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(September 17, 2007) Canadians eased off foreign acquisitions in July but still bought $3.6 billion worth of foreign securities, according to StatsCan. That’s down from a record of $13.1 billion in April.

Equity investments were the vehicle of choice, accounting for two-thirds of the total. With the Canadian dollar hovering around 94 cents U.S. in July, investors took the opportunity to scoop up $2.3 billion worth of U.S. stock. By contrast, total U.S. stock purchases through May and June were just $723 million.

Canadians bought $580 million worth of non-U.S. stocks in July, after selling off $2.2 billion worth in June.

On the fixed income side, Canadians sold off $2.2 billion in U.S. bonds but bought $2.5 billion in non-U.S. debt. The net acquisition of just $259 million marked a sharp slowdown in bond purchases, following a 19-month buying binge that averaged $4.2 billion per month.

On the other side of the balance sheet, foreign investors purchased $1.5 billion in Canadian securities, a shift in flows following a two-month sell-off that totalled $6.7 billion. Again, equity investments were preferred, with $1.3 billion in money market instruments sold.

Foreign investors spent $2.5 billion on Canadian equities, reversing their two-month selling trend that totalled $4.3 billion.

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Rubin takes oil warning abroad

(September 17, 2007) One of Canada’s most outspoken energy sector bulls has taken his prediction of $100 crude to the global stage. Jeff Rubin, chief economist at CIBC World Markets, addressed the sixth annual conference of the Association for the Study of Peak Oil & Gas, held in Cork, Ireland.

“At current rates of domestic consumption, the future export capacity of OPEC, Russia and Mexico must be increasingly called into question,” Rubin told the conference. “These trends are likely to result in a sharp escalation in world oil prices over the next few years.”

Rubin says export capacity from these key producers will fall by 2.5 million barrels a day by 2010. As global supply dwindles, the price of crude should top $100 a barrel by the end of 2008 and be even higher by 2010.

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Sox changed audit landscape

(September 17, 2007) The cost of corporate audits has soared since the implementation of the Sarbanes-Oxley Act in the U.S., which applies to all companies listed on American exchanges, regardless of the firm’s nation of domicile.

According to a study by the Corporate Library, audit fees rose by 756% between 2001 and 2006. Among the 3,140 corporations the study examined, median total auditor costs rose from $1,420,000 in 2001 to $2,741,087 in 2006.

“There has been a revolution not only in the type of tasks performed by outside auditors, but also in the fees charged for those tasks,” says Paul Hodgson, senior research associate at the Corporate Library and author of the report. “The outside audit itself has changed dramatically, taking into account much more internal control testing and compliance work than it did pre-2002. The revolution in fees has mirrored this change in the type of work.”

Meanwhile, the number of audit firms vying for these corporate accounts has exploded. In 2001, there were only nine firms outside of the Big Four (KPMG, Deloitte & Touche, Ernst & Young and PricewaterhouseCoopers). By 2006, the number of non–Big Four audit firms had reached 91 and had doubled their market share.

(09/17/07)