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Canada Pension Plan Investment Board says net assets now top half a trillion dollars – Canada News – Castanet.net

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The Canada Pension Plan Investment Board says its net assets grew to top half a trillion dollars in its first quarter.

CPP Investments says its net assets for the quarter ended June 30 totalled $519.6 billion, up from $497.2 billion at March 31.

The increase came as the fund, which includes the base CPP account and additional CPP accounts, earned a return of 3.5 per cent, net of all costs, for the quarter.

The $22.4 billion increase in net assets included $17.7 billion in net income after costs and $4.7 billion in net Canada Pension Plan contributions.

CPP Investments says the results were driven by ongoing strength in public equity markets, gains from its private equity and real assets programs and contributions from credit investments.

A strong Canadian dollar partially offset some of the gains.

“CPP Investments delivered solid results to open the fiscal year, vaulting the Fund well beyond the half-trillion mark in assets,” CPP Investments CEO John Graham said in a statement.

“Diversification from active management continues to drive long-term performance as strong 10-year returns help bolster the sustainability of the fund.”

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How Canada is exposed to ripple effects of Evergrande debt crisis – The Globe and Mail

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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.

What’s behind Evergrande’s debt struggle and why it’s rattling investors around the world

China’s Evergrande mess is spreading and hurting big mining companies. The iron ore and steel party is over

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.

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CDC director diverges from recommendation, endorses COVID-19 booster for millions of older Americans – CTV News

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The U.S. Centers for Disease Control and Prevention on Thursday endorsed booster shots for millions of older or otherwise vulnerable Americans, opening a major new phase in the U.S vaccination drive against COVID-19.

CDC Director Dr. Rochelle Walensky signed off on a series of recommendations from a panel of advisers late Thursday.

The advisers said boosters should be offered to people 65 and older, nursing home residents and those ages 50 to 64 who have risky underlying health problems. The extra dose would be given once they are at least six months past their last Pfizer shot.

However, Walensky decided to make one recommendation that the panel had rejected.

The panel on Thursday voted against saying that people can get a booster if they are ages 18 to 64 years and are health-care workers or have another job that puts them at increased risk of being exposed to the virus.

But Walensky disagreed and put that recommendation back in, noting that such a move aligns with an FDA booster authorization decision earlier this week. The category she included covers people who live in institutional settings that increase their risk of exposure, such as prisons or homeless shelters, as well as health care workers.

The panel had offered the option of a booster for those ages 18 to 49 who have chronic health problems and want one. But the advisers refused to go further and open boosters to otherwise healthy front-line health care workers who aren’t at risk of severe illness but want to avoid even a mild infection.

The panel voted 9 to 6 to reject that proposal. But Walensky decided to disregard the advisory committee’s counsel on that issue. In a decision several hours after the panel adjourned, Walensky issued a statement saying she had restored the recommendation.

“As CDC Director, it is my job to recognize where our actions can have the greatest impact,” Walensky said in a statement late Thursday night. “At CDC, we are tasked with analyzing complex, often imperfect data to make concrete recommendations that optimize health. In a pandemic, even with uncertainty, we must take actions that we anticipate will do the greatest good.”

Experts say getting the unvaccinated their first shots remains the top priority, and the panel wrestled with whether the booster debate was distracting from that goal.

All three of the COVID-19 vaccines used in the U.S. are still highly protective against severe illness, hospitalization and death, even with the spread of the extra-contagious delta variant. But only about 182 million Americans are fully vaccinated, or just 55% of the population.

“We can give boosters to people, but that’s not really the answer to this pandemic,” said Dr. Helen Keipp Talbot of Vanderbilt University. “Hospitals are full because people are not vaccinated. We are declining care to people who deserve care because we are full of unvaccinated COVID-positive patients.”

Thursday’s decision represented a dramatic scaling back of the Biden administration plan announced last month to dispense boosters to nearly everyone to shore up their protection. Late Wednesday, the Food and Drug Administration, like the CDC panel, signed off on Pfizer boosters for a much narrower slice of the population than the White House envisioned.

The booster plan marks an important shift in the nation’s vaccination drive. Britain and Israel are already giving a third round of shots over strong objections from the World Health Organization that poor countries don’t have enough for their initial doses.

Walensky opened Thursday’s meeting by stressing that vaccinating the unvaccinated remains the top goal “here in America and around the world.”

Walensky acknowledged that the data on who really needs a booster right away “are not perfect.” “Yet collectively they form a picture for us,” she said, “and they are what we have in this moment to make a decision about the next stage in this pandemic.”

The CDC panel stressed that its recommendations will be changed if new evidence shows more people need a booster.

The CDC advisers expressed concern over the millions of Americans who received Moderna or Johnson & Johnson shots early in the vaccine rollout. The government still hasn’t considered boosters for those brands and has no data on whether it is safe or effective to mix-and-match and give those people a Pfizer shot.

“I just don’t understand how later this afternoon we can say to people 65 and older, `You’re at risk for severe illness and death, but only half of you can protect yourselves right now,”‘ said Dr. Sarah Long of Drexel University.

About 26 million Americans got their last Pfizer dose at least six months ago, about half of whom are 65 or older. It’s not clear how many more would meet the CDC panel’s booster qualifications.

CDC data show the vaccines still offer strong protection against serious illness for all ages, but there is a slight drop among the oldest adults. And immunity against milder infection appears to be waning months after people’s initial immunization.

For most people, if you’re not in a group recommended for a booster, “it’s really because we think you’re well-protected,” said Dr. Matthew Daley of Kaiser Permanente Colorado.

Public health experts not involved in Thursday’s decision said it is unlikely people seeking third doses at a drugstore or other site will be required to prove they qualify.

Even with the introduction of boosters, someone who has gotten just the first two doses would still be considered fully vaccinated, according to the CDC’s Dr. Kathleen Dooling. That is an important question to people in parts of the country where you need to show proof of vaccination to eat in a restaurant or enter other places of business.

Among people who stand to benefit from a booster, there are few risks, the CDC concluded. Serious side effects from the first two Pfizer doses are exceedingly rare, including heart inflammation that sometimes occurs in younger men. Data from Israel, which has given nearly 3 million people — mostly 60 and older — a third Pfizer dose, has uncovered no red flags.

The U.S. has already authorized third doses of the Pfizer and Moderna vaccines for certain people with weakened immune systems, such as cancer patients and transplant recipients. Other Americans, healthy or not, have managed to get boosters, in some cases simply by asking.

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The Associated Press Health and Science Department receives support from the Howard Hughes Medical Institute’s Department of Science Education. The AP is solely responsible for all content

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China declares cryptocurrency trading illegal, beefs up mining crackdown – CBC.ca

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China’s central bank on Friday declared all transactions involving cryptocurrencies such as bitcoin illegal and stepped up a crackdown on illegal mining of them in the country.

Chinese banks have been forbidden from handling cryptocurrencies since 2013, but it still existed at the margins, and the country was one of the world’s largest producers of bitcoin. The crackdown on crypto is part of a broader push by Beijing to ratchet down risk in the country’s economy, specifically the technology sector and in real estate.

“Virtual currency derivative transactions are all illegal financial activities and are strictly prohibited,” the People’s Bank of China said on its website.

China has cracked down on cryptocurrency before, causing major mining facilities to move to other jurisdictions, including Canada.

But watchers say this time around is in the strongest language yet. 

“China has been known to go to extremes, with either very assertive statements and prosecutions to complete radio silence,” said George Zarya, CEO of Bequant crypto exchange in London, England.

“This time the point was made very clear that China will not support cryptocurrency market development as it goes against its policies of tightening up control over capital flow and big tech.”

Friday’s notice alleges that bitcoin, ethereum and other digital currencies disrupt the financial system and are used in money-laundering and other crimes. Production of cryptocurencies such at bitcoin is done by computers solving increasingly complicated mathematical problems, a task that consumes vast amounts of energy.

China argues that cryptocurrencies cannot be treated the same way as fiat currencies such as dollars, euros and francs are — and eliminating them is necessary to reduce risk and, through the crackdown on crypto mining, meet the country’s carbon-reduction goals, Scotiabank economist Derek Holt said in a note to clients.

Bitcoin, the world’s largest cryptocurrency, lost more than seven per cent of its value to just over $41,000 each.

Smaller coins, which typically rise and fall in tandem with bitcoin, also tumbled. Ether fell 10 per cent while XRP was down a similar amount.

“There’s a degree of panic in the air,” said Joseph Edwards, head of research at cryptocurrency broker Enigma Securities in London.

Promoters of cryptocurrencies say they allow anonymity and flexibility, but Chinese regulators worry they might weaken the ruling Communist Party’s control over the financial system and say they might help to conceal criminal activity.

The People’s Bank of China is developing an electronic version of the country’s yuan for cashless transactions that can be tracked and controlled by Beijing.

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