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Briefing highlights

  • Wealthy worried about stocks
  • Stocks, loonie, oil at a glance
  • Magna profit, sales slip in quarter
  • Required Reading

Worried about stocks

Wealthy investors are suddenly growing anxious about stocks, in what appears to be a reallocation of money “in anticipation of a market correction.”

Spectrem Group’s latest research, conducted when stocks were recently at record levels, and before this week’s trade-related market turmoil, suggests the rich “plan to hold on to their wallets and avoid expensive new investments at market peaks,” the research group said.

“While stock indices have reached their highest levels ever, the housing market is stagnant, the global trade situation has not improved and the American political scene remains turbulent,” Spectrem president George Walper Jr. said in releasing the results.

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“Sophisticated investors appear ready to take some cash off the table and hold their collective breath to see if there is a troubling shoe on the horizon waiting to drop.”

The research also came before the U.S. Federal Reserve trimmed interest rates by one-quarter of a percentage point, but, given that cut was expected, obviously took it into account.

Spectrem’s indexes show changes in sentiment among American households with more than US$500,000 of investments and, separately, families with at least US$1-million.

Both fell in July, the millionaire index to its lowest since the beginning of the year.

“Interest in individual stock investing among all investors surveyed dropped to 25.6 per cent in July after climbing above 30 per cent for the first time in 2019 the previous month,” Spectrem said.

“The millionaire investors, who are more likely to invest in individual stocks, dropped their interest down to 31.2 per cent, a 6-per-cent decrease from June, while interest among non-millionaires fell below 20 per cent to 19.7 per cent,” it added.

“Interest in stock mutual fund, individual bond and bond mutual fund investing also fell among all investors, on average, but investing in cash products rose among millionaires to 31.3 per cent from 22.1 per cent the previous month. That is the highest level of cash investing among millionaires since August of 2012, almost seven years ago.”

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Markets at a glance

“Asia markets have managed to maintain a degree of stability after the latest China trade numbers showed that exports improved in July with a rise of 3.3 per cent, despite the recent tariffs increases,” said CMC Markets chief analyst Michael Hewson.

“These numbers showed that while exports to the U.S. were down by 2.4 per cent, exports to other countries were able to take up the slack.”

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Magna profit slips in quarter

Magna International Inc. posted a weaker second quarter, with both profit and sale slipping.

The auto parts giant said profit attributable to Magna declined to $452-million, or $1.42 a share, dilute, from $626-million or $1.77 a year earlier.

Sales dipped 1 per cent to $10.1-billion against what Magna sales was a drop of 6 per cent in global light vehicle production.

The company said its outlook for the year is “largely unchanged.” It projects sales of between $38.9-billion to $41.1-billion, and profit attributable to Magna of $1.9-billion to $2.1-billion.

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Citigroup analyst Itay Michaeli described the second-quarter results as “solid,” adding Magna’s guidance for this year is “mostly intact.”

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Ticker

Bayer to fully acquire BlueRock

Bayer AG announced it will fully acquire BlueRock Therapeutics, valuing the biotechnology firm with offices in Toronto at approximately US$1-billion, Megan Devlin reports.

Canadian Tire revenue climbs

From Reuters: Canadian Tire Corp. reported a 5.9-per-cent rise in quarterly revenue, buoyed by strong sales of its private label brands and as promotional campaigns attracted more shoppers.

Canadian Tire buys 65 Party City stores

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From The Canadian Press: Canadian Tire Corp. is diversifying its store offerings with the purchase of 65 Party City stores across Canada for $174.4-million cash, a move the national retailer expects to strengthen its connection with millennial customers.

Kraft Heinz profit drops

From Reuters: Kraft Heinz Co.’s net income halved in the first six months of the year, the packaged food maker said as it wrote down the value of several business units by over US$1-billion in results delayed by an internal investigation into procurement practices.

Chinese exports rise

From Reuters: China’s exports unexpectedly returned to growth in July on improved global demand despite escalating U.S. trade pressure, but the rebound may be short-lived as Washington prepares to slap even more tariffs on Chinese goods.

Required Reading

Air Canada CEO lands rich payday

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Air Canada chief executive officer Calin Rovinescu brought home $52.7-million by exercising stock options over the past week, a pay package that largely stems from a rapid rise in the airline’s share price. Tim Kiladze reports.

Investors wade back into gold stocks

Surging bullion prices might not stimulate blockbuster dealmaking, but there are signs generalist investors are wading back into gold stocks after a protracted period of shunning the sector, Niall McGee writes.

What’s at risk in a currency war

When the United States declared China a currency manipulator on Monday, long-building trade tensions between the world’s two largest economies spread to the combustible realm of currencies — with potentially huge consequences for the global financial system should the escalation continue. Neil Irwin looks at the ramifications.

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