Category: Business Investment News

Bank of Canada warns of low productivity ‘emergency,’ making it harder to control inflation

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Carolyn Rogers, Senior Deputy Governor of the Bank of Canada, at a press conference in Ottawa on March 6.Sean Kilpatrick/The Canadian Press

The Bank of Canada issued a stark warning about the country’s weak labour productivity and low levels of business investment on Tuesday, saying the situation is an emergency that makes it harder to control inflation and which could erode living standards if left unaddressed.

In an unusually blunt speech in Halifax, senior deputy governor Carolyn Rogers said that Canada is slipping further behind the United States and other peer countries when it comes to economic output per hour worked.

She pointed to weak business investment, meagre competition and a failure to properly integrate skilled immigrants into the Canadian work force.

“I’m saying that it’s an emergency – it’s time to break the glass,” the central bank’s second-in-command told the business audience.

Canada has long lagged the United States when it comes to how much the economy produces per hour of work. But the situation has gotten worse over the past decade, especially coming out of the pandemic. Before the final quarter of last year, productivity had declined for six straight quarters.

“Back in 1984, the Canadian economy was producing 88 per cent of the value generated by the U.S. economy per hour,” Ms. Rogers said.

Auerback: Canada’s productivity problem runs deep and ripples far in the economy

“That’s not great. But by 2022, Canadian productivity had fallen to just 71 per cent of that of the United States. Over this same period of time, Canada also fell behind our G7 peers, with only Italy seeing a larger decline in productivity relative to the United States.”

The speech contained few hints about the near-term trajectory of monetary policy ahead of the bank’s next

Saudi Arabia plans $40 billion investment in artificial intelligence | World News


The government of Saudi Arabia plans to create a fund of about $40 billion to invest in artificial intelligence, according to three people briefed on the plans — the latest sign of the gold rush toward a technology that has already begun reshaping how people live and work.


In recent weeks, representatives of Saudi Arabia’s Public Investment Fund have discussed a potential partnership with Andreessen Horowitz, one of Silicon Valley’s top venture capital firms, and other financiers, said the people, who were not authorized to speak publicly. They cautioned that the plans could still change.


The planned tech fund would make Saudi Arabia the world’s largest investor in artificial intelligence. It would also showcase the oil-rich nation’s global business ambitions as well as its efforts to diversify its economy and establish itself as a more influential player in geopolitics. The Middle Eastern nation is pursuing those goals through its sovereign wealth fund, which has assets of more than $900 billion.


Officials from the Saudi fund have discussed the role Andreessen Horowitz — already an active investor in A.I. and whose co-founder Ben Horowitz is friends with the fund’s governor — could play and how such a fund would work, the people said. The $40 billion target would dwarf the typical amounts raised by U.S. venture capital firms and would be eclipsed only by SoftBank, the Japanese conglomerate that has long been the world’s largest investor in start-ups.


The Saudi tech fund, which is being put together with the help of Wall Street banks, will be the latest potential entrant into a field already awash in cash. The global frenzy around artificial intelligence has pushed up the valuations of private and public companies as bullish investors race to find or build the next Nvidia or OpenAI.

Reddit IPO: Stock jumps on first day as a public company


New York
CNN
 — 

Reddit, one of the original social media companies, is finally making its debut on the New York Stock Exchange Thursday — more than a decade after many of its peers.

Trading under the ticker “RDDT,” shares started trading at $47 and reached a high of $57.80 early Thursday afternoon, up as much as 70% from its initial price offering of $34. At its peak, shares of the stock had a market cap of about $10.9 billion.

It’s a major milestone for the nearly 20-year-old company, something Reddit has been preparing for since at least 2021, when it hired its first chief financial officer. It also marks the first social media company to go public in years, and its performance could be a signpost for other companies considering IPOs.

Funds raised from a successful IPO could help Reddit invest in key areas for growth, including building out new revenue streams as it seeks to stake a claim as a data provider for the burgeoning artificial intelligence language model industry. A successful public offering could also establish a sustainable ownership structure for a company with a history of ownership changes and leadership controversies.

But its success is far from guaranteed. Reddit has never turned a profit, and by its own admission, “we may not be able to achieve or maintain profitability in the future.” The company is also giving loyal users a chance to buy IPO shares, a move that’s “great for PR but practically risky,” according to Kamran Ansari, Venture Partner at investment firm Headline, because those users could cause volatility in the share price right out of the gate if they quickly sell the stock.

It’s been a rough few years for the IPO market — and successful IPOs typically beget other successful listings. While 2021

Pension funds are Canada’s ‘crown jewels.’ Should they invest more at home? – National

Signals that Ottawa wants more domestic investment from Canadian public pension funds are being amplified by some members of the business community who argue there’s more these large pools of capital can do to boost Canada’s economy.

But the pension plans themselves are pushing back against suggestions that anyone in government should dictate how they invest Canadians’ retirement savings.

An open letter sent to Finance Minister and Deputy Prime Minister Chrystia Freeland on March 6 urged the Liberals to amend rules governing pension funds to encourage more Canadian investment. It has been signed by nearly 100 current and former executives from Canada’s business community.

“Canada has great companies, true global champions. These competitive businesses deserve our support, and we must create many more. Increasing investments in Canada should be a national priority,” reads the letter, sponsored by Montreal-based investment management firm Letko, Brosseau & Associates Inc.

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The vast majority of the CEOs supporting the push are from the mining and energy sector, which also disproportionately makes up listings on the Toronto Stock Exchange. The list also includes the top executives from telecom giants Rogers Communications Inc. and Telus Communications Inc., grocers including Empire Co. Ltd. and Metro Inc., as well as National Bank of Canada – the sole representative from Canada’s Big Six banks.

Letko Brosseau laments the decline in pension fund holdings that are allocated to publicly traded Canadian firms. Roughly four per cent of Canadian funds’ equity investments were allocated domestically at the end of 2022, down from nearly 28 per cent in 2000, according to Pension Investment Association of Canada data.

This is despite pension funds holding roughly 37 per cent of institutional savings in Canada, according to the letter, putting it on par with Canada’s big banks.

“I think it’s a

Business investment per worker fell 20% in 15 years amid weaker competition: StatCan

OTTAWA — Canadian business investment per worker plummeted by 20 per cent over a 15-year stretch, according to new Statistics Canada research that suggests weaker competition is partly to blame.

The report finds for every worker, businesses invested $628.80 less in their companies in 2021 than they did in 2006.

The decline was more significant in large and medium-sized companies and foreign-controlled businesses, though it’s unclear why that was the case.

The report attributes nearly one-third of the drop to declining entry rates, or the number of new companies starting up by industry.

“Economists always believe that competition promotes investment. When you look at our data, there’s a decline in the share of new firms,” said Wulong Gu, the study’s author.

Canada is struggling to increase labour productivity amid low business investment, an issue that has been raised frequently by business groups and economists in recent years.

Capital investment, which refers to spending on everything from real estate to machinery, helps businesses grow and make their employees more productive.

That’s why economists argue capital investment is critical to growing the economy and improving living standards.

The report says the slowdown in investment coincided with a shift toward intangible assets such as brand equity and patents, which national statistical agencies don’t record as investments.

However, that shift doesn’t explain why business investment in Canada lags that in other countries, said Wu, because intangible assets are not recorded as investments elsewhere, either.

The study also found no relationship between profitability and business investment, which Wu said was “surprising.”

Canada’s competition watchdog released a report in the fall that found competition weakened over the previous two decades as profits and markups rose.

The Liberal government recently introduced several changes to the Competition Act after pledging to modernize the country’s competition law.

The Competition

Adani Group to invest over ₹1.2 lakh crore across portfolio companies in FY25; 70% for renewable business

Adani Group is all set to exponentially boost its planned investments in the next fiscal year ending March 2025. As per the news agency PTI, Adani Group is expected to invest over 1.2 lakh ($14 billion) crore across its portfolio business with a special focus on green/renewable energy.

The investments are made in portfolio companies ranging from energy, airports, commodities, cement, and media.

The planned investments are 40% higher than the invested amount in the current fiscal year. The report claimed that by March 31 this year, Adani Group is estimated to have incurred a capex of around USD 10 billion. The company has doubled down on its $100 billion investment guidance for the next 7-10 years.

Adani Group is planning to allocate as much as 70% of this 1.2 lakh crore in the green energy business which includes renewable power, green hydrogen, and green evacuation. Out of the remaining 30%, the company will look to spend a big chunk to expand its airports and ports businesses.

The report claimed that Adani Group is expecting a big jump in profits after the execution of planned investments.

Major investments in the airport portfolio

The new set of planned investments comes after the Adani Group pledged to invest more than 60,000 crore in its airport business over the next 5-10 years.

Karan Adani, MD of Adani Ports and Special Economic Zone Ltd said that the company is planning to pump half of the investments into the terminal and runway capacity over the next five years while the other half will be allocated for the city-side development of the airports over a period of 10 years.

“In coming times, we foresee non-metros bypassing hubs and providing flyers direct connectivity across the world. Their connectivity within the country will also improve,”

Adani to invest $14 billion in FY25

Adani group plans to invest more than Rs 1.2 lakh crore (about $14 billion) across its portfolio companies that range from ports to energy, airports, commodities, cement and media in fiscal year starting April 1, as it doubles down on its $100 billion investment guidance over the next 7-10 years to grow businesses, sources said.
The projected capital expenditure or capex for 2024-25 (April 2024 to March 2025) fiscal is 40 per cent higher than what the portfolio is estimated to have incurred in FY24.
According to analysts, the portfolio is estimated to have incurred a capex of around $10 billion in FY24 that ends on March 31.
Sources said these investments will set the stage for exponential profit growth.
The group had previously guided a $100 billion capex over the next 7-10 years. Most of this investment is going to go into group fast growing businesses — renewable, green hydrogen and airports.
As much as 70 per cent of the planned capex will go into its green portfolio — primarily renewable power, green hydrogen, green evacuation. Of the remaining 30 per cent, the majority will be spent towards airports and ports businesses, they said.
In calendar year 2023, the portfolio delivered a $9.5 billion EBITDA (up 34.4 per cent year-on-year), while its net debt has reduced by 4 per cent from March 2023 to September 2023 (balance sheet figures are only declared half yearly).
In the December quarter, Adani’s portfolio reported record EBITDA growth of 63.6 per cent, taking its 12-month EBITDA to an all-time high of $9.5 billion (Rs 78,823 crore) in 2023.
Increasing cash flows from fast growing profits have set the stage for mega-scale investments, sources said.
Its net debt to EBITDA at the end of September was 2.5x, which is expected to decline by the

Premarket stocks: Congress has bad news for Wall Street

A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


New York
CNN
 — 

Dealmaking is the lifeblood of Wall Street. When companies combine, or one company buys another, it creates opportunities for investors and banks to make money by providing advice or financing for the transaction.

Last week, President Joe Biden signed a package of bills to fund the federal government, narrowly avoiding a very expensive and damaging shutdown. But analysts say that funding cuts in the plan could end up harming mergers and acquisitions on Wall Street, squashing hopes of a recovery in dealmaking.

What’s happening: It’s been a rough few years for investment bankers. Goldman Sachs (GS) reported substantial drops in revenue last year as 2023 had some of the lowest M&A activity in a decade.

Dealmaking activity has dried up as executives have contended with recession fears, interest rates and geopolitical tensions.

Thankfully, some green shoots of recovery have been emerging.

“While many of these headwinds will continue to impact decisions in 2024, and we can add upcoming elections and supply chain issues to the list, there are reasons to be optimistic for more deal making this year,” said Lucille Jones of LSEG Deals Intelligence.

A more stable economic climate, expectations of interest rate cuts by the Federal Reserve, pent up buyer demand and a red-hot US stock market have “made it easier for dealmakers to price, execute and plan their deals,” said Jones.

The bad news: Recent regulations and proposed budget cuts threaten to step on those green shoots before they’re able to flower.

Late last year, the Federal Trade Commission and Department of Justice

Which former Trump adviser wants to buy TikTok? Take our business quiz for the week of March 15

Welcome to The Globe and Mail’s business and investing news quiz. Join us each week to test your knowledge of the stories making the headlines. Our business reporters come up with the questions, and you can show us what you know.

This week: The U.S. House of Representatives on Wednesday passed a ban on TikTok, the popular social media platform, unless its China-based parent company sells its stake in the business. After the bill’s success, the Canadian government revealed it had ordered a national-security review of TikTok in September, 2023, but had not disclosed the move publicly. Meanwhile, Empire Co., the parent company of Sobey’s, reported on Thursday that its net earnings grew to $134.2-million in its third quarter ended Feb. 3, compared with $125.7-million in the same period the previous year.

Also: Ontario Teachers’ Pension Plan announced a disappointing year in which its portfolio only gained 1.9 per cent, missing its internal benchmark of 8.7-per-cent benchmark by a wide margin.


1Which of the following things helped make Canadians wealthier during the final three months of 2023?

a. Stocks and bonds

b. Real estate

c. Falling debt

d. Lower interest rates

a. Stocks and bonds. Canadians’ net worth climbed 1.8 per cent in the first quarter. The biggest contributors were financial assets – stocks and bonds, mostly. They jumped 5 per cent, more than offsetting a 1.9-per-cent drop in the value of residential real estate.

2What was one reason Toronto-Dominion Bank chief executive Bharat Masrani took a $1-million pay cut in 2023?

a. A failed expansion into Europe

b. Lack of progress in diversity hiring

c. Troubles with U.S. regulators and law enforcement

d. A failure to meet technology targets

c. Troubles with U.S. regulators and law enforcement. TD faces penalties from U.S. authorities after a probe

China’s corruption watchdog zeroes in on cadres’ fake business investments

China’s top anti-graft watchdog is targeting cadres who take bribes in the form of “dividends” from fake business investments, a type of corruption that authorities say is becoming more common, secretive and complex.
The Central Commission for Discipline Inspection (CCDI) said on Sunday that in these cases, the officials take “returns” from the business without actually investing in the enterprise or being involved in its operations.

In many cases, the invested company has no actual operations or profits and distributes dividends only to a handful of shareholders who are the officials or their proxies.

07:00

China airs 4-part anti-corruption series on prime-time TV amid renewed crackdown on graft

China airs 4-part anti-corruption series on prime-time TV amid renewed crackdown on graft

As an example, the CCDI cited the case of Yang Degao, former vice-president of the Hubei branch of China Development Bank.

The commission said that from 2005 to 2014, Yang took advantage of his position in CDB to help a company obtain a loan from his bank.

Yang and four accomplices also invested 2 million yuan (US$280,000) in the firm, becoming shareholders and receiving fixed dividends every year.

The group received 8 million yuan in “dividend payments” and took back their “principal” of 2 million yuan in just the next few years, with Yang receiving over 3.74 million yuan more than his rightful amount, according to investigators.

In January 2023, Yang was sentenced to 12 years in prison for accepting over 31 million yuan bribes.

10:14

‘No one is safe’: China purges record number of ‘tiger’ officials in 2023

‘No one is safe’: China purges record number of ‘tiger’ officials in 2023

The campaign against such bribery is part of the CCDI’s priority this year to crack down on “corruption involving political and business collusion”, particularly in the finance