Tuesday October 07, 2008
REPORT ON BUSINESS FRONT PAGE 
Sale of CI stake lets Sun Life look south
Sun Life Financial Inc. hastily approached Bank of Nova Scotia on Friday, hammering out a weekend deal to sell its stake in CI Financial Income Fund for $2.3-billion in cash, in order to jump on opportunities coming out of the credit crunch.
Emerging markets pounded in global rout
Investors fled to the safety of U.S. Treasuries and a handful of other trusted government bonds and gold yesterday, accelerating a commodity rout driven by the global credit freeze.
Washington finds a scapegoat
Had Richard Fuld entertained any doubts about why he was invited to testify before a congressional committee yesterday, they were quickly put to rest by John Mica, a blunt-speaking Republican congressman from Florida.
MORE INSIDE
If your to-do list includes significant hand holding these days, you're probably a financial adviser. Rob Carrick reports. PAGE 18 ''Bad times are coming' - how Ted Rogers read the headwinds and began preparing his company for
Why this slump will be 'long and deep'
A global recession may be near, but the global bear market has already arrived, and my, what teeth it has. After yet another Monday horror show - the fourth in a row in which the Dow Jones industrial average dropped at least 300 points - every one of the world's major equity markets has shed at least one-quarter of its value so far in 2008.
THE MARKETS
DOWNSandP/TSX10,230.43-572.92DOWNDJIA9,955.50-369.88DOWNNasdaq1,862.96-84.43DOWNDollar90.98-1.48UP
COLUMNISTS
New face coming to Bay St.
The phone lines are being installed and the business cards are on order while a group of Bay Streeters wait for regulatory go-ahead ''any week now'' for their brand spanking new securities firm.
Bear makes me feel like yelling 'uncle'
I'm not going to lie to you. I'm more terrified now than I was in third grade when the class bully threw me to the ground and was all set to hurl himself knees-first into my head.
From bailing to buying: One adviser's day
Investment adviser Ted Rechtshaffen's to-do list yesterday as the stock markets plunged: 1. Concede defeat in trying to calm one particular client and place a sell order for all his holdings in the stock markets.
MONEY & MARKETS
A user's guide to market mayhem
This begins a regular Report on Business feature to answer reader questions about the global financial crisis. To submit your questions and read more, go to reportonbusiness.comWhere will the $700-billion (U.S.) in the Wall Street bailout package go and how will prices be determined?
INTERNATIONAL BUSINESS
Clearer skies trump falling oil in Beijing gas hikes
Beijing's city authorities have raised pump prices by up to 4 per cent to cover the cost of cleaner fuel, a bold gesture of support for efficiency and green growth on a day when global oil markets hit an eight-month low.
'Amazulu World' planned for South Africa
A Dubai-based real estate company said yesterday it plans to build a 40,000 acre themed entertainment development in South Africa. ''Amazulu World'' will be ''a multibillion-dollar themed entertainment and mixed-use destination development on the north coast of Durban,'' the firm Ruwaad Holdings LLC said in Dubai. Key elements will include a theme park, Africa's largest shopping destination, a sports village, a dedicated education and health village, as well as hotels and resorts.
U.K. Web ad spending rises 21%; other media slip
Spending on Internet advertising in Britain grew 21 per cent in the first half of 2008, propping up the total ad market which fell as cash-strapped companies cut back on marketing, a key report said. The Internet Advertising Bureau said yesterday expenditure on the Web increased to & 1.68-billion ($3.22-billion) in the first six months, while the total advertising market was down 0.7 per cent year-on-year. The total market would have been down 4.6 per cent without the Internet's growth as television, press and radio fell.
Rio Tinto says low costs help during crunch
Rio Tinto PLC is better placed than some mining firms to ride out the credit crisis, chief executive officer Tom Albanese said yesterday. Mr. Albanese said that Rio Tinto, the No. 2 miner behind BHP Billiton Ltd., was helped by low-cost operations and links to China, where growth is slowing but is still far stronger than in western nations. ''We have some of the lowest cost iron ore mines in the world, some of the lowest cost copper mines, some of the lowest cost aluminium production in the world,'' he said. ''On a comparison with our peers basis, we actually generally do better on total shareholder return during difficult times than during buoyant times,'' he said. RIO (London) fell & 5.10 to & 28.88 ($55.34). .
UN body to finalize action on ships' emissions
Corus to 'adjust' steel production
London-based Corus Group Ltd., owned by India's Tata Steel, said yesterday demand had slowed and it was taking steps to ''adjust'' its steel production accordingly. Corus's statement follows an announcement by ArcelorMittal of a 15-per-cent cutback in output, but it contrasted with a statement by the World Steel Association that it was confident 2008 and 2009 would be years of demand growth. ''We are in a period of high economic uncertainty,'' said Ku-Taek Lee, chairman of the WSA and chairman and chief executive officer of Posco. ''However, we continue to expect growth in steel demand in 2009 and for the medium term, above the world GDP growth rate,'' he said, speaking at an industry gathering in Washington. TATA (Mumbai) fell 43 rupees to 350 rupees ($8.07).
HP plans 1,400 job cuts in Germany
Hewlett-Packard Co. will cut 1,400 jobs in Germany over the next two years as part of a worldwide restructuring effort, a company spokesman said yesterday. Some 1,150 of the cuts are expected at the subsidiary Electronic Data Systems, while 250 jobs will likely come from the main company, said spokesman Norbert Gelse. HP, whose German base is near Stuttgart in Boeblingen, will work out a plan for the cuts with labour representatives over the coming weeks, Mr. Gelse said. EDS, whose German operations are based in Duesseldorf, currently has some 4,200 employees in the country, while HP has 8,500. HPQ (NYSE) fell $2.05 (U.S.) to $40.95.
Atlantic City may delay casino smoking ban
Ford eyes U-turn on tiny-car launch
Rising demand for small cars has pushed Ford Motor Co. to revisit its decision not to bring the tiny European Ka model to the United States, Ford's chief executive officer said yesterday. ''We're assessing that right now,'' Alan Mulally told a Detroit radio station. A new version of the Ka was unveiled last week at the Paris Motor Show. It will be launched in major European markets by late this year or early 2009. The Ka is far smaller than the Focus, which currently is Ford's only U.S. compact car. U.S. small car sales overall are up 6 per cent for the first nine months of the year, while truck sales are off 21 per cent, according to Autodata Corp. F fell 36 cents (U.S.) to $3.69.
Wachovia suitors suspend lawsuits
Wachovia Corp. and suitors Wells Fargo and Co. and Citigroup Inc. agreed yesterday to halt all litigation until noon tomorrow in the hopes of deciding the winner of the troubled Charlotte, N.C.-based bank.
BNP Paribas top dog in euro zone savings after Fortis deal
France's BNP Paribas SA became the euro zone's largest holder of private savings after buying control of Belgium's biggest bank, the struggling lender Fortis, for about €14-billion ($20.7-billion).
Eli Lilly wins tussle for ImClone
Eli Lilly and Co. has agreed to acquire ImClone Systems Inc. for $6.5-billion (U.S.), outbidding Bristol-Myers Squibb Co. and bringing to a close one of the most colourful corporate sagas in biotech history.
India's biggest industrial barrier? Farmers
Kiran Mhatre, 33, ekes out a living growing rice, fishing in the village pond, rearing livestock and cultivating miswak, a shrub whose twigs are used to maintain dental hygiene.His family has lived off a three-acre patch of land for generations. And so when Reliance Industries Ltd., a powerful business conglomerate, offered him $25,000 for his land - an astronomical sum for a peasant who typically earns $600 a year - he declined.
CANADIAN BUSINESS
Rogers braced to weather the storm
Ted Rogers says he began warning his top executives 18 months ago, not long before storm clouds began gathering over the stock market, that ''bad times are coming.''The chief executive officer of Rogers Communications Inc. told the heads of his wireless, cable and media divisions to start raising capital before the well ran dry, and to pull back on costly acquisitions.
Oil price drop tarnishes fortunes of oil sands
Canada's oil sands companies are facing a rough ride as crude prices continue to fall, putting a squeeze on high-cost producers around the world, and the crises in credit and equities markets make it difficult to finance expansions.
His cup runneth over
When Harald Thiel sold his stake in AVW-TELAV, an audiovisual services company he had run for 23 years, he knew just what to do with the cash from the seven-figure deal: start his own winery.
With Okanagan wine, add bits and bytes
British Columbia's Okanagan Valley, long known for its award-winning vineyards, picturesque golf courses and sparkling lakes, is bolstering its reputation with a decidedly unromantic venture - electronic data storage.
Best practices just a keystroke away
Time is something small business owners have precious little of. Whether you're new to entrepreneurship or an old hand at the game, it's often difficult to get away from the shop or office to attend courses and seminars to learn new skills or better ways to build your business.
Crisis strengthens Manulife's hand in AIG bid
The chances of Manulife Financial Corp. winning parts of American International Group Inc. are rising sharply as the credit crisis hurts the ability of rival insurers to knock the Canadian company out of the picture, industry sources and analysts said.
Mining 'just got a whole lot scarier'
The metals sector is bracing for a wave of mine shutdowns and development project cancellations amid a deepening crash in commodity prices.Plunging metals prices are forcing executives to reconsider the economic viability of mines as commodity values fall toward the cost of production at many operations.
Developers struggle to secure financing
This summer, Michael Gold, developer of a much-hyped condo project in downtown Toronto, realized he was facing a problem.Just eight months after frenzied buyers lined up for days to buy units of the $450-million luxury skyscraper to be erected at the corner of Yonge and Bloor Streets, the global credit and U.S. subprime mortgage crises tightened their grip.
EnCana defends drilling in Alberta wildlife area
EnCana Corp.'s fight to expand its operations in one of Alberta's most environmentally sensitive regions began in earnest yesterday with the company telling an arbitrator that its controversial project can be done in a sustainable manner.
New rules would restrict small investors from buying ABCP
Regulators plan to stop the sale of asset-backed commercial paper products to ordinary investors in response to the collapse last year of Canada's non-bank ABCP system.The Canadian Securities Administrators (CSA), an umbrella group for provincial securities commissions, issued a report yesterday proposing to eliminate an exemption that allowed asset-backed commercial paper (ABCP) to be sold without a disclosure document called a prospectus. That allowed the paper to be sold to any investors without regulatory scrutiny.
Scotiabank balks at U.S., expands at home
Bank of Nova Scotia has decided to put another chunk of its money into a Canadian wealth management deal while taking more time to assess opportunities the credit crunch is creating south of the border.
Horizon stays bright for business jets
The boom in business jet sales is expected to continue for some time to come despite the global financial crisis, according to a closely watched annual forecast from Honeywell Aerospace.
REIT watch*
No issue with shorts, regulator says
Former Duvernay CEO back in junior oil game
Bid for TransAlta still too low, CEO says
TransAlta Corp. is still worth more than the $7.8-billion bid floated by major shareholders this summer, despite the meltdown in financial markets, the chief executive officer of Canada's biggest publicly traded power generator said yesterday. In addition, it is unlikely that big players in the North American power sector are plotting takeovers in the depressed, credit-tight environment, TransAlta CEO Steve Snyder said. ''Clearly, in this unsettled time, there's just a tendency for everyone to stop and take time out and go to the sidelines. Bidders don't know what to bid and askers don't know what to ask,'' Mr. Snyder said in an interview. Shares in TransAlta are mired well below the $39 offer proposed by LS Power Equity Partners and Global Infrastructure Partners in July. TA (TSX) fell $2.27 to $25.23.
RailPower delays plant completion
RailPower Technologies Corp. postponed yesterday the completion of its new assembly plant in Saint-Jean-sur-Richelieu, Que., which was initially planned for completion in the first quarter of next year. The hybrid locomotive company also said it has decided to put in place a cost reduction plan which includes cutting certain jobs to lower costs. ''Certain expected large orders have been delayed this year by customers due to the economic slowdown and other factors related to delayed governmental subsidies in the United States,'' RailPower Technologies president and chief executive officer Jose Mathieu said in a statement. RailPower makes specialized technology systems for the transportation and related industries that it claims reduce fuel usage, operating and maintenance costs, and emissions. P (TSX) fell 3 cents to close at 29 cents.
Pala hikes stake in Coalcorp
Swiss investment group Pala Investments Holdings Ltd. has more than doubled its stake in Coalcorp Mining Inc. with a $52.9-million private share purchase. Pala said yesterday it has agreed to buy 35 million shares, which will increase its holdings in the Toronto-based coal miner to 44 per cent. Pala said the increased stake will allow it to ''influence the business decision making of Coalcorp'' and it will look to place nominees on the company's board. Earlier this year, Coalcorp decided against trying to sell itself and choose instead to focus on developing the La Francia mine in Colombia. CCJ (TSX) fell 22 cents to $1.08.
GENERAL BUSINESS
ET CETERA
''If you haven't discovered your role, you're the villain today.''Congressman John Mica to Richard Fuld, former CEO of failed investment bank Lehman Brothers. Page 1
CORRECTION
Canadian Pacific Railway Ltd. has $203-million (U.S.) of debt maturing in 2009. Incorrect information provided by Bloomberg Financial Services was published Saturday.
GLOBE INVESTOR
From bailing to buying: One adviser's day
Investment adviser Ted Rechtshaffen's to-do list yesterday as the stock markets plunged: 1. Concede defeat in trying to calm one particular client and place a sell order for all his holdings in the stock markets.
Zeroing in on stocks nearest to 52-week highs
WHAT ARE WE LOOKING FOR?A momentum portfolio for a tough market. Yin Luo, quantitative strategist at Macquarie Securities, recommends a portfolio strategy each month, and this month he suggests looking at stocks trading near their year highs.
Worst September on record for U.S. dividend cuts
The credit crisis is taking a giant bite out of U.S. dividends with more than two-thirds of the cuts being made by U.S. financial institutions, according to a report by Standard and Poor's.
Bear makes me feel like yelling 'uncle'
I'm not going to lie to you. I'm more terrified now than I was in third grade when the class bully threw me to the ground and was all set to hurl himself knees-first into my head.
Market turmoil puts all eyes on rates
The turmoil in the global capital markets will bring increased attention to three central bank rate-setting policy meetings this week as the credit crisis that has led to a drop in the Canadian dollar continues to unfold.
EYE ON EQUITIES: STOCKS THAT SHOULD BE ON YOUR RADAR SCREEN BY
GROUPE AEROPLAN: (AER-TSX)Yesterday's close$10.99, down $1.28Because of Groupe Aeroplan's heavy exposure to consumer spending, Versant Partners analyst Neil Linsdell remains cautious on the loyalty reward program. Its shares, however, have dropped to a level that ''more than reflects our concerns,'' and can provide a potential 25-per- cent total return over 12 months, he says.
Volatility index shows investors in state of heightened fear
You could almost hear the collective gasping among investors as the stock market plunged yesterday. But the real gauge of sentiment was over at the Chicago Board Options Exchange volatility index, or VIX, where you could nearly hear people screaming.
Russian index drops most on record
Russia's Micex index fell the most since Bloomberg began tracking the index in 2001, forcing three trading halts as the global banking crisis escalated in Europe and oil's tumble below $90 (U.S.) a barrel dragged down OAO Rosneft.
COMMODITIES
Key commodities were clobbered by deepening fears of a global recession, with gold being the only exception as investors embraced the safe haven of the precious metal. Oil dropped more than 6 per cent to below $88 a barrel, copper and soybeans slumped over 7 per cent.
MONDAY'S MARKETS: WHAT HAPPENED
DOWNDow plunges below 10,000U.S. stocks dropped, driving the Dow Jones industrial average below 10,000 for the first time in four years, after bank bailouts in Europe widened and commodities producers slid on concern global growth is slowing. Equities fell worldwide, erasing more than $2-trillion in market value.
BONDS
Canadian bonds ended sharply higher yesterday, as a rout on global stock markets and heightened fears of global recession again droveinvestors into seeking shelter in the perceived safety of bonds. CANADA
FOREIGN EXCHANGE CROSS RATES
The U.S. dollar made another huge advance against the euro yesterday, but fell equally hard versus the yen as the U.S. and Japanese currencies benefited from heightened risk aversion due to plunging stock markets. The loonie ended dramatically lower.
