First Look With Surveillance: China Versus Gaming, Infrastructure
China is putting investors on edge with a regulatory crackdown that’s spreading by the day. Now it looks like video games are in the crosshairs after state-owned media blasted them as “electronic drugs” and “spiritual opium," which was enough to send shares of Tencent Holdings down as much as 10.8 per cent in Hong Kong. This comes after Beijing cracked down on for-profit education, ride-hailing and overseas listings.
Inter Pipeline provided an update today on its prized $4.3-billion Heartland Petrochemical Complex, which has now lined up take-or-pay commitments for 68 per cent of its production capacity, up from 60 per cent at the time of its last update in April. Inter Pipe, which recently scrapped its deal with Pembina Pipeline in favour of Brookfield Infrastructure’s sweetened takeover offer, this morning said it was yanking its 2022 financial forecasts for Heartland due to uncertainty surrounding when the full complex will be up and running.
CALGARY’S BOW SOLD
The office tower that at one time was meant to symbolize Calgary’s clout as a global energy hub but later became a casualty of the crash in crude prices is being sold. H&R Real Estate Investment Trust announced today that it’s selling the Bow, as well as a Bell office, for $1.47 billion. H&R noted in the release that the divestment significantly reduces its exposure to the Calgary’s office market.
The 10-year U.S. treasury yield has firmed up a bit this morning after sinking as low as 1.147 per cent yesterday amid persistent growth fears tied to the COVID-19 delta variant and as the July ISM U.S. manufacturing index unexpectedly slipped.
TRUDEAU, BIDEN SPEAK
Prime Minister Justin Trudeau spoke with U.S. President Joe Biden yesterday. According to the PMO readout, the two leaders touched on a range of hot button issues, including China’s ongoing detention of Michael Spavor and Michael Kovrig, COVID-19, wildfires, the border, and Enbridge’s Line 5 pipeline. The White House released a far shorter readout that dedicated the most attention to Spavor and Kovrig. We’ll point out here that the extradition hearing of Huawei Chief Financial Officer Meng Wanzhou, whose arrest in Canada has been intertwined with the fates of Michael Spavor and Michael Kovrig, resumes today in Vancouver.
BRIDGING FINANCE UPDATE
There are some interesting nuggets in the latest report from PricewaterhouseCoopers in its role as receiver of embattled private lender Bridging Finance. According to the document, which is dated July 29 but seemingly slipped under the radar, an Alberta judge granted PwC’s request to have MNP appointed as interim receiver of the Alaska-Alberta Railway Development Corp., which is Bridging’s top borrower. The other primary figure in the file, Sean McCoshen, has been “deemed bankrupt,” according to PwC, and a trustee is now involved with his assets. The filing also shows that McCoshen has retained criminal lawyers to represent him.
OTHER NOTABLE STORIES
- BP announced this morning it will raise its dividend and buy back US$1.4 billion in shares. That’s after stronger oil prices helped the supermajor swing to an adjusted second-quarter profit of US$2.8 billion.
- PepsiCo is selling Tropicana and other juice brands to private equity firm PAI Partners for US$3.3 billion. Pepsi will emerge from the deal with a 39 per cent stake in a new joint venture and certain distribution rights in the U.S.
- Bausch Health this morning announced it’s planning an initial public offering of its Solta Medical unit, which was acquired by Valeant Pharmaceuticals in 2013. Bausch said the listing, which is expected later this year or early 2022, will allow it to pay down more debt and unlock value. Solta generated US$253 million in revenue last year.
- Notable data: U.S. factory orders
- Notable earnings: Canaccord Genuity, Great-West Lifeco, Sleep Country Canada, Finning International, CargoJet, Stella-Jones, Bausch Health, Alibaba, BP, ConocoPhillips, Lyft, Under Armour, Live Nation, Marriott International
- Huawei CFO Meng Wanzhou's extradition hearing resumes
Editor’s note: An earlier version of today’s Daily Chase neglected to specify that it is only next year’s forecasts for Inter Pipeline’s Heartland complex that have been withdrawn.