Thursday, April 2, 2009

Less is more at duh TSX?


Brent, 

The comments of former TSX CEO Rik Parkhill, from last night’s Ignatieff dinner, that you shared with me are interesting, concerning how the income trust tax has killed new listings on the TSX, given that the trust tax is triggered by the mere act of being publicly listed?

As a result, many of the royalty trusts have now listed on NYSE and some do the bulk of their trading on it. All felt that the TSX basically abandoned them when Flaherty introduced his tax on publicly-traded trusts and flow-throughs.  That’s after having paid the TSX millions of dollars in fees for years.  The TSX did not understand what a tax on publicly-traded vehicles would do to their business model.  If you don’t know where your primary source of revenue comes from – how are you ever going to grow your business, or even manage to keep it?

Zero initial public offerings on Toronto stock market in first quarter


April 2, 2009

TORONTO — The market for initial public offerings was dormant on the Toronto Stock Exchange in the first quarter of 2009, with zero new listings for the third quarter in a row.

It's not unusual for IPO activity to be minimal in the January-March quarter, PricewaterhouseCoopers said in its quarterly survey.

Only three new issues made it to the TSX in the first quarter of 2008 for a total value of $113 million and only five IPOs in the first three months of 2007 with a value of $191 million.

But PricewaterhouseCoopers says the nine consecutive months without an IPO on Canada's main stock market reflects a wariness among investors that shows no signs of abating.

"It has been hard to find many signs of life in the IPO market in the past two years'",[following the announcement of the income trust tax] "so optimism about the second quarter, and even beyond, is in short supply," said Ross Sinclair, head of PwC's IPO and income trust services.

"But that doesn't mean investors have stopped looking for opportunities in other new listings."

The junior TSX Venture exchange was also down, with three IPOs and a total value of $2.5 million during the quarter, off from 14 issues valued at $30.7 million during the first quarter of 2008.

The same number of new issues in 2007 generated $91.2 million in new equity.

PwC said the Venture exchange IPOs were "the only activity on all Canadian exchanges in the first quarter of 2009, down from a total of 20 issues valued at $148 million in the same period of 2008."

In the first quarter of 2007, there were 21 offerings with a value of $300 million.

Structured financial product listings are not included in the accounting firm's quarterly reviews of equities markets.

But it did note that the investment vehicles created to acquire portfolios of traded shares, bonds or other financial instruments were in some demand, with eight new structured financial products introduced to the TSX with a value of $394 million.

That was down from 25 issues worth $1.2 billion in the first quarter of 2008.

"While not depressed to the IPO levels in our survey, it is interesting to note that these structured products have also shown a steady decline," said Sinclair.

Copyright © 2009 The Canadian Press. All rights reserved.

4 comments:

Kephalos said...

The Canadian oil industry is regressing back to the 1960s when it was 90% owned by American corporations.

Unlike Petro Canada (Trudeau miscreant) and Alberta Energy (Lougheed miscreant), the only true Canadian homegrown, TSE traded, energy entities have been Encana (from CPOG and AEC) and income trusts. Income trusts moved Canadian ownership up to about 25%.

What is wrong with Canadians owning Canada and keeping their profits in Canada?

Duh?

CAITI said...

Kephalos:

Re: "The Canadian oil industry is regressing back to the 1960s when it was 90% owned by American corporations."

So, you are saying that the income trust tax has achieved its intended goal?......the one that Jack Layton was too brain dead to figure out was actually going on....even in the face of the billboards that we ran across the entire country (including the bloody Danforth riding and Olivia Chow's riding) with the caption "Why is Jack Layton selling out Canada's resources" overlaid on a picture of the American flag with the NDP logo taking the place of the Stars in the Stars and Stripes?

We thought pictures would be required to convey the complexity (?) of the issue, given there weren't any ATM fees or pay day loans involved.....and Jim Stanford of the CAW was busy bankrupting Canada's car industry by negotiating SPA days for line workers and may not have been around to advise Jack Layton about what was in the best interests of US private equity firms in general and ABU Dhabi Energy and Li Ka Shing in particular.

Brent

Kephalos said...

The NEP was dismantled in the mid 1980s. Since then there has not been a pro-Canadian ownership policy by any provincial or federal government.

What we had was a small corp of Canadian oilmen (oil persons if you like) who understood what it takes to start-up and run an energy business. Most of them used the income trust as their business model, which model suited the mature oilfield assets that the majors were abandoning. One other thing: the Canadians all used the TSX and some inter-listed on NYSE.

As I see things, energy trusts were becoming serious competitors of major oil. Harper has been deadly to Canadian ownership and overly friendly with companies like his first employer; that company by the way employs Jack Mintz as a director.

Dr Mike said...

It`s almost "Amero" time!!!!!!!

The TSX was just an inconvenience that needed to be removed anyway.

Long live King Steve.

Dr Mike