engine, just like oil or natural gas. Hydrogen can also
be channeled into a fuel cell to produce electricity. Interest in
hydrogen as an alternative energy source is on the rise, as
hydrogen burns without emitting carbon dioxide, and has been
heralded as a potential solution to global emissions and energy
storage challenges. In the longer term, the government’s goal
is to deploy large-scale hydrogen production with carbon capture,
utilization and storage in various commercial settings in the
province by 2030, and to export hydrogen and hydrogen-derived
products to other provinces and countries by 2040.

Hydrogen does not naturally occur in commercially producible
quantities, and not all hydrogen is created equally.
“Grey” hydrogen is produced using fossil fuels such as
natural gas, and accounts for roughly 95% of the hydrogen produced
globally. “Blue” hydrogen is made by extracting hydrogen
from natural gas using steam methane reformation, and then using
carbon capture and sequestration technology to store the remaining
carbon. “Green” hydrogen is generated through
electrolysis using renewable energy sources, such as solar or wind

In July 2020, the government announced $10.8 million in funding
for the three hydrogen projects in Alberta. The goal of
Alberta’s hydrogen plan is to establish “a very aggressive
and profitable hydrogen industry”, including maintaining the
province’s position as the leading hydrogen producer in Canada,
according to Dale Nally, Alberta’s Associate Minister of
Natural Gas. The announcement this summer pledged $5 million for a
prototype and field-testing for a new method of extracting hydrogen
from natural gas, and $3 million on the development of a new
early-stage technology to use heat to crack methane into hydrogen
and other byproducts. ATCO Ltd. will also receive $2.8 million in
provincial funding for a $5.7 million project to be built next year
that will blend blue hydrogen into natural gas streams distributed
for home heating in Fort Saskatchewan, near Edmonton.

A key benefit to Alberta’s hydrogen market is the extensive
pipeline and carbon dioxide transportation systems, including Air
Products’ Heartland Hydrogen pipeline, the Alberta Carbon Trunk
Line and the Quest Carbon Capture and Storage Project. Current gas
conduits can flow with as much 20% of their streams consisting of
hydrogen, and many home furnaces could handle increased hydrogen
amounts, providing a ready market for the fuel and a quick way to
reduce carbon emissions.

At the national level, the federal government has indicated that
a national hydrogen strategy is forthcoming. This plan is expected
to be premised on the use of both blue and green hydrogen.

(c) Energy infrastructure projects to support new

By the end of 2020, Alberta will have seen the largest-ever
government investment in infrastructure. The government has
earmarked $10 billion to be spent on projects across the province.
These projects are intended to establish the foundation for the
private sector to create 50,000 jobs while creating many collateral
benefits for Alberta, and drawing additional investors to
established and emerging industries in Alberta.

On April 1, 2020 the government announced a $1.5 billion equity
investment in the Keystone XL Pipeline (Keystone
), coupled with a $6 billion loan guarantee. During the
next two years of construction, Keystone XL will directly and
indirectly support 7,000 jobs, spurring increased economic activity
in associated trades, retail, and hospitality services along the
construction route. TC Energy Corp. the primary proponent announced
on September 29, 2020 that a memorandum of understanding had been
reached with Natural Law Energy, which represents four First
Nations in Alberta and one in Saskatchewan, for a minority
investment in Keystone XL.

Overall, the government estimates that Keystone XL will
contribute approximately $2.4 billion to Canada’s GDP, and in
its first year of service, will generate more than $7 million in
property taxes. Keystone XL could generate $30 billion in tax and
royalty revenues over the life of the pipeline.

Despite legal challenges, protests and blockades related to the
construction of the Trans Mountain Pipeline expansion, construction
of the expansion is underway. Courts of all levels, including the
Supreme Court of Canada, have repeatedly confirmed the validity of
the approvals for and processes undertaken in respect of the
pipeline. On January 16, 2020 the Supreme Court of Canada ruled in
support of the Trans Mountain Pipeline expansion going forward, and
the Government of British Columbia has since announced that it will
not initiate further challenges against the Trans Mountain
Pipeline. In March 2020, the Supreme Court of Canada declined to
hear five additional challenges to the federal government’s
decision to approve the expansion and, in June 2020, declined to
hear additional challenges to the adequacy of the government’s
consultation efforts. Construction is ongoing in Alberta and
Kamloops, British Columbia, and expansion work continues in the
Westridge Marine Terminal and the Burnaby Terminal on the West
coast. On September 15, 2020, Ian Anderson, president and CEO of
Trans Mountain Corp. announced that the Trans Mountain Pipeline
expansion is currently on budget and on schedule for completion by
the end 2022, despite challenges related to COVID-19. The Trans
Mountain Pipeline will increase the pipeline’s capacity to
transport petroleum products from Strathcona County (near
Edmonton), Alberta to the Burnaby Terminal from 300,000 to 890,000
barrels per day.

In October 2018, the joint venture partners of the LNG Canada
liquefied natural gas export terminal announced a positive final
investment decision to proceed with the project, which will allow
LNG Canada to transport natural gas from northeastern British
Columbia to the LNG Canada liquefaction facility and export
terminal in Kitimat, British Columbia, via the Coastal GasLink
pipeline (the CGL Pipeline). The Coastal GasLink
Limited Partnership, which is controlled by TC Energy, is building
and will own and operate the CGL Pipeline. Pre-construction
activities began in November 2018 and completion is targeted for
2025. In late 2019, TC Energy announced that it would sell 65% of
the limited partnership units in Coastal GasLink Limited
Partnership to investment companies KKR & Co Inc. and Alberta
Investment Management Corporation. The transaction closed on May
25, 2020. The government aims to gain access to Asian and European
markets via multiple LNG export facilities by 2030.

To address crude oil egress concerns for Alberta’s
producers, the previous government leased 4,400 rail cars capable
of transporting 120,000 bbls/day of crude oil out of the province.
Under this arrangement, the Alberta Petroleum Marketing Commission
would purchase crude oil from producers and market it, using the
expanded rail capacity to transport the marketed oil to purchasers.
In February 2020, the current government announced that it had sold
or assigned $10.6 billion worth of crude-by-rail contracts to the
private sector, a move that retained producers’ ability to
access the expanded export capacity.

On September 28, 2020, the President of the United States
granted a presidential permit for the proposed US$17 billion Alaska
to Alberta railway. The project would extend United States access
to Alberta’s resources and would provide Alberta with an
additional means of egress and access to the Southcentral Alaska
Ports. The 2,750 km project is not yet fully permitted. The project
developer, Alaska to Alberta Railway Development Corp., estimates
that the project will provide an additional $60 billion in
cumulative economic output through 2040 and create more than 28,000

* * *

Alberta’s pandemic recovery strategy and the pre-pandemic
goals of the provincial government combine to create a welcome
environment for investors in the province. Alberta’s vast
resource endowment gives the province great power to responsibly
diversify its economy in the wake of the pandemic. The government
is investing heavily in infrastructure to facilitate investors’
projects, and introducing legislation and policies to remove
barriers to entry. As the demand for petroleum-based products
remains ubiquitous globally, Alberta presents a strong option for
investors seeking to get involved in petrochemicals, or other
projects across various industries.

Citations can be found in the PDF below.

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The content of this article is intended to provide a general
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Vancouver investment firm bought under fraudulent circumstances: IIROC – Powell River Peak



Vancouver-headquartered investment firm PI Financial Corporation was purchased under fraudulent pretences, according to allegations set out in a notice of hearing from Canada’s investment regulator.

The Investment Industry Regulatory Organization (IIROC) alleges Gary Man Kin Ng and Donald Warren Metcalfe duped their lenders, who assisted them in buying PI Financial in 2018 for $100 million.

article continues below

Ng personally guaranteed the loans used to buy the firm, however, “despite his representations, Ng did not actually own, control or have trading authority over the securities accounts pledged as collateral,” according to IIROC. “Instead, ownership and control of the collateral was falsified by Ng and Metcalfe.”

Before buying PI Financial, which is said to employ over 300 people across Canada, Ng, 36, was an Approved Person and a Registered Representative for selling securities. He owned a Winnipeg-based firm named Chippingham Financial Group Limited via various corporate structures referred to by IIROC as the Ng Group. In November 2018, Ng, through the Ng Group, acquired a 100% controlling interest in PI Financial, IIROC stated in a notice of hearing that has scheduled a preliminary appearance on January 6, 2021.

Ng is said to have borrowed $80 million from “Lender One” and $20 million from “Lender Two.”
As security for the loans, “Ng purportedly granted separate, unencumbered security interests to Lender One, and also to Lender Two, over collateral including certain Chippingham securities accounts (later PI Financial accounts) which were owned by him,” stated IIROC, adding such representations were fake.

Ng is accused of “vastly overstating” the value of assets in the accounts and altering securities account statements.

“Metcalfe also perpetrated a fraud as he directly and actively participated with Ng in the falsification and distribution of false and/or fictitious account documentation to lenders,” it said in the November 24 notice of hearing.

In addition to the $100 million to buy PI Financial, Ng and Metcalfe borrowed a further $40 million from Lender Two and then $32 million from a third lender – all based on falsified collateral.

Although PI Financial was 100% owned by Ng, company officials “became aware of the issues concerning Ng’s purported ownership of securities accounts at the end of January 2020, and immediately reported these matters to IIROC,” the notice states.

Both men failed to attend an interview with IIROC enforcement staff over the summer.

IIROC said, “Ng, who was born in 1984, represented himself to others as an extremely successful businessperson who created enormous personal wealth through highly successful technology, real estate and manufacturing investments in Canada and China.”

At the time of the PI Financial purchase, Ng spoke of the deal with BNN Bloomberg, whose hosts noted how unique the deal was, given most investment firms are bought by large corporate entities, not individuals.

Metcalfe, meanwhile, was someone who worked initially with Ng at Chippingham.

Some details of the alleged lies are outlined in the notice. For example, several accounts Ng purported to have a value of $91 million actually had a value of $1.9 million.

IIROC proceedings are civil and not criminal. Should the allegations be proven, Ng and Metcalfe face any of the following corrective measures: a reprimand; disgorgement of any losses; a maximum $5 million fine; suspension or prohibition of activities; and a permanent ban from the industry.

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Investment firms cautious on reopening plans, notification procedures – Investment Executive



Financial sector could be a Covid-19 long hauler: Fitch

Banks in particular face future earnings, ratings challenges due to pandemic

Crisis coming in seniors’ care if governments don’t shift investments: report

Current spending levels of 1.3% of GDP could soar to 4.2% by 2041, says report

  • By: IE Staff
  • November 27, 2020
    November 27, 2020
  • 11:44

Global house prices rose in the face of Covid-19: BIS

Canada among the housing market leaders, both short and long term

Markets move past election uncertainty

With Biden’s transition underway, investors have shifted their focus to Covid vaccines and economic recovery

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Takeaways from our 2021 investment outlook: Legacy of the lockdowns – Investors' Corner BNP Paribas



Here we summarise the big picture for investors at the end of 2020. This constitutes the starting point for our 2021 investment outlook.

  • Since the 2008 global financial crisis, the global economy has been mired in anaemic growth and weak demand, tempered by consistently rising asset prices.
  • In 2020 the global economy faced a crisis of unprecedented magnitude (see Exhibit 1 below) after the pandemic lockdowns. After a contraction of 4.4% in 2020 the IMF forecasts global growth of 5.4% in 2021. Overall, this would leave 2021 GDP some 6.5% lower than in the pre-COVID-19 projections of January 2020. The adverse impact on low-income households is particularly acute, imperilling the significant progress made in reducing extreme poverty over the last 30 years. Countering inequality is a key challenge to be met in 2021 and beyond.

Exhibit 1: Largest decline since WWII – graph shows change in world gross domestic product (inflation-adjusted, in %)

Source: BNP Paribas Asset Management, as of 26/11/2020

  • Under the best-case scenario, one or more vaccines for COVID-19 become widely available by the second half of 2021. Otherwise, the disease remains a longer-term threat requiring us to ‘live with’ the virus – repeated lockdowns will not be a sustainable long-term strategy.
  • In 2020, advanced economies loosened the monetary and fiscal reins most spectacularly. Debt-to-GDP ratios soared, rising for many countries by more than they did in the years after the Global Financial Crisis (GFC). Major central banks have largely financed the increase in budget deficits, monetising an expanding national debt, much as Japan has done.
  • One way to understand the weakness in aggregate economic demand is to study real interest rates (the ‘price’ of money in the economy). In 2006, the real yield of the 10-year inflation-protected US Treasury bond was between 2% and 3%. Since 2010, its yield has mostly been below 1%, including a spell in negative territory both in 2012 and again in 2020. Negative real yields are now common to the G3 economies (see Exhibit 2 below) and beyond. In 60% of the global economy — including 97% of advanced economies — central banks have pushed policy interest rates to below 1%. In one-fifth of the world, policy rates are negative.

Exhibit 2: Real yields are now negative for G3 sovereign debt – graph shows changes in real yields for US, Japanese and eurozone government debt between 1997 and 16/11/2020.

Source: BNP Paribas Asset Management, as of 26/11/2020

  • In 2020, these meagre interest rates, along with cheap, low-risk liquidity from central banks, led asset prices higher. Risk premia for risky assets shrank. Companies whose revenues have plummeted — cruise lines, airlines, cinemas — were able to borrow money in 2020 to survive. Investors had few higher-yield options. Will central banks continue to supply such liquidity in 2021?
  • And how is all this debt to be paid for? The appropriate historical parallel is perhaps the post-World War II period, when central banks capped bond yields at levels well below the trend GDP growth rate to gradually reduce the national debt as a proportion of GDP.
  • Alternatively, instead of financial repression and inflation (as post WW2), the extraordinarily low real interest rates we have seen over the past decade could help achieve fiscal sustainability. It would, however, be imprudent to count on it. No policymaker should expect real interest rates to remain persistently below the growth rate of real GDP. Indeed, forecast imbalances in planned global savings and investment could drive real interest rates higher (ageing societies save a lot, but old societies do not).
  • Another risk is that improved real trend growth does not come to the rescue. Lower global growth after the pandemic accompanied by inadequate fiscal stimulus would leave marginal sections of the economy vulnerable to collapse. Such an outcome would test the paradigm of modest growth, low inflation and supportive central bank policy that has supported asset prices since 2008.

Today we face three interconnected crises – health, economic and climate. The instability provoked by the pandemic presents a window of opportunity to pivot in a new direction. Long-term environmental viability, equality and inclusive growth are essential pre-conditions to a sustainable economy. By taking a holistic, systemic, long-term view, we are less likely to be surprised by crises and better able to manage them.

For in-depth insights into what’s next for the global economy and markets, read our 2021 investment outlook, ‘Legacy of the lockdowns’

Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. The views expressed in this podcast do not in any way constitute investment advice.

The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns.

Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions).

Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.

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