These are stories Report on Business is following Wednesday, April 8, 2015.
Follow Michael Babad and The Globe's Business Briefing on Twitter.
Toronto market surges
It now takes an average of just 20 days to sell a home in Toronto.
Or, as economist Robert Kavcic sees it, you "put up a sign and your house is sold."
The Bank of Montreal economist was commenting in a research note on the latest numbers from the Toronto and Calgary markets, which are taking different paths in the wake of the oil price plunge.
The average time in Toronto is down from an "already-low" 21 days a year ago, while the timespan in Calgary, the heart of Canada's oil industry, has climbed to almost 40 days from 28.
As The Globe and Mail's Tamsin McMahon reports, the quest for detached homes is driving the Toronto market.
The latest Toronto stats show average prices jumped 10 per cent in March from a year earlier, as the cost of detached houses climbed about 16 per cent to well over $1-million.
Sales jumped 11 per cent from a year earlier, and new listings rose 5.5 per cent.
"Part of the massive jump reflects a shift in the sale mix toward higher-priced homes, but the underlying strength of the detached market remains very real," Mr. Kavcic said of prices, noting those of condos rose at a much slower pace.
"In other words, while Toronto simply can't get enough detached homes on the market (put up a sign and your house is sold), liquidity in Calgary has effectively dried up," he added.
- Follow our Real Estate Beat
- Tamsin McMahon: Toronto home prices surge 10% as sales activity heats up
- Tamsin McMahon: Boomers drive real estate market for luxury housing
- Tamsin McMahon: One-quarter of first-time home buyers had family help, survey finds
Takeover speculation
With the blockbuster takeover deal for BG Group PLC, the game is now afoot in the energy sector.
Royal Dutch Shell PLC and BG this morning unveiled a deal worth $70-billion (U.S.) that is already sparking talk of a round of takeovers in the sector.
Shell is offering about 1,350 pence in cash and stock for BG, and its liquefied natural gas projects around the world.
"If oil prices can hold up, Royal Dutch Shell's huge takeover of BG group could spur some big gains in U.S. energy stocks on the prospect of perhaps U.S. oil giants Exxon Mobil or Chevron engaging in a similar deal," said analyst Jasper Lawler of CMC Markets in London.
"The energy sector is beaten down from the drop in oil prices so it makes a lot of strategic sense for the majors to get 'opportunistic' about growing through acquisitions, especially when slashed [capital spending] budgets reduce the ability to grow organically."
It goes without saying that the energy sector has had a tough go of things since the summer collapse in oil prices.
Which is why analysts are speculating on what could follow today's marriage, the second-largest in the sector since the merger of Exxon and Mobil in the late 1990s.
The Shell-BG deal has "given the beleaguered oil and gas sector a much-needed shot in the arm after 18 months of significant underperformance," said Michael Hewson, chief analyst and Mr. Lawler's colleague at CMC.
"It also speaks to the damage the sharp decline in the oil price has done to a number of big oil players in the last few months, making the sector ripe for consolidation," Mr. Hewson said.
"It also raises expectations as to which other companies could also come into play as the oil and gas sector gears up for further consolidation, with speculation surrounding Tullow Oil, whose shares have lost 60 per cent since the beginning of 2014, and BP," he said, adding, too, that "the bigger question arising from today's move by Shell is whether, as in 1998, it marks the first of a number of deals in the oil and gas sector."
As The Globe and Mail's Bertrand Marotte reports, today's deal also raises questions about proposed LNG projects on the British Columbia coast.
Shell has proposed an export terminal in Kitimat, while BG is working on one in Prince Rupert.
"Given that BG Group is one of the world leaders in LNG and recently completed a $20-billion facility in Australia, the acquisition here could well draw a line under a turbulent time for BG Group, which has struggled with management uncertainty over the last eighteen months and in the process given shareholders a rather torrid time," said Mr. Hewson.
- Shell buys BG's oil and gas riches for $70-billion to close gap with Exxon
- Bertrand Marotte: Shell-BG deal could impact fate of major B.C. LNG projects
- Carl Mortished in ROB Insight (for subscribers): For bulked-up Shell, megadeal is all about a commanding LNG position
- Brent Jang: Global supply glut threatens British Columbia's LNG projects
Gold heist
Armed robbers have looted about $8.5-million (U.S.) worth of gold from a Canadian mining company in Mexico.
Toronto-based McEwen Mining Inc. said late yesterday the robbers escaped with an estimated 900 kilograms of gold-bearing concentrate, which contained some 7,000 ounces of gold, from the refinery at its El Gallo 1 mine in Sinaloa.
Gold is worth about $1,211 an ounce today, putting the haul at almost $8.5-million.
McEwen said it is insured, but that its policy won't cover the full loss.
No one was hurt, the miner said, and there was no significant damage to operations, where work continues.
"The crime is being vigorously investigated by the Mexican authorities," said McEwen, which operates also in Argentina and the United States and which is 25-per-cent owned by chairman Rob McEwen.
Among other things, Mr. McEwen is known for having built Goldcorp. Inc. into one of the world's major gold companies.
Other Canadian miners also operate in Mexico, and, as Bloomberg notes, this isn't the first violent crime against one of them.
Four Goldcorp employees, for example, were reportedly kidnapped last month.
- Lou Schizas: This miner's stock requires an investor's full attention
- Rachelle Younglai in Streetwise (for subscribers): Goldcorp founder doesn't see rival bids for Osisko
- Gordon Pitts on Rob McEwen: Mining magnate with a vision
Canada aims for balanced budget law
The Canadian government says it's going to introduce legislation that would promise balanced budgets "in normal economic times."
Finance Minister Joe Oliver unveiled the pledge today in the run-up to his April 21 budget. The Canadian government had promised this earlier.
"The proposed legislation would define concrete actions to be taken in the event of a deficit and require specific timelines for a return to balanced budgets," the Finance Department said in a statement, adding the plan would preserve "the government's ability to take action in the event of a recession."
Manulife in Asian deal
Manulife Financial Corp.'s Asian insurance and wealth business is expanding its reach through a new partnership with a big bank in the region, The Globe and Mail's Jacqueline Nelson reports.
Canada's largest insurer is teaming up with Singapore-based DBS Bank Ltd. in an exclusive deal to sell insurance and financial products to new customers in Singapore, Hong Kong, China and Indonesia.
Manulife will pay DBS $1.2-billion (U.S.) in this deal, which will be amortized over the 15 years covered by the the initial agreement. In addition, Manulife said there would be other payments made based on the success of the partnership.
The deal is called a bankassurance arrangement, a model popular in Asia and some other regions where banks add to their branches' product lineup with with insurance for life, critical illness and income protection. Manulife has also struck bankassurance deals in the past with other banks and also had some existing relationship with DBS.
Streetwise (for subscribers)
ROB Insight (for subscribers)
Business ticker
- Saudi Arabia boosts oil output in aggressive move to claw back market share
- Computers of three Amaya employees seized by AMF, warrant reveals
- Bank of Japan sticks to its guns two years into stimulus
- Iran joins infrastructure bank as founding member, China says
- Oil falls on U.S. stock build, record Saudi output
Michael Babad