CANADA ECONOMICS

CANADA - CHINA

The Globe and Mail. 21 Jun 2017. Think tank seeks to sway Canadians on Chinese trade. [PPF] is corporate Canada plus the Liberal Party in another guise. They have a corporate and political agenda to have free trade with China, almost at any cost. I fear if they get their way, any complaints we have about human rights would be tucked under the carpet. Tony Clement Conservative MP
ROBERT FIFE
STEVEN CHASE

An Ottawa-based think tank, with ties to corporate Canada and the federal government, is spearheading a campaign to persuade Canadians to embrace a free-trade deal with China.
As Canada’s negotiators ready for a third round of exploratory trade talks with China, the Public Policy Forum (PPF) is embarking on a two-year effort, bankrolled by major corporations, to change Canadians’ minds about bilateral trade with the world’s second-biggest economy.
Public-opinion surveys, conducted in April by Nanos Research for The Globe and Mail, found nearly nine in 10 Canadians are “uncomfortable” with the idea of China’s large, governmentcontrolled businesses gaining more access to Canada’s economy – an almost inevitable aspect of any free-trade deal. The poll also found that 66 per cent of respondents want Ottawa to link human rights to trade talks.
The first quarterly meeting of the PPF’S Consultative Forum on China takes place in Ottawa on Wednesday and includes executives doing business with China, leading pro-free-trade advocates from academia as well as the head of the Canada China Business Council. Ian Shugart, deputy minister of Foreign Affairs, will address the gathering. Two highranking federal civil servants sit on the board of the PPF, an organization that advocates policies to promote good governance.
The conference is closed to the media. Edward Greenspon, a former editor-in-chief of The Globe and president of the PPF, was “too busy” to comment, according to spokesman Carl Neustaedter who defended barring the media. » “The discussion might be a bit different if there were media in the room, but that doesn’t mean at some point there wouldn’t be,” Mr. Neustaedter said. “But I think the group will probably talk about how will its findings and discussions be communicated.”
Even before it opened exploratory talks on a free-trade deal with Beijing, the Trudeau government had expressed concern in briefing notes, prepared by the department of Global Affairs last year, that Canadians are “ill-informed and negatively biased” in their understanding of China.
The PPF, which recently completed a federally commissioned report on the state of the media, laid out its plans for China in a background paper about the need to “write a more sophisticated narrative for Canadians” to catch up with Australia and New Zealand, which have signed free-trade agreements with Beijing.
“They have forged ahead with free-trade agreements and secured competitive advantages for their economies, universities and workers. Now, Canada is looking at following their path,” the PPF paper said.
“As part of any effort the Canadian government must gain a firm grip on Canadian views toward China. Any [free-trade] agreement with China will require a broad social and political consensus built on a solid foundation of support from different quarters.”
Mr. Neustaedter said the forum wasn’t trying to shape public opinion in favour of free trade with Beijing, but rather was seeking ways to engage with China on areas as diverse as the training of judges and the environment.
“I wouldn’t characterize it as everybody is for pro-free trade,” he said. “It is really about a wide engagement, a more nuanced engagement [rather than] simply pro or con, or human rights versus trade kind of thing.”
All of the people on Wednesday’s speakers’ list are known to be supporters of greater economic ties with China.
But Conservative MP Tony Clement said Canadians should be skeptical of the PPF’s efforts on behalf of Canada’s business establishment and the federal government.
“This organization is corporate Canada plus the Liberal Party in another guise,” Mr. Clement said. “They have a corporate and political agenda to have free trade with China, almost at any cost. I fear if they get their way, any complaints we have about human rights would be tucked under the carpet.”
The “prime” audience for the initiative is “the roughly half of Canadians who have not made up their minds and are open to weighing the arguments,” the background PPF paper said, while noting the challenges of overcoming Canadian apprehension about China. “For Canada to muster persuasive arguments at home in an age where elites do not enjoy a monopoly means facing up squarely to the obstacles to a full flowered relationship while working to mitigate them.”
Among the companies funding the China effort are Teck Resources, Bank of Montreal, Manulife, Canada Pension Plan Investment Board, Canadian National, Ernst & Young, Tim-berWest and Canpotex.
The PPF background paper cited a number of surveys that suggest Canadians are open to free trade.
One of them was an Abacus Research survey conducted in 2016 that showed 46 per cent of Canadians said they could be persuaded to support a closer relationship with China. The poll was paid for by Teck Resources, a Vancouver-based mining company with significant investment from a Chinese sovereign wealth fund that answers to the Communist government. A wholly owned subsidiary of China Investment Corp. owns 17.8 per cent of Teck’s Class B shares and has control over 7.5 per cent of shareholder votes. A member of the National People’s Congress of China, Quan Chong, sits on the Teck board of directors.
Other polls cited were conducted for the Asia Pacific Foundation, which has published articles in favour of free trade with China.
China’s new envoy to Canada Lu Shaye has called on Canada’s corporate elite to “actively introduce and explain to the Canadian public” the benefits to the country of signing a free-trade deal.
In speeches to business groups, Mr. Lu has expressed concern about negative Canadian public opinion and media editorials about opening up the Canadian economy to China, especially state-owned enterprises that often act in the interests of Beijing and are known to steal high technology.

The Globe and Mail. REUTERS. 21 Jun 2017. Ford to export Focus cars from China to U.S. in 2019

Ford Motor Co. will export the next-generation Focus compact car from China to North America in 2019, rather than from Mexico as earlier planned, the company said on Tuesday.
The current Focus will be phased out of production in Wayne, Mich., in mid-2018, according to Joe Hinrichs, president of global operations. The Wayne plant will begin building a new Ranger compact truck in late 2018.
No U.S. jobs will be affected, Ford said, adding that it employs more U.S. hourly workers and builds more vehicles in the United States than any other auto maker.
The redesigned Focus for North America will be built at a joint-venture plant in Chongqing, China, Mr. Hinrichs said. Earlier this year, Ford cancelled plans for a new $1.8-billion (U.S.) small-car plant in San Luis Potosi, Mexico, and said it would build the new Focus instead at an existing plant in Hermosillo.
The decision to shift from Hermosillo to Chongqing, where Ford has an existing Focus plant, was made “over the last couple months,” according to Mr. Hinrichs, and will save the auto maker $500-million in tooling costs.
Ford also said some future variants of the new Focus will be shipped later from Europe.
U.S. President Donald Trump had criticized Ford for shifting small-car production from the United States to Mexico. Mr. Hinrichs said Ford planned to inform the White House this morning.
Mr. Hinrichs said Ford remains a major exporter to China, shipping about 80,000 vehicles a year from North America. Ford Motor (F)
Close: $11.12 (U.S.), down 12¢

REUTERS. Jun 21, 2017. China's pork demand hits a peak, shocking producers, as diets get healthier
By Dominique Patton

BEIJING (Reuters) - China's frozen dumpling makers are finding there's a quick route to winning new sales - increase the vegetable content, and cut down on the meat.

This departure from traditional pork-rich dumplings is a hit with busy, young urbanites, trying to reduce the fat in diets often heavy on fast food.

"They like to try to eat more healthy products once a week or fortnight. It's a big trend for mainland China consumers, especially those aged 20 to 35," said Ellis Wang, Shanghai-based marketing manager at U.S. food giant General Mills GIS.N, which owns top dumpling brand Wanchai Ferry.

For pig farmers in China and abroad, it is a difficult trend to stomach. The producers and other market experts had expected the growth to continue until at least 2026.

Chinese hog farmers are on a building spree, constructing huge modern farms to capture a bigger share of the world's biggest pork market, while leading producers overseas have been changing the way they raise their pigs to meet Chinese standards for imports. Some have, for example, stopped using growth hormones banned in China.

China still consumes a lot more meat than any other country. People here will eat about 74 million tonnes of pork, beef and poultry this year, around twice as much as the United States, according to U.S. agriculture department estimates. More than half of that is pork and for foreign producers it has been a big growth market, especially for Western-style packaged meats.

But pork demand has hit a ceiling, well ahead of most official forecasts. Sales of pork have now fallen for the past three years, according to data from research firm Euromonitor. Last year they hit three-year lows of 40.85 million tonnes from 42.49 million tonnes in 2014, and Euromonitor predicts they will also fall slightly in 2017.

Chinese hog prices are down around 25 percent since January, even though official numbers suggest supply is lower compared with last year.


China's meat and seafood sales IMG: tmsnrt.rs/2s83aam

RARE LUXURY

Since China began opening up to the world in the late 1970s, pork demand expanded by an average 5.7 percent every year, until 2014 as the booming economy allowed hundreds of millions of people to afford to eat meat more often. During Mao Zedong's reign as Chinese leader from 1949-76 meat had, for many, been a rare luxury.

Now, growing concerns about obesity and heart health shape shopping habits too, fuelling sales of everything from avocados to fruit juices and sportswear.

"Market demand remains very weak. I think one factor behind this is people believe less meat is healthier. This is a new trend," said Pan Chenjun, executive director of food and agriculture research at Rabobank in Hong Kong.

Sales of vegetable-only dumplings grew 30 percent last year, compared with around 7 percent for all frozen dumplings, Nielsen research also shows.

"Demand for vegetable products keeps rising, giving us large room for growth," said Zhou Wei, product manager at number two dumpling producer Synear Food.

Guangzhou-based Harmony Catering says health is the key to reduced servings of meat to the roughly 1 million workers eating at its 300 canteens each day.

Staff at the technology companies, banks and oil majors that are Harmony's clients will consume about 10 percent less meat today than they did five years ago, but around 10 percent more green vegetables, according to Harmony vice president Li Huang. "It's mainly because of media, the concept of health has entered popular consciousness," he said.

For now, it's mostly urban and white-collar workers paying closer attention to their diets. There's been, for example, a sharp rise in vegetarian food stations at university campuses. But the government wants a nationwide shift in eating habits.

Childhood obesity in China is rocketing, and the country also faces an epidemic of heart disease, Harvard researchers warned last year. Among the problems, they blamed growing consumption of red meat and high salt intake.

In April, the health ministry kicked off its second 10-year healthy lifestyle campaign, urging citizens to consume less fat, salt and sugar, and aim for a 'healthy diet, healthy weight and healthy bones'.

By 2030, Beijing wants to see a marked increase in nutritional awareness, a 20 percent cut in the per capita consumption of salt, and slower growth in the rate of obesity, it said in its recently published 'Healthy China 2030' pamphlet.

Meat consumption by type and country: reut.rs/2s3F00J

Some companies have been urgently changing the mix of products they sell, going for higher-margin pork meats rather than volume. Sales of traditionally less popular lamb and beef have also been increasing.

Li of Harmony Catering says although servings of pork are down, the firm is including more beef and lamb in meals.

"People usually eat lean beef or lamb, like beef brisket, while with pork it's both fatty and lean parts, like in 'hong shao rou'," said Beijing-based nutritionist Chen Zhikun, referring to the widely consumed braised pork dish.

China's top pork producer WH Group has been going up market, selling Western-style products in China, such as sausages and ham. A lot of this is imported from Smithfield, the largest U.S. pork producer, which was acquired by WH in 2013.

Some producers say that the recent drop in pork consumption can be partly explained by sharply lower output. A prolonged period of losses during 2013 to 2015 forced farmers to cull millions of hogs, hitting supply and sending pork prices to record levels in 2016.

But for a growing portion of Chinese consumers, price tags on food items are less and less important. A spate of safety scandals in recent years, many related to meat, have made urban Chinese highly sensitive to food quality.

More than 80 percent of people in China surveyed by Nielsen last year said they were willing to pay more for foods without undesirable ingredients, much higher than the global average of 68 percent.

"China is in a new stage where consumption of pork and other foods is no longer a simple matter of 'more is better'," said Fred Gale, senior economist at the United States agriculture department.

(Reporting by Dominique Patton and Beijing Newsroom. Additional reporting by Julie Zhu in HONG KONG; Editing by Martin Howell)

NAFTA

The Globe and Mail. Jun. 21, 2017. Canada vows to defend supply management as NAFTA talks set to start in August
ERIC ATKINS

Lawrence MacAulay, Canada’s agriculture minister, vows Canada will defend its controversial support for dairy farmers ahead of trade talks slated to start in August.

“We’re the government that put supply management in place and we’re the government that’s going to defend it,” Mr. MacAulay said, without elaborating, by phone from Savannah, Ga., where he held talks with his counterparts from the United States and Mexico in advance of new negotiations over the North American Free Trade Agreement.

Mr. MacAulay said he is not a trade negotiator, and that there were no discussions with Sonny Perdue of the United States and Jose Calzada of Mexico over what would be on the table in the new talks. Rather, the goal of the meeting was to build “rapport” and co-operation.

He predicted the agreement covering Canada’s $31-billion in agriculture and food trade with Mexico and the United States would get a mere “tweak.”

“It’s certainly obvious that NAFTA has been a very valuable asset to the three countries and we have to make sure it continues in that manner,” he said.

However, there are numerous signs Canada’s dairy system will be at the heart of new trade talks.

U.S. President Donald Trump called for the renewal of the 1994 pact, saying it was a bad deal for the United States and cost the country jobs.

The U.S. dairy industry – and Mr. Trump himself – has singled out Canada’s system of prices, production and import tariffs as unfair to U.S. producers.

Mr. Perdue has said he does not object to Canada’s supply managed dairy regime, but does not want its products being exported.

Bobby Seeber, a former trade advisor to the Ontario government, noted Canada made concessions to allow more dairy imports in free trade talks with Europe and the Trans-Pacific Partnership. The dairy industry’s protections are no longer “sacrosanct,” he said in a recent speech to members of Ontario’s food and beverage industry.

“There is going to be a concession” in NAFTA on dairy products, Mr. Seeber said, adding drug patents, autos and softwood lumber would be also be the focus of talks.

THE GLOBE AND MAIL. REUTERS. Jun. 21, 2017. U.S. Trade Representative says no deadline for NAFTA deal

WASHINGTON — U.S. Trade Representative Robert Lighthizer said on Wednesday there was no deadline for completing NAFTA trade talks between the United States, Canada and Mexico even as lawmakers warned that U.S. business would be hurt by prolonged negotiations.

“There is no deadline. My hope is that we can get it done by the end of the year, but there are a lot of people who think that is completely unrealistic,” Lighthizer told a Senate Finance Committee hearing to discuss the USTR’s budget. He said reaching a NAFTA deal by year-end was a “very, very quick timeframe (and) we’re not going to have a bad agreement to save time.”

Under U.S. law, Lighthizer, a veteran trade lawyer, will be the principal U.S. negotiator on NAFTA, although U.S. Commerce Secretary Wilbur Ross will have a major role.

The renegotiation of the 23-year-old NAFTA was a key campaign promise of U.S. President Donald Trump, who pledged to shrink trade deficits with other countries.

While the talks are expected to begin in mid-August, Lighthizer said discussions were underway with Canada and Mexico to firm up a start date.

“We are in the process right now talking to our negotiating partners about when the first day of the meeting will be,” he added.

A number of senators urged Lighthizer to avoid lengthy negotiations, which they warned would hurt sales by American businesses and farmers.

Lighthizer was also pressed on the Trump administration’s investigation into whether foreign steel and aluminum imports threaten U.S. national security. Findings of the investigations are expected by the end of June.

Democratic Senator for Missouri Claire McCaskill expressed concern that possible sweeping tariffs or quotas on steel and aluminum would impact American manufacturers.

“I’ve got businesses in Missouri who use raw materials which aren’t made in the United States and they are very worried about the impact a decision in this area will have on their costs of producing goods, but they are also worried about any other national security blockades,” she said.

Lighthizer said while steps were needed to crack down on foreign steel and aluminum flooding the American market, it was likely that an “exclusion process” would be introduced whereby U.S. businesses could apply to import products not made in the United States.

“Situations where there are legitimate cases of a manufacturer who needs a steel product or aluminum product not made in the United States should go in and I think they will be accommodated. In most of those cases, it will be accommodated with an exclusion,” he added.

REUTERS. Jun 21, 2017. Canada 'waiting and seeing' on farm issues ahead of NAFTA talks

WINNIPEG, Manitoba (Reuters) - Canada will not publicly complain about agriculture trade irritants with the United States, ahead of North American trade negotiations, Canadian Agriculture Minister Lawrence MacAulay said on Wednesday.

"We have to wait to see how the table is set, and then we'll deal with the issues that are on the table," MacAulay said on a conference call from Georgia, where he was meeting with U.S. and Mexican officials. "...We're just waiting and seeing."

U.S. Agriculture Secretary Sonny Perdue has already raised concerns about access to Canada for U.S. dairy, wheat and wine.

(Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Chizu Nomiyama)

BLOOMBERG. 2017 M06 21. Trump's Trade Chief Says U.S. Won't Force Quick Nafta Deal
By Andrew Mayeda

• Lighthizer: Talks to start Aug. 16 after domestic consultation
• There’s still debate on adding currency clause: USTR chief
• Sec. Ross Says Canada, Mexico Open to Renegotiate Nafta

President Donald Trump’s top trade negotiator said there’s no deadline to reach a deal on revamping the North American Free Trade Agreement, and if talks end in a deadlock the U.S. will be compelled to rethink its strategy.

Robert Lighthizer speaks after being sworn in during a ceremony in Washington, D.C., on May 15, 2017.

The U.S. plans to start re-negotiating Nafta with partners Canada and Mexico on Aug. 16 and the government wants the discussions to move quickly, U.S. Trade Representative Robert Lighthizer told the Senate Finance Committee on Wednesday. The U.S. is currently engaging in a 90-day consultation period with domestic industry, lawmakers and the public to get ready for the start of official talks.

“I am prepared to continue to negotiate until we get a high-standard agreement unless there’s a total stalemate, in which case I’ll be back in front of this committee and I’ll consult with senators,” Lighthizer said. “I’m not going to be in a position where I commit to the status quo going on forever. That’s not going to happen. But we don’t have any artificial deadlines.”

Commerce Secretary Wilbur Ross has acknowledged that there’s a logic to wrapping up the talks by late 2017 or early next year before Mexican presidential elections in mid-2018 followed by American midterm election that November. Trump has threatened to withdraw from Nafta if Mexico and Canada fail to agree on more favorable terms for the U.S.

Lighthizer said on Wednesday that Trump has asked him to focus on improving opportunities for American workers as part of the revamp.

Negotiating Targets

The U.S. government plans to publish its Nafta negotiating objectives on July 17 following a series of public hearings next week, Lighthizer said. The hope is for a final agreement by the end of this year that would have broad bipartisan support when it’s presented to Congress, but many people think that timeline is “totally unrealistic,” Lighthizer said.

The USTR is working with the Treasury Department and lawmakers on whether to add a currency clause in the new Nafta deal. However, there’s no evidence of currency manipulation by Mexico and Canada, he said.

“We’re still debating whether to put a currency-manipulation provision in here,” he said.

Ron Wyden of Oregon, the ranking Democrat on the Senate Finance Committee, urged the U.S. to take the time it needs to hammer out new trade terms that benefit workers instead of pushing artificial deadlines that could corner the U.S. into lowering its standards.

“Nafta could use a complete overhaul,” Wyden said. “That means high-standard, enforceable labor and environmental commitments; removing Chapter 19, which hurts our ability to fight unfair trade practices,” and addressing issues specific to dairy, wine and key manufacturing industries. He also said the U.S. needs to “combat currency manipulation, market-distorting state-owned enterprises” and trade abusers.

HOUSING BUBBLE

StatCan. 2017-06-21. Investment in new housing construction, April 2017

Investment in new housing construction — Canada
$4,645.4 million
April 2017
8.4% increase
(12-month change)
Source(s): CANSIM table 026-0017.

New housing construction investment totalled $4.6 billion in April, up 8.4% compared with April 2016. Eight provinces posted gains, led by Ontario.

Nationally, investment increased for every dwelling type. The gain was mostly due to spending on single-family dwellings, up $251.8 million to $2.4 billion. Six provinces posted higher investments in single-family dwelling construction. Ontario was well ahead of the other provinces, with $203.7 million in increased spending, a 22.9% increase over April 2016.

Investment in apartment building construction rose 1.9% in April, mainly attributable to higher spending in British Columbia (+$61.4 million), followed by Quebec (+$29.5 million). The biggest declines for this type of dwelling were in Alberta (-$58.2 million) and Ontario (-$14.1 million).

Year over year, investment in new row housing construction continued to increase in most provinces in April. Only Alberta (-$18.4 million) and Nova Scotia (-$0.5 million) posted declines.

Spending on semi-detached dwelling construction increased in seven provinces in April, up 13.2% from April 2016 to $218.1 million. Alberta posted the largest year-over-year increase (+$12.9 million). Spending on semi-detached dwelling construction edged down in British Columbia, Quebec and Manitoba.

Chart 1   Chart 1: Investment in new housing construction, by type of dwelling
Investment in new housing construction, by type of dwelling



Provincially, the biggest year-over-year increases were recorded in Ontario and, to a lesser degree, British Columbia and Manitoba.

In Ontario, new residential construction investment rose 15.1% to $1.9 billion. Spending was up for all dwelling types except apartment buildings, which fell 2.8%.

New housing construction investment in British Columbia rose 6.1% year over year to $997.2 million. This gain was mainly attributable to increased spending on apartment building construction, as spending for this type of dwelling represents 45.6% of total spending on new housing construction in the province.

In Manitoba, investment in new housing construction totalled $143.3 million, up 38.7% compared with April 2016. This gain was primarily attributable to increased investment in single-family dwelling construction (+$27.7 million) and, to a lesser extent, apartment building construction (+$9.4 million).

FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/170621/dq170621c-eng.pdf

The Globe and Mail. 21 Jun 2017. Home Capital offloads $1.2-billion in loans
JAMES BRADSHAW
JACQUELINE NELSON

Home Capital Group Inc. is selling a portfolio of commercial mortgages worth about $1.2-billion at a small loss, offloading a variety of property loans in an effort to reduce its onerous debt load.
Through its Home Trust subsidiary, Home Capital will sell a mix of commercial mortgages to Toronto-based real estate private-equity firm KingSett Capital, with proceeds expected to reach nearly $1.16-billion once the agreement closes in the coming months.
The deal strips Home Capital of some of its revenue-generating mortgages, but will help quickly shore up capital at a critical time for the beleaguered alternative mortgage lender.
Home Capital has been pursuing a broad array of business changes under refreshed leadership in an effort to restore stability to a business badly damaged in recent months by a crisis of market confidence and a run on deposits.
The company recently settled disputes with a major regulator, as interested private-equity investors circle and management looks for buyers for some assets. “This transaction will help the company further stabilize its liquidity position and highlights the flexibility and options created by the quality of our assets,” Bonita Then, Home Capital’s interim president and chief executive officer, said in a statement. Home Capital has said that securing a new CEO is among its highest priorities.
“Proceeds from the transaction are expected to have an immediate impact by enabling us to enhance our liquidity and reduce the outstanding debt … ” Ms. Then added.

Home Capital: Sale proceeds create a dent in debt-repayment efforts

Amid recent turmoil, Home Capital has been kept afloat by a $2-billion credit line from investors led by the Healthcare of Ontario Pension Plan, which carries an onerous 10-per-cent annual interest rate. The company has drawn all but $350-million of the credit and has been actively looking to replace that source of funds with a cheaper solution in recent weeks.
Home Capital says it will make a dent in its debt-repayment efforts by using some proceeds from the deal with KingSett. Home Capital plans to provide an update on its debts when the proceeds are received. As of June 19, Home Capital’s high-interest and Oaken Financial savings accounts held a combined $255million, while its GIC balance hovered at $12-billion.
Credit rating agency DBRS Ltd. said the deal was a helpful step for the company in boosting its liquidity and funding profile, even though the move erodes future recurring revenues that would have come from having the commercial loans on Home Capital’s balance sheet. The move will free up some capital that the company had to hold to support the loan portfolio.
The rating agency also noted that the small loss Home Capital is expected to record as a result of the sale is a “very modest discount to par on the portfolio sale” and illustrates “the still-sound credit performance of the Group’s assets,” DBRS said in a report. Home Capital expects to lose about $15-million on the transaction, before taxes, based on its expectations about the health of the portfolio. It plans to close the agreement in the third quarter of 2017.
Commercial mortgages made up nearly $2.5-billion of Home Capital’s $18.5-billion loan portfolio as of the end of its first quarter on March 31. The company said when announcing those results that it would actively pursue sales of some loan groups. In an update on Tuesday, a spokesman for Home Capital said that the company “continues to review opportunities for further asset sales” as well as “further financing and strategic options.”
The buyer, KingSett, already controls a $9.2-billion portfolio of retail, office, hotel and industrial properties, as well as having some residential holdings. The firm made waves around this time last year when it teamed up with the Alberta Investment Management Corp. to buy a 50per-cent interest in Toronto’s Scotia Plaza office building, valued at more than half a billion dollars.
KingSett plans to slot the Home Capital mortgages into a real estate fund and a high-yield debt fund that it runs. The firm declined to comment on its investment in Home Capital.
Home Capital has also been lining up other mortgage-finance partners. The company said in May that an “independent third party” would buy up to $1.5-billion of new mortgages, as well as some existing mortgages and home loans that are up for renewal. That deal will be facilitated by mortgage-finance firm MCAP Corp.
Last week, Home Capital and three former senior executives agreed to settle an enforcement case with the Ontario Securities Commission, as well as a classaction lawsuit with investors.
While Home Capital’s challenges are far from over, Brenna Phelan, an analyst at Raymond James, said that the KingSett deal was a positive step for the company. “However, the significant rebound in the share price limits current upside and so we maintain our Market Perform rating,” she wrote in a note to clients.

BLOOMBERG. 2017 M06 21. Toronto Home Sales Cool Amid Signs Prices May Be Next to Fall
By Katia Dmitrieva

• Sales halved in first two weeks of June, listings rose 22%
• Slowdown puts Toronto more in line with other big cities
• Richardson's Kerlow Says No Canada Housing Correction Yet

Here’s more evidence that one of the world’s hottest housing markets is cooling down.

Home sales in Toronto fell by half to 2,999 in the first two weeks of June from the same period a year earlier, according to preliminary data from the Toronto Real Estate Board obtained by Bloomberg News. The average price for all property types rose 6.7 percent to C$808,847 ($608,888), easing from a 17 percent gain last June. And listings surged 22 percent.

“You’re having different conversations: for buyers, now we can see five to six properties in one day instead of ‘let’s go run and see this one because it’s the only one,’" Tom Storey, a Royal LePage real estate agent in downtown Toronto, said by phone. Sellers "used to list for six days and see offers, now we’re starting to see conditions creep back into the market like home inspections."

Toronto’s housing market has been hit in recent months with the imposition of a 15 percent tax on foreign buyers and tighter mortgage regulations. Listings are surging as sellers look to cash out after a record run-up, and buyers get picky. Mid-month data add to signs -- including at least one major indicator -- that prices may soon modestly decline.



The cooling began earlier this spring: home-listing terminations tripled to about 1,770 in the first three weeks of April, up from just 600 in the same period last year, TREB data show. The terminations rose as sellers pulled listings and lowered their asking price before putting it back on the market. Some people did this several times, according to Storey.

While sellers are looking to book profits following soaring demand and prices over the last few years, confidence may also have been hit by the near-collapse of Home Capital Group Inc., which offers mortgages to people turned away by traditional banks. Some were simply unable to afford the prices earlier this year and several new regulations made getting mortgages harder.

The slowdown puts Toronto more in line with other large North American markets. It wasn’t the case earlier this year. The average price of a property in Canada’s largest city climbed 28 percent in February, outstripping the 18 percent gain in median Manhattan homes. Now, Toronto’s single-digit rise is below the 17 percent increase in Manhattan prices as of April 30.

AVIATION

Innovation, Science and Economic Development Canada. June 21, 2017. Government of Canada promotes global investment in the country’s world-class aerospace sector. Minister Bains leads delegation at 2017 International Paris Air Show and marks the creation of more than 190 well-paying jobs

Ottawa, ON – Global companies invest in Canada’s world-class aerospace industry because it is globally integrated, export-oriented and innovation-driven. Behind the industry’s global leadership in innovation are the talents of a highly skilled workforce and a commitment by the Government of Canada to invest in the sector’s global competitiveness, which creates well-paying middle-class jobs for Canadians.

That was the message delivered at the 2017 International Paris Air Show by the Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development. The show is a major opportunity for the Government to highlight innovation in the country’s aerospace industry and promote Canada as an ideal destination for aerospace investments from around the world.

Minister Bains led a delegation of 420 representatives from more than 130 Canadian aerospace companies. He was joined by the Honourable Marc Garneau, Minister of Transport; the Honourable François-Philippe Champagne, Minister of International Trade; and Steven MacKinnon, Parliamentary Secretary to the Minister of Public Services and Procurement.

While at the show, Minister Bains announced a $2.2-million contribution, through Canada Economic Development for Quebec Regions (CED), to six aerospace companies that provide highly specialized equipment to the sector. More than 90 new manufacturing jobs will be created as a result of this investment.

He also announced a repayable contribution of $1 million, through CED, to F. List, an Austrian company that specializes in designing and manufacturing jet interiors. More than 100 middle-class jobs will be created in the Montréal region as a result of this investment, which will support the expansion of F. List’s first manufacturing facility in North America.

As part of their efforts to promote Canada as an investment destination for global companies, Minister Bains and his colleagues held meetings with a number of leaders from international aerospace companies. And they highlighted the Government’s commitment to the aerospace sector through the Innovation and Skills Plan, a multi-year strategy to create well-paying jobs for the middle class and those working hard to join it.

Quotes

“Now is the time for the world to invest in Canada’s aerospace industry. At a time when companies can source their talent, goods and services from anywhere in the world, global companies are investing in Canada because of the talents of the highly skilled men and women who work in this country’s aerospace sector. They also invest in Canada because our government partners with the sector to develop next-generation technologies that enable this country’s aerospace companies to maintain their global leadership in innovation. That’s how innovation leads to better jobs and opportunities for Canadians.”

– The Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development

“It has been a great pleasure to engage with successful Canadian companies doing business abroad. These firms create good jobs and represent our country with pride. This event facilitates productive discussions with key international aerospace industry leaders to advance Canada’s economic interests. Business opportunities created at this international air show enable the growth of our companies and enhance their recognition on the world stage.”

– The Honourable Marc Garneau, Minister of Transport

“Canada is a preferred destination for trade and investment in aerospace, thanks to the strength and competitiveness of our industries, our strong commercial ties with our trading partners, and our reputation as an open and progressive trading nation. I am happy that Canadian companies signed important commercial agreements that will benefit Canada’s aerospace industry‎, hence the good jobs that depend on it.”

– The Honourable François-Philippe Champagne, Minister of International Trade

“Canada's aerospace sector remains the envy of the world. The Paris Air Show provided an important opportunity to hear first-hand from vendors about their thoughts on Canada’s planned purchase of 88 fighter jets. During the meetings, vendors took the opportunity to express their satisfaction with the Government’s commitment to an open, fair and transparent competition. This will ensure our women and men in uniform receive the equipment they need, while ensuring maximum value for Canadians by creating opportunities for Canada’s innovative aerospace companies.”

– Steven MacKinnon, Parliamentary Secretary to the Minister of Public Services and Procurement

Quick Facts

• In 2016, the aerospace industry contributed $28 billion in GDP and 208,000 jobs to the Canadian economy.
• Aerospace accounts for close to 30 percent of total research and development investments in Canada’s manufacturing sector, making it the top R&D spender among all Canadian manufacturing industries.
• The Canadian aerospace industry exports more than 60 percent of its products as part of a global supply chain.
• This year, the International Paris Air Show hosted more than 420 Canadians representing more than 130 companies.

REUTERS. Jun 21, 2017. Boeing gets boost from United, lifts demand forecast
By Giulia Segreti and Matthias Blamont

PARIS (Reuters) - Boeing Co won a key endorsement from United Airlines for the latest model of its best-selling 737 on Tuesday and struck an upbeat tone by raising its 20-year industry demand forecast despite signs the pace of growth is slowing.

A day after the launch of the 737 MAX 10 at the world's biggest air show in Paris, United said it would convert an order for 100 other 737 MAX planes to the new model.

Gerry Laderman, United senior vice president, said the MAX 10 had "the best economics of the family", a boost for a plane Boeing designed to plug a gap in its range at the top end of the market for single-aisle jets, following runaway sales of the rival Airbus A321neo.

The United deal brought the number of MAX 10s covered by air show order announcements to a higher than expected total of more than 320, though more than half were conversions and underlying new orders and commitments for Boeing stood closer to 160.

Despite the interest in the MAX 10, analysts expect passenger jet orders at the Paris Airshow to fall short of recent boom years, as airlines digest a flood of deliveries.

But over the longer term, Boeing sees an industry in rude health, forecasting 41,030 passenger and freight plane deliveries worth more than $6 trillion over the next two decades, up from 39,620 in a similar projection a year ago.

Boeing's projection includes a 5 percent increase in the 20-year forecast for deliveries of single-aisle aircraft such as the Boeing 737 and Airbus A320 families, the cash cows of the world's two largest aircraft manufacturers.

In a sign of that interest, aircraft leasing company Avolon announced a provisional deal to buy 75 Boeing 737 MAX 8s worth $8.4 billion at list prices and said it would have a "hard look" at possible orders for the MAX 10.

Airbus agreed a provisional $5 billion deal with low-cost carrier Viva Air, confirming a Reuters report.

The European planemaker has seen arch-rival Boeing grab most of the headlines so far, but could turn to one of its top buyers as a potential wild card for the show, industry sources said.

AirAsia co-founder Tony Fernandes remained in Paris on Tuesday after signing a data deal with Airbus and picking up an airline award, and could use the opportunity to evaluate jets at attractive prices as new orders wane.

Asked by Reuters whether he would return to the show on Wednesday, a move that would typically signal he is in the market to buy, Fernandes said, "We'll see".

Airbus declined to comment.

AVIATION SERVICES

Boeing's head of airplane developments meanwhile said he was "very optimistic" about the chances of establishing the business case for a mid-market jet project to open up new routes from the middle of the next decade.

Air travel has been on a sharp uptrend, led by emerging economies as China looks set to replace North America as the world's biggest transport market in the coming years.

But China's economic expansion is slowing even as it remains above 6 percent a year. Boeing trimmed its 20-year forecast for average global traffic growth to 4.7 percent from 4.8 percent.

With demand for new jets cooling, planemakers are seeing greater opportunities in aviation services.

Boeing forecast that market could be worth $8.5 trillion over 20 years, growing at an average 4 percent a year. Airbus launched a digital services platform on Tuesday, which it said could crunch data to help airlines improve maintenance, reduce fuel burn and optimize routes.

BIGGER NOT BETTER?

In a symbolic change likely to rankle with its European rival, Boeing ditched its forecast for very large four-engined airplanes such as the Airbus A380 and its own 747-8. For the first time, it lumped these models with large two-engined jets such as the Boeing 777 and the largest Airbus A350.

Boeing has long argued that the "very large" category is on its way out as airlines switch to smaller twinjets. Both manufacturers have had to cut production of four-engined jumbos.

Airbus insists the double-decker A380 has a future due to airport congestion and predicts 5 percent of aircraft delivered over the next 20 years will be in that category.

"They would do that, the 747-8 isn't selling," Airbus sales chief John Leahy said of Boeing's decision to ditch its separate forecast for the biggest planes. "We have no intention of sharing that market with them, albeit a smaller market than we might have thought."

"Traffic is doubling," he said. "(Boeing's) explanation is we'll fly more flights. I'm sorry, but you can't do it. You have to have bigger aircraft."

(Additional reporting by Tim Hepher, Victoria Bryan, Andrea Shalal, Mike Stone, Cyril Altmeyer in Paris and Alwyn Scott in Seattle; writing by Mark Potter; Editing by Alexander Smith and David Clarke)

BOMBARDIER

The Globe and Mail. 21 Jun 2017. Bombardier inks deal with Indian airline
NICOLAS VAN PRAET

Manufacturer points to years-long marketing push as the reason for its recent sales turnaround
Bombardier Inc. has clinched a key order from India’s SpiceJet Ltd. for as many as 50 turboprop planes worth $1.7-billion (U.S.) as the Canadian aerospace manufacturer begins to see the fruits of a bolstered marketing and sales effort implemented two years ago.
SpiceJet, an Indian budget carrier, said at the Paris Air Show on Tuesday that it signed a letter of intent to buy 25 Bombardier turboprop planes with future purchase rights for 25 more. Each aircraft has a list price of $32.2million, but Bombardier typically offers discounts for sizable orders.
It is Bombardier’s third order for its legacy Q400 this month, cementing the plane’s previously shaky status in Bombardier’s commercial aircraft lineup. Philippine Airlines Inc. bought another seven turboprops on June 19 under a previous deal and Ethiopian Airlines bought five more on June 9.
“These announcements are likely to ensure the viability of the Q400 program,” Benoit Poirier, an analyst at Desjardins Securities Inc., said in a research note. He said Bombardier had only 26 Q400 planes in its firm backlog as of March 31 this year, which represented about a year of visibility on production.
Bombardier has had trouble in recent years winning new orders for its established commercial aircraft, namely the Q400 and CRJ regional jets, which has hurt both revenue and profitability. The Q400 has been hamstrung by a particular problem in that it is an estimated 20 per cent to 30 per cent more expensive than rival aircraft made by European joint venture ATR, the market leader.
Although carriers in North America and Africa have embraced the Q400, Bombardier has had trouble persuading customers in other regions to pay more for the extra speed, size and technology it offers compared with rival aircraft. Airlines using the planes to fly shorter distances don’t necessarily make use of those performance advantages.
To remedy the situation, Bombardier has been trying to keep the Q400’s manufacturing costs in check so it can keep the list price competitive. More importantly, however, it has changed its sales and marketing approach under commercial aircraft president Fred Cromer. The C-suite shakeup that Bombardier initiated two years ago has also filtered down the organization.
Mr. Cromer brought in Colin Bole – a former senior executive with Airbus and International Lease Finance Corp. lauded for his mastery of airline strategy and aircraft negotiations – as chief of sales in May, 2015. Mr. Bole has beefed up and revamped his own team, replacing half the company’s six regional vice-presidents and bringing on a new marketing chief in a bid to get the best people possible, a Bombardier spokesman said. There’s also been significant renewal of the sales ranks below the vicepresident level, the spokesman said.
“SpiceJet is the first demonstration of increased success in Asia, together with Philippine Airlines,” Mr. Bole said in an interview. “It’s a tough market because ATR has big market share. But we’re intent on getting our [slice of deals].”
In India, orders for new aircraft are being fuelled by a growing middle class that is flying for the first time. In Africa, the airline market has been growing slowly but steadily as the industry is becoming more liberalized and the infrastructure to support that growth is being put in place, according to Bombardier.
Mr. Bole said he gave his team a mission to revitalize the Q400 and CRJ order books. He said that before he arrived, Bombardier had been very focused on the development and entry into service of the C Series, its new flagship airliner, at the expense of proper marketing of the capabilities of its other commercial aircraft.
That marketing push is now taking hold, Mr. Bole said. “Aircraft sales campaigns typically last anywhere from 12 to 24 months. And it takes time to rebuild the confidence and build up the organization. This is the beginning.”
The new team has pushed relationships with potential customers to the point where they understand early on how Bombardier aircraft can fit into a client’s strategy, according to Mr. Cromer. That modelling and information is then brought forward to the negotiating table, well before a deal is concluded.
“When we bring in the sales teams, we’re so much more advanced in those presentations and conversations because we’ve got the marketing foundation, which is kind of critical,” Mr. Cromer told reporters in a briefing before the Paris show. “That was somewhat lacking. So now we’ve put resources where needed. And it’s one of those reasons why I feel very confident about the [sales] conversations that we’re having.” Bombardier (BBD.B) Close: $2.61, up 2¢

INDUSTRY

The Globe and Mail. 21 Jun 2017. Big Pharma say falls well short of genuine transparency. Big Pharma assailed for lack of transparency over payments. Critics say voluntary declaration of millions paid to physicians, organizations doesn’t go far enough. UNIVERSITY OF TORONTO. Andrew Boozary, a resident at St. Michael’s College in Toronto, says that allowing the pharmaceutical industry to self-regulate itself has left Canada far behind. Advocates are urging the federal government to force the industry to be more transparent about how it compensates doctors. Ten of Canada’s largest pharmaceutical companies have revealed that together they spent at least $48.3-million on payments to physicians and health-care organizations last year, a voluntary disclosure that critics of
KELLY GRANT
HEALTH REPORTER

The figures provided a peek into how drug makers compensate this country’s physicians for consulting, delivering speeches, sitting on advisory boards and travelling to international medical conferences.
But the companies did not name any of the doctors, nor did they reveal the total number of physicians they paid or the amounts they provided to doctors for running clinical trials.
Even though the disclosures had been planned for two years, only four of the 10 companies provided figures for all of 2016.
One provided information covering just three months.
The minimal disclosure shows the federal government needs to step in and force the pharmaceutical industry’s hand, according to the Toronto doctor behind Open Pharma, a pro-transparency campaign.
“Allowing pharma to go with self-regulation or their own voluntary measures has left us really far behind,” said Andrew Boozary, a resident physician at St. Michael’s Hospital.
“I can’t see anybody really celebrating this as a progressive leap forward.”
Federal Health Minister Jane Philpott told reporters in Ottawa on Tuesday that she was sympathetic to that position, but that any move to force the disclosure of payments to individual doctors should be left to the provinces.
“Absolutely, in principle, I think this is an important concept,” Dr. Philpott said. »
“I know that some provinces are moving in this area and it’s a conversation that I’m open to having, but obviously I can’t wade into the [provincial] territory of regulating health professionals.”
Pamela Fralick, the president of Innovative Medicines Canada, which represents brand-name drug companies and co-ordinated the voluntary disclosures made on Tuesday, stressed the revelations were only a first step.
“We know that the information that’s out there is not going to be satisfactory to everyone,” she said. “But it starts opening the doors a bit.”
The drug makers released totals of their spending in three categories: Payments to healthcare providers for services such as speaking and consulting; funding to health-care organizations such as hospitals; and funding to health-care providers to support their travel to international medical meetings and conferences.
Only 10 of the 45 members of Innovative Medicines took part in the voluntary effort. Each posted figures to its own website, and not always in an easy place to find.
Those companies are: AbbVie Corporation; Amgen Canada Inc.; Bristol-Myers Squibb Canada; Eli Lilly Canada Inc.; Gilead Sciences Canada, Inc.; GSK Inc.; Hoffmann-La Roche Limited (Roche Canada); Merck Canada Inc.; Novartis Pharmaceuticals Canada Inc.; and Purdue Pharma (Canada).
Of the companies that revealed a full year of data, Merck spent the most: just more than $9.4-million, most in direct payments to health-care providers. The drug maker spent a little less than $7.1-million last year paying physicians and other providers to act as consultants, advisers and speakers on its behalf.
Roche Canada was next, spending nearly $8.6-million on the three categories in all of last year, followed by AbbVie ($6.4million); Amgen ($5.8-million); and Novartis ($4.9-million), each of which reported figures for July to December, 2016. Eli Lilly divulged figures for October, November and December.
Among companies that published a full year of data, GSK spent the least – a little over $2.1-million, none of it on sponsoring travel or paying physicians to speak to other prescribers.
“In my view, [the disclosure] is not good enough, but it’s a good first step,” said Paul Lirette, the president of GSK Canada (formerly GlaxoSmithKline,) which led the push for voluntary disclosures. He urged every life-sciences company in the country to join the voluntary program.
When it comes to transparency in pharmaceutical payments, Canada lags behind the United States, Australia and some European countries where patients can search for doctors’ names on a public database to see if they have taken money from the drug industry. Some in the Canadian industry hope the voluntary disclosure will help persuade the government not to pass legislation compelling them to reveal more details.
Ms. Fralick of Innovative Medicines said that as things stand in Canada, drug companies would have to obtain consent directly from doctors before publishing the payment details – that is the main reason the drug makers elected to release only aggregate figures, she said.
Ms. Fralick said more of the brand-name companies are expected to disclose their total payments next year.
But Matthew Herder, the director of the Health Law Institute at Dalhousie University, said more aggregate disclosures will be useless without specifics.



“Transparency isn’t a goal in and of itself. It has to be for some larger purpose,” he said. “It’s really about trying to affect change in the way medicine is practised.” With a report from Laura Stone in Ottawa

FINANCE

THE GLOBE AND MAIL. Jun 21, 2017. Royal Bank of Canada to cut 450 jobs

TORONTO (Reuters) - Royal Bank of Canada, Canada's biggest lender, said on Wednesday that it would cut 450 jobs, primarily from its head offices in Toronto, as part of a restructuring enabling it to invest more in new technology.

Canada's biggest banks have been cutting jobs in response to customers banking more online and new technological advancements which have allowed them to automate some roles.

"We consolidate where necessary so that we can re-invest in key areas including digital, data, new technology as well as investment in high growth business areas," RBC said in a statement.

The bank said it would also be making hundreds of changes that include promotions, transfers, creation of new roles and new teams as well as outsourcing some roles.

Last month, RBC reported an 11 percent increase in second quarter earnings, beating market forecasts, helped by a strong performance in its capital markets and wealth management businesses.

(Reporting by Matt Scuffham; Editing by Bernard Orr)

CANADA/COLOMBIA - CROSS BORDER COOPERATION

Competition Bureau Canada. June 21, 2017. Canada and Colombia enhance cross-border collaboration in competition law enforcement

OTTAWA, ON – The Competition Bureau of Canada and its Colombian counterpart signed a memorandum of understanding (MOU) today to promote cooperation and strengthen cross-border competition law enforcement.

The MOU between the Competition Bureau and the Superintendence of Industry and Commerce (SIC) of the Republic of Colombia establishes a framework for collaboration, coordination and communication of information that will support the investigations and enforcement activities of both agencies.

The signing fulfills a commitment made under the Canada-Colombia Free Trade Agreement to establish a cooperation instrument between the countries’ respective competition authorities. As more business is conducted across global markets, international collaboration is increasingly important in ensuring markets remain competitive and innovative.

John Pecman, Canada’s Commissioner of Competition (right), and Jorge Enrique Sánchez Medina, Deputy Superintendent for Competition Protection at Colombia’s SIC, signed the MOU in Paris, France, where they were attending meetings of the OECD Competition Committee.

Quotes

“With rapidly evolving global markets, competition agencies around the world are facing similar enforcement challenges. We are stronger and more effective when we work together. I look forward to collaborating more closely with Colombia to advance our shared interest in promoting and protecting competitive and innovative markets, for the benefit of consumers and businesses in both our countries.”

John Pecman,
Commissioner of Competition

Quick Facts

• The Competition Bureau’s international partnerships help ensure that Canadian consumers benefit from competitive prices and that Canadian businesses prosper in both domestic and foreign markets.
• With this signing, the Competition Bureau has negotiated cooperation instruments with 15 jurisdictions, including Australia, Brazil, Chile, Colombia, the European Union, Hong Kong, India, Japan, the People’s Republic of China, the Republic of Korea, Mexico, New Zealand, Taiwan, the United Kingdom and the United States.
• The Canada-Colombia Free Trade Agreement entered into force on August 15, 2011.
• In 2016, two-way merchandise trade between Canada and Colombia totaled $1.6 billion.

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LGCJ.: