On January 16-18, the Asia Infrastructure Investment Bank (AIIB) is scheduled to launch its inaugural ceremonies and hold a Board of Directors meeting to start operations.
Don’t count Jerome Hass, a portfolio manager at Toronto-based Lightwater Partners Ltd., among the supporters of the new exempt market rules that went into effect in Ontario this week.
One of the key changes is an offering memorandum (OM) exemption that will allow investors to participate in private capital investment opportunities previously only available for high net worth investors.
The new rules – they include exemptions for capital raisings through crowdfunding and through friends, family and business associates – will also harmonize the rules across the country.
Hass agrees with the decision to open up the exempt market through the offering memorandum exemption, which because of the lower income thresholds will allow more investors to participate. But he doesn’t like the second part of that decision, namely the exclusion of investment funds from the new rules.
That sector is the largest issuer in the exempt market: In 2014, the sector was responsible for two-thirds of the $121 billion raised through prospectus-exempt distributions. The overall market is big with issues ranging from less than $250,000 to more than $500 million, with more than half the issues being above $100 million.
In Hass’ view excluding funds won’t achieve the goals set for the new rules. In other words they won’t facilitate capital raising for small and medium-sized enterprises (SMEs) to the extent desired; and, they won’t allow the average punter to “invest like the rich.”
The Ontario Securities Commission said to permit investment funds to sell to retail investors under the OM exemption without the benefit of the disclosure and product regulation that applies to retail investment funds “would be inconsistent with the principles underlying these existing rules and with three ongoing investment fund policy initiatives: modernization of investment fund regulation; point of sale disclosure for mutual funds; and the review of the cost of ownership of mutual funds.”
Maybe, but Hass, whose firm manages two hedge funds that focus on mid-cap stocks, argues investment funds are one of the main suppliers of capital to SMEs. “By excluding investment funds from the liberalization of the exempt market, the objective of making capital available to SMEs will be severely impaired.”
Indeed, rather than spending taxpayer dollars “on policy programs to subsidize productivity and innovation, here is a cost-free alternative: remove the barriers that limit the private sector’s ability to provide capital to SMEs,” he said.
* * *
Victory for Hopkins
While Hass has reservations, another industry participant is having the opposite feelings.
Darrin Hopkins, an investment adviser with Richardson GMP in Calgary, saw his efforts rewarded this week when regulators in five provinces approved a prospectus exemption that will allow listed issuers “to more easily raise money by distributing securities without the need for a prescribed offering document.”
Provided the issuer is up to date with filings, and provided the investor receives advice about the investment’s suitability, the purchase can be made. The exemption that follows on from a Hopkins-inspired initiative granting existing shareholders those rights now applies to all shareholders.
Hopkins, who spent 3.5 years on the latest endeavour, said you need “patience and persistence.”
“I set out all the arguments to the regulators, the exchanges, the numerous committees and kept stressing the case that this change was needed. The capital markets will be better off because the change creates a low cost and efficient way for public companies to raise capital.”
It is approaching five years since Apple began shipping the Thunderbolt Display in September 2011, leading many to wonder when the monitor will receive a long-anticipated update, if ever.
Apple could have refreshed the Thunderbolt Display with USB 3.0, Thunderbolt 2 and a tapered iMac-style design as early as 2013, but it has chosen not to do that. The company continues to sell the 2011 27″ model with USB 2.0 and first-generation Thunderbolt ports for $999.
So, what has been the holdup? The answer likely lies in supply chain considerations and connectivity.
4K Thunderbolt Display
Many have been long hoping that Apple would release a 4K Thunderbolt Display, considering that the latest Macs, and most models refreshed since late 2013, can be used with at least one 4K display.
But, typically, standalone Apple displays have shared the same screens as iMacs. Since Apple skipped over a 4K 27″ iMac, Apple would have to source a separate screen to release a 4K Thunderbolt Display, and the product may be too niche for that to be worthwhile.
Meanwhile, with Thunderbolt 3 rolling out this year, it seems unlikely that Apple will bother with a refreshed non-4K Thunderbolt Display in the interim. So, as time goes on, the more likely possibility is that Apple will eventually release a much improved 5K Thunderbolt Display.
5K Thunderbolt Display
5K displays have an incredible 14.7 million pixels, resulting in sharper and crisper images, but they remain expensive. 5K models from Dell and HP retail for between $1,649 and $1,999, while Apple’s all-in-one 5K iMac starts at $1,799, but cannot be used in target display mode.
Apple already sells a 27″ Retina 5K iMac, and its screen could be the basis for a corresponding 5K Thunderbolt Display. The display could share the same 5,120×2,880 resolution, USB Type-C ports for connecting Thunderbolt 3 peripherals and possibly an ultra-thin design like the newest iMacs. But no current Macs could drive such a 5K display over a single cable.
Apple won’t release the first Macs with Intel’s new Skylake chips and Thunderbolt 3 support until later in 2016, and only those models will be able to drive a 5K display at 60Hz over one cable. While that makes a 5K Thunderbolt Display a possibility in 2016, Apple has good reason to wait until at least 2017.
Intel’s Skylake processors, launching in early 2016, and Kaby Lake processors, expected to launch in the first half of 2017, will not be able to drive a 5K Thunderbolt Display over Single-Stream Transport (SST). The underlying issue is that both processor lineups lack support for DisplayPort 1.3. Instead, the display would sync two channels over Multi-Stream Transport (MST), which can cause some performance issues. That means Apple may wait until at least Cannon Lake chipset (which promise SST 5K support) in the second half of 2017, before releasing a 5K Thunderbolt Display.
Because external displays are a relatively small market for Apple, it’s possible Apple never plans to introduce an updated Thunderbolt Display. If a new model is in the company’s plans, Apple will likely wait to introduce a 5K display until 2017 when most Macs can easily support it in order to maximize supply chain efficiency.
If you are interested in exploring third-party 4K displays, read our 4K and 5K Display Buyer’s Guide for Macs.
Discuss this article in our forums
Even the world’s largest petroleum importer thinks oil prices have fallen too low. This week, China set a US$40 per barrel price floor for domestic fuels to protect local producers and curtail the use of cheap fuel.
Inconsolable oil investors wish they, too, could conjure up a bottom on oil prices, which have fallen 20 per cent in the first two weeks of the year, to add to the 45 per cent decline of last year. U.S. crude skidded six per cent Friday, below US$30 per barrel for the first time in 12 years, as the market fretted over the prospect of new supplies from Iran.
“Traders could take it down to US$25 per barrel in the next several months,” warned Patricia Mohr, vice-president, economic and commodity market specialist at Scotiabank. “It really doesn’t have much to do with cost of production, and it’s not sustainable for years and years.”
Over the weekend, the United Nations atomic watchdog is expected to announce Iran’s compliance with the nuclear disarmament deal it struck with global powers last year, which will clear the way to lifting sanctions on the country. Iran claims it can raise production by 500,000 barrels per day quickly once sanctions are lifted.
The prospect of fresh supplies has sent share prices of oil and gas companies tumbling, with the S&P/TSX Capped Energy Index down 4.50 per cent Friday.
“You don’t have return expectations anymore right now at current levels and, definitely with regards to the Canadian guys, it is very hard to find anybody who is making money right now,” said Samir Kayande, a director at Calgary-based RS Energy Group.
Investment dealer Peters & Co. expects a US$21 billion funding shortfall for Canadian producers in 2016, and oil output to slide five per cent, if the current price environment persists.
Even before this year’s plunge, investors were bracing for a “white knuckle ride” when the Canadian oilpatch kicks off fourth-quarter earnings season later this month, says CIBC Capital Markets.
CIBC expects the industry’s cash flow per share – a key metric in times of liquidity concerns — to decline by 15 per cent overall, and fall 27 per cent for integrated companies, in the fourth quarter compared to the previous quarter.
Some Canadian producers are shielded from the evaporating value of the loonie as oil prices are denominated in U.S. dollars, but the currency impact is muted.
“It’s more helpful for light oil and natural gas producers…. But for heavy oil guys, unfortunately, the biggest cost is in the discount that their products receive relative to WTI,” Kayande said. The Canadian heavy benchmark Western Canada Select was trading at a US$14.60 differential to the West Texas Intermediate on Thursday.
Paradoxically, the strong U.S. dollar has helped some oil-producing countries to maintain production, argues Mohr.
The small consolation of a cheaper currency is not enough to lift the producers’ mood. But amid the gloom, there are signs that global supplies are declining. The U.S. Department of Energy expects U.S. oil production to shrink by about 700,000 bpd to 8.5 million bpd by November 2016.
“The market will react very positively to U.S. production decline, and if you see a bigger move down in actual oil production, you can have prices lift US$10 quite quickly,” Mohr said.
The dramatic declines may even be laying the ground for a recovery, according to Goldman Sachs analyst Jeff Currie, who predicted last year that oil could touch US$20 per barrel.
“The key theme for 2016 will be real fundamental adjustments that can re-balance markets to create the birth of a new bull market, which we still see happening in late 2016,” Currie and colleague Damien Courvalin said in a note to clients.
Oil bull Emad Mostaque, who had predicted the oil price decline in 2014, is reiterating his call for triple-digit oil prices.
“Despite the recent crash I remain optimistic for a recovery into next year and my oil price target remains US$100+ by the end of 2017 unless production costs really have dropped by 70 per cent across the board,” said Mostaque, now an analyst at London-based research consultancy Ecstrat.