Sign In
sign up
Menu
Sign In
sign up
shutterstock_1629512083

Covid-19 Diligence Briefing

Our briefing for Wednesday, July 28, 2021:

  • In the United States, the Centers for Disease Control and Prevention (CDC) updated their mask guidelines on Tuesday as cases surged. The CDC now recommends that even fully vaccinated people should be wearing masks indoors and in other areas where there’s a high risk of transmission. They also recommend that all teachers and students should be wearing masks in the classroom, regardless of whether they’ve been vaccinated.  According to the CDC, 63% of U.S. counties have high transmission rates that should warrant mask wearing. Many Americans may choose not to follow the new recommendations as they are not binding.
  • In Canada, Prime Minister Justin Trudeau says the country now has enough doses of vaccine to inoculate every eligible Canadian.  Speaking at a vaccine clinic in New Brunswick, Trudeau encouraged all Canadians to get their shot, saying there are “no more excuses.” As of Tuesday the country had received 66 million doses, enough for all 33.2 million Canadians who are 12 and older. “Back in the winter I made a promise that we would have enough vaccines for all eligible Canadians by the end of September. Not only have we kept that promise, we've done it two months ahead of schedule,” Trudeau said.
  • In the United Kingdom, the government announced a change to international travel rules. The change will allow people who have been fully vaccinated in the U.S. or most of Europe to avoid quarantine if they’re arriving from amber list countries, beginning on August 4. Under the current rules, only those who have been vaccinated by the National Health Service (NHS) are eligible for a “Covid-19 pass” that allows them to skip quarantine if returning from an amber list country. The European countries included are all but one of the 27 EU member states, as well as Norway, Iceland and Switzerland, plus Lichtenstein, Monaco, Andorra and Vatican City. France is the only exception because it remains on the “amber plus” list, meaning quarantine is unavoidable even for fully vaccinated travellers.
  • In Japan, Tokyo has set another coronavirus record, reporting 3,177 new cases, the first time cases have exceeded 3000 in a day. Although Japan has kept its cases and deaths relatively low compared to other countries, its vaccination campaign started late and has been slow. While Japan is now averaging about 10 million shots a week, the country’s vaccination minister Taro Kono says the speed of the campaign is less important than getting jabs to young people. "Even if we slow down a little bit, I’m OK. Rather we need to reach out to the younger people, so that they would feel that it’s necessary for them to get vaccinated,” Kono said, speaking in English during an interview.
  • In South Korea case numbers have reached an all-time high as the country continues to deal with its fourth wave. There were 1,896 new cases reported on Tuesday, up from the previous record set on July 22. Tighter social distancing restrictions were enacted across most of the country, most areas are under a level three on a four-level scale. This means a 10 PM curfew and a ban on gatherings of more than four people. The greater Seoul area remains under level four curbs, which means gatherings of more than two people after 6 PM are banned.
  • In Australia, Sydney’s lockdown will be extended for at least another four weeks, officials announced. The lockdown, which began on June 26, will be extended until at least August 28. New South Wales state Premier Gladys Berejiklian reported 177 new cases on Wednesday, the most in a day since March 2020. After containing smaller outbreaks, Victoria and South Australia lifted their lockdown measures, but experts are warning that the restrictions in Sydney could last until September or even later. The nation’s vaccine program has struggled, with only 16% of the adult population fully vaccinated.

Covid-19 – Due Diligence And Asset Management

UK institutional investors show concern over economy coming out of pandemic

Brief: Almost forty per cent of UK institutional investors are optimistic about the economy as the country emerges from the pandemic, according to the latest Institutional Investor Compass Survey from MFS Investment Management. The survey found that almost half of respondents (48 per cent) are confident about achieving their three- to-five-year goals but are less certain (24 per cent) of meeting their shorter-term objectives, post-pandemic. Adding to this mixed sentiment, the survey showed that more than 57 per cent of institutional investors agree some industries will not recover, with more than 47 per cent agreeing that Covid-19 has created investment opportunities and 35 per cent agreeing that markets do not fully reflect the long-term economic impact of the pandemic.

READ MORE...


IBM Report: Cost of a Data Breach Hits Record High During Pandemic

Brief: IBM Security today announced the results of a global study which found that data breaches now cost surveyed companies $4.24 million per incident on average – the highest cost in the 17-year history of the report. Based on in-depth analysis of real-world data breaches experienced by over 500 organizations, the study suggests that security incidents became more costly and harder to contain due to drastic operational shifts during the pandemic, with costs rising 10% compared to the prior. Businesses were forced to quickly adapt their technology approaches last year, with many companies encouraging or requiring employees to work from home, and 60% of organizations moving further into cloud-based activities during the pandemic.

READ MORE...


Top UAE Banks See Profits Surge as Impairments Drop on Recovery

Brief: The three largest banks in the United Arab Emirates reported a drop in impairment charges by nearly a third in the first half as they took advantage of an economic recovery from the Covid-19 pandemic. Emirates NBD PJSC, Dubai’s biggest lender, and its counterpart in the UAE capital, First Abu Dhabi Bank PJSC, posted an increase in profit in the first half, supported by higher fee income and a drop in the cost of risk. Dubai Islamic Bank’s first-half impairments fell 29% even though profit dropped. The results reflect an improvement in economic conditions in the UAE, OPEC’s third-biggest producer, whose vaccine rollout fed an upswing in activity and as oil prices rebounded. Executives emphasized lower-than-expected loan-loss charges, pointing to their banks’ strengthening balance sheets and adequate provisioning while still sounding caution about the outlook.

Read more...


This Type of Day Is Price of Progress in Post-Pandemic Stocks

Brief: The Nasdaq 100 Index trades for 38 times earnings. Abby Joseph Cohen says it’s a market with “no margin for error.” It’s only July, and the S&P 500 Index has put in a gain that most fund managers would consider a stellar year. So when big drops like Tuesday’s land with no obvious bad news to explain them, it’s useful to consider how far the market has already come. “It’s priced to short-term perfection,” said Kim Forrest, founder and chief investment officer at Bokeh Capital Partners. “Was yesterday the high? Because that’s what everyone is acting on. I don’t believe yesterday was the high of the year,” she added, citing views on earnings over the next six months.

READ MORE...


Everyone Is Losing It Over Inflation. Except Financial Markets

Brief: It’s everywhere. At the White House. In consumer data. On earnings calls: Anxiety that inflation is about to gut the economy. Two places it isn’t are the stock and bond markets, where investors have taken Jerome Powell’s “transitory” mantra to heart. Breakeven rates -- a gauge of bond market inflation expectations -- have barely budged in a month, even after the hottest price print in more than a decade. Meanwhile, tech giants -- thought to be vulnerable to a pickup in price pressures -- have overpowered cyclical shares, which normally fare better in an inflationary environment. The divide highlights a dynamic that has persisted since pandemic lockdowns began 16 months ago: Economic hardships crimping companies real time, while markets stay calm on grounds this too shall pass. So far it’s been a winning strategy for investors, who stood firm amid the deepest recession in generations and now seem bent on reprising the high-wire act as the latest stresses play out.

READ MORE...


Contact Castle Hall to discuss due diligence
 
Castle Hall has a range of due diligence solutions to support asset owners and managers as our industry collectively faces unheralded challenges. This is not a time for "gotcha" due diligence - rather this is a time where investors and asset managers can and should work together to share best practices and protect assets. Please contact us if you'd like to discuss any aspect of how Covid-19 may impact your business.

Our briefing for Tuesday, July 27, 2021:

  • In the United States, travel restrictions will remain in place as the country continues to deal with the delta variant and rising coronavirus case numbers. The first round of travel restrictions was imposed by the U.S. on China in January 2020 to address Covid-19. Since then, more countries have been added and the ban now applies to most non-U.S. citizens who recently visited the U.K., the 26-nation Schengen bloc in Europe, Brazil, Ireland, India, Iran and South Africa. The announcement comes amid lobbying from airlines and the tourism industry to lift the restrictions before the end of summer. The Biden administration has not offered any indication as to when the restrictions might change.
  • In Canada, two Ontario ministers have asked Ottawa to ensure mixed vaccines will be recognized for international travel. Health Minister Christine Elliott and Solicitor General Sylvia Jones wrote to Intergovernmental Affairs Minister Dominic LeBlanc on Sunday. They asked the federal government to work with the World Health Organization to help guide international partners, so that they will recognize mixed vaccines as an accepted regimen. Ontario and other Canadian provinces have allowed citizens to mix Pfizer-BioNTech and Moderna vaccines, or to take an mRNA shot after a first of the Oxford-AstraZeneca vaccines.
  • In the United Kingdom, an expert from the Scientific Advisory Group for Emergencies (Sage) says the worst of the pandemic could be over by late September. Epidemiologist Neil Ferguson says it’s still too early to tell what effect the July 19 unlocking in England will have, but that vaccines are having a major impact. “We’re not completely out of the woods, but the equation has fundamentally changed. The effect of vaccines is hugely reducing the risk of hospitalisations and death. And I’m positive that by late September or October time we will be looking back at most of the pandemic,” he said. “We will have Covid with us, we will still have people dying from Covid, but we’ll have put the bulk of the pandemic behind us.”
  • In Spain, although the incidence rate of Covid-19 cases continues to rise, officials are starting to see some positive signs. The 14-day incidence rate reached 700 infections per 100,000 inhabitants on Monday, the highest rate registered in Spain since February 5. Deputy Health Minister Silvia Calzon told a press conference that 65% of new cases were among people below the age of 40, based on the way Spain has prioritized its vaccination program by age groups. “It looks like we are starting to observe a deceleration in the incidence's rhythm of growth,” she said. 
  • In Japan, just days after the Olympics began, Tokyo reported its highest number of new coronavirus cases. On Tuesday the city reported 2,848 new cases, which exceeds their former record of 2,520 cases set in January. According to experts, the sharpest increase in cases has been among younger, unvaccinated people. Japan’s vaccination drive has been slow and began late, according to the government 25.5% of Japanese have been fully vaccinated. The city of Tokyo is still under its fourth state of emergency, which will continue through to the end of the Olympics.
  • In Australia, the state of Victoria announced they will lift their lockdown restrictions after successfully curbing the spread of Covid-19. The neighbouring state of New South Wales reported 172 new Covid-19 cases in a 24-hour period on Tuesday, a new daily record. Victoria reported just 10 new cases on Tuesday, and all had been in quarantine while they were infectious.  Pubs, restaurants and schools will reopen in Victoria, although people will not be allowed to have visitors in their homes for another two weeks.

Covid-19 – Due Diligence And Asset Management

Private Equity ‘a Shot in the Arm’ for Middle Market Businesses

Brief: In a recent snap poll by audit, tax and consulting firm RSM, almost three quarters (74 per cent) of private equity backed middle market businesses said that their investor has had a positive effect on their firm’s future prospects. Nearly seven in 10 (69 per cent) believed their private equity investor had a positive effect on their firm’s resilience during the global Coronavirus pandemic, as communication between businesses and investors increased for nearly three fifths of the companies (68 per cent). With 59 per cent of businesses saying that the pandemic has had a negative or very negative effect on trade, the findings highlight that the strength and guidance private equity investment brings has supported growing middle market businesses throughout a difficult year.

READ MORE...


The Firms Keeping Investors in the Know in Latin America

Brief: When the Covid-19 pandemic shut the world down last year, there was little time for anyone to adapt. But for the business of corporate access — which until last year connected investors and companies largely through travel and in-person events — the transition was especially stark. For Brazilian provider BTG Pactual, this happened in the middle of a roadshow where, after one day of meetings, the event went instantly, if unexpectedly, virtual on the second day. “Companies from their end understood that they had to be in contact with investors and clients and converted their interactions to online meetings as well,” recalls Carlos Sequeira, head of research at BTG Pactual. “Our straight relationship with IR and management teams helped to enhance the events calendar with several online group meetings since the first week of lockdown.”

READ MORE...


Hedge Fund Investors Pleased After Best Start To A Year Since 2009

Brief: The vast majority of hedge fund investors were pleased with the performance of their funds during the first half of this year, according to a new study from HFM and the Alternative Investment Management Association (AIMA). As a result, more than one-third of investors are planning to boost their allocation to hedge funds. The study is based on surveys and interviews with 108 investors in alternatives and 128 senior hedge fund investor relations and marketing professionals during the second quarter. With an 8.9% average return, hedge funds reported their most robust first half of a year since 2009, which is one reason investors were so pleased with their fund returns. HFM and AIMA also said investors have been rewarding hedge funds for their performance as inflows in the first five months of the year amounted to $57.8 billion, more than double the $23.4 billion recorded in the first five months of 2021.

Read more...


Europe's venture capital market booming in 2021

Brief: The last 16 months have provided every aspect of society with an unprecedented challenge, yet Europe's venture capitalists are fuelling a red-hot market that looks to be anything but challenged. While the startup market is booming globally, Europe's scene of private startup investment deserves close attention for the particularly astounding rate at which innovation is accelerating. According to Dealroom's latest report, Europe is the fastest growing major region by venture capital investment - outpacing both the US and China -  with investment in European startups having grown by 2.9x YoY to EUR49 billion in the first six months of 2021 alone.

READ MORE...


IMF Forecasts 6% Global Growth This Tear as Economies Reopen

Brief: The International Monetary Fund is sharply upgrading its economic outlook this year for the world’s wealthy countries, especially the United States, as COVID-19 vaccinations help sustain solid rebounds from the pandemic recession. But the 190-country lending agency has downgraded its forecast for poorer countries, most of which are struggling to vaccinate. Overall, the IMF said Tuesday that it expects the global economy to expand 6% this year — a dramatic bounce-back from the 3.2% contraction in the pandemic year of 2020. The IMF's forecast, unchanged from its previous estimate in April, would mark the fastest calendar-year global growth in records dating to 1980.

READ MORE...


Contact Castle Hall to discuss due diligence
 
Castle Hall has a range of due diligence solutions to support asset owners and managers as our industry collectively faces unheralded challenges. This is not a time for "gotcha" due diligence - rather this is a time where investors and asset managers can and should work together to share best practices and protect assets. Please contact us if you'd like to discuss any aspect of how Covid-19 may impact your business.

Our briefing for Monday, July 26, 2021:

  • In the United States, the nation’s top infectious disease expert has warned that the country is going “in the wrong direction” as they struggle with rising coronavirus case numbers. Dr. Anthony Fauci said in an interview with CNN’s State of the Union program that vulnerable people who are unvaccinated are driving up the numbers. “It’s really an outbreak among the unvaccinated…which is the reason why we’re out there practically pleading with the unvaccinated people to go out and get vaccinated,” Fauci said.  He said government experts are still considering whether to recommend booster shots for people who are vaccinated.
  • Canada’s central bank will adopt a hybrid working model once it is safe for employees to return to the office. The Bank of Canada has said they will permanently allow their employees to work 50% of their hours remotely. They will continue to follow public health guidelines as they prepare for their offices to reopen, and will not mandate vaccines or expect employees to show proof of vaccine. The announcement comes at a time when employers across the country are in the process of developing return-to-work plans as provinces ease lockdown restrictions.
  • In the United Kingdom, case numbers have fallen for five days in a row, for the first time since February. It’s also the first time since the start of the pandemic that a national lockdown has not been in alignment with the sustained drop in cases. The U.K. reported 29,173 cases on Sunday, down from 48,161 reported a week earlier on July 18. Experts have said that warm weather could be partially responsible for the drop in case numbers, as more people are socializing outside. These figures don’t include the impact of the July 19 easing of restrictions.
  • In Germany, Chancellor Angela Merkel’s chief of staff says restrictions for unvaccinated people may be required if case numbers rise in the coming months. Chief of Staff Helge Braun told a newspaper that he doesn’t expect Germany will have another lockdown, but that unvaccinated people may be barred from restaurants, movie theaters and other venues because the risk is too high. Approximately 60% of Germans have had at least one dose of vaccine, while about 48% are fully vaccinated. Case numbers have been on the rise in Germany since early July, largely because of the spread of the delta variant.
  • In France, President Emmanuel Macron called for unity as people protested the government’s Covid-19 health pass over the weekend. The health pass requires people to show proof of vaccination, a negative test or recent recovery from Covid-19, in order to access restaurants and public venues, or when undertaking domestic travel. Around 160,000 people protested across the country on Saturday, expressing that the government shouldn’t tell them what to do. Macron said the protesters are “free to express themselves in a calm and respectful manner,” but he warned that demonstrations won’t end the pandemic.
  • In Australia, thousands of people marched over the weekend in an anti-lockdown protest that turned violent in central Sydney. State Police Commissioner Mick Fuller said around 10,000 people called the police hotline to report people breaching Covid-19 restrictions. Fuller said the calls were “an amazing outcry by the community, not just in terms of their disgust at the protest but at the way police were treated.” Protesters were opposing lockdown measures that were put in place over a month ago in Sydney to try to contain the delta variant. Currently only about 16% of Australians over the age of 16 are fully vaccinated.

Covid-19 – Due Diligence And Asset Management

New COVID variants tops list of market concerns - Deutsche Bank sentiment survey

Brief : New COVID variants now tops the list of concerns for financial markets, followed by inflation and economic growth, according to Deutsche Bank's monthly market sentiment survey for July published on Monday. A surging Delta variant of the coronavirus has rattled markets in recent weeks, fuelling concerns that world economic growth may have peaked. In a Deutsche Bank survey conducted July 21-23 covering around 550 market professionals globally, over 60% of respondents said they viewed new variants as more worrisome than they did back in April when it was last the top risk.

READ MORE...


Goldman Expects U.S. Economic Growth to Slow Sharply Next Year

Brief: U.S. economic growth will likely slow significantly in 2022 as the services sector’s recovery fades, according to Goldman Sachs Group Inc. The U.S. bank expects the world’s biggest economy to return to trend-like expansion in the second half of next year. It also cut its forecast for gross domestic product growth in the final two quarters of 2021 by one percentage point to 8.5% and 5% respectively. “Until a couple of months ago, our GDP growth forecast had been distinguished for the prior year by being well above consensus expectations,” economists led by Jan Hatzius wrote in a report to clients. “At this point, our forecast is instead distinguished from consensus expectations by the sharpness of the deceleration that we expect over the next year and a half,” they wrote

READ MORE...


Everybody take the week off, Wall Street firm tells staff

Brief: No calls, no emails and no meetings. That's the order this week from Aquiline Capital Partners to its staff. The private equity firm is putting all employees on vacation, people familiar with the matter said. It's an unusual move intended to recognize employees and avoid burnout from the physical and mental pressure of the COVID-19 pandemic and the frenetic pace of dealmaking. Aquiline has more than $6 billion in assets and over 60 employees in its New York headquarters and London office. The firm has canceled all internal meetings for the week and told employees to refrain from calls, emails and chatroom messages, the sources said. If a company owned by Aquiline has an emergency, an employee will step in, one added

Read more...


Jeremy Grantham's GMO says stocks are overvalued by every metric, but there are 3 strategies investors can use to weather a crash

Brief :Billionaire Jeremy Grantham's investment firm says stocks are too pricey, outlining their view as US equities sit at record highs, with the team offering their advice on how to navigate through what they call a global growth bubble. "Global equity markets rallied impressively in the quarter, pushing some year-to-date numbers into double-digit territory only halfway through the calendar year," said GMO in its second-quarter outlook published this week. Grantham, co-founder of investment firm Grantham, Mayo, van Otterloo & Co., is a legendary investor who is well known for calling for a burst of the 1989 Japanese asset-price bubble, the 2000 tech bubble, and the 2008 real-estate bubble.

READ MORE...


Churchill AM's Schwimmer: The Covid-19 crisis from a lender perspective

Brief: PEWire spoke to Randy Schwimmer, who heads up senior lending origination and capital markets at Nuveen affiliate Churchill Asset Management, to hear how he experienced the lending market throughout the crisis and how it keeps evolving into 2021. Churchill AM is structured as a private equity firm and is headquartered in New York but works with clients globally, and provides structuring, credit analysis, equity, debt, and capital investment to middle market companies, primarily those owned by private equity investment firms. From Schwimmer's perspective, he noted that the period going into 2020 was tainted with a certain degree of apprehension.

READ MORE...


Contact Castle Hall to discuss due diligence
 
Castle Hall has a range of due diligence solutions to support asset owners and managers as our industry collectively faces unheralded challenges. This is not a time for "gotcha" due diligence - rather this is a time where investors and asset managers can and should work together to share best practices and protect assets. Please contact us if you'd like to discuss any aspect of how Covid-19 may impact your business.

Our briefing for Friday July 23, 2021:

  • In the United States, three states account for almost 40% of the country’s new Covid-19 cases, CNN reports. White House Coronavirus Response Coordinator Jeff Zients says every person who gets vaccinated helps bring the pandemic to an end. "This week, just three states Florida, Texas and Missouri, three states with lower vaccination rates accounted for 40 per cent of all cases nationwide," Zients said at a White House news conference. "For the second week in a row, one in five of all cases occurring in Florida alone. And within communities, these cases are primarily among unvaccinated people." Right now the U.S. is averaging 34,056 new Covid-19 cases per day.

  • In Canada, the debate over whether or not there should be mandatory vaccines for healthcare workers is growing. France has required all healthcare workers to get vaccinated by September 15, while Italy and Greece have taken similar approaches. Healthcare workers were among the first to have access to vaccines in Canada. While the Ontario Medical Association and the Registered Nurses’ Association of Ontario call for mandatory vaccines for healthcare workers in Ontario, the province’s premier is against it, saying healthcare workers have a “constitutional right” to opt out of vaccination. 

  • In the United Kingdom, experts say more effort is needed to encourage young people to get the vaccine. In England, less than 60% of 18-25 year-olds have had their first dose, though the latest data from Public Health England (PHE) shows that case rates are highest among people in their 20s. Adults over the age of 18 have been eligible for Covid-19 vaccination since June 18. In response to the slowing vaccine uptake among young people Prime Minister Boris Johnson announced that crowded venues, such as nightclubs, may soon require patrons to be fully vaccinated in order to enter.

  • Spain is considering administering a third dose of vaccine, its health minister said, though she did not determine a timeframe. “Everything seems to suggest that we will have to [give a third dose]”, said Health Minister Carolina Darias. She also added that she expects people will have to take annual vaccines for Covid-19 “without a doubt.”  Spain has vaccinated 52.8% of the population, while 63.7% have had at least one dose. The World Health Organization recently came out against booster shots, saying that it’s more important to get vaccines to poorer countries.

  • In South Korea,  the government has said it will shut down a rally that planned to defy Covid-19 restrictions. The Korean Confederation of Trade Unions (KCTU) expected to hold the rally in Wonju, a rural city about 100 km east of Seoul.  The city of Wonju updated their restrictions to the highest level on Thursday at midnight, banning public rallies.  The South Korean government was recently criticized for being too lenient over a larger KTCU rally that took place on July 3, while at least three people have now tested positive as a result of the rally. 

  • New Zealand has suspended its quarantine-free travel bubble with Australia, as the country struggles with its latest Covid-19 outbreak. The travel pause will apply to all of Australia and will last for at least eight weeks.  Th government of New Zealand held an urgent cabinet meeting on Thursday to discuss the decision. At the press briefing on Friday Prime Minister Jacinda Ardern said the delta variant has made things more dangerous than when the bubble first opened. “Covid has changed, and so must we,” she said.

Covid-19 – Due Diligence And Asset Management

Investors Eye COVID-19 Spread, Golden Cross to Gauge U.S. Dollar Trajectory

Brief : A rally in the U.S. dollar has investors looking at a broad range of factors -- from global COVID-19 infections to yield gaps -- to determine whether the greenback will continue appreciating. The dollar is up 4% from its lows of 2021 and is among the world's best performing currencies this year, boosted by last month's hawkish shift from the Federal Reserve, burgeoning inflation and safe-haven demand driven by COVID-19 worries. Because of the dollar’s central role in the global financial system, its moves ripple out towards a broad range of asset classes and are closely watched by investors. For the United States, a period of sustained dollar strength would be a double-edged sword, helping tamp down inflation by increasing the currency's buying power while denting the balance sheets of exporters by making their products less competitive abroad.

READ MORE...


Stocks Climb To All-Time High at End of Wild Week

Brief: Another raft of blockbuster corporate profits pushed stocks toward a record at the end of a week that started with concern about a peak in earnings and a coronavirus resurgence. About 87 per cent of the S&P 500 companies reporting results so far this season have beaten Wall Street estimates, according to data compiled by Bloomberg. Twitter Inc. and Snap Inc. led a rally in social-media firms as sales blew past forecasts, while American Express Co. jumped after adding a record number of new customers to its tony Platinum card in the second quarter. Stocks extended their weekly advance, with most major groups moving higher. While the rapid spread of the delta variant has sown volatility in financial markets, thus far economists are maintaining their forecasts for a historically strong U.S. recovery. A measure of activity at U.S. service providers settled back in July to a five-month low, a separate manufacturing gauge climbed to a fresh record.

READ MORE...


Bank of Canada to Allow 50% Remote Work as Employees Return

Brief: The Bank of Canada will allow most of its employees to work remotely as much as 50 per cent of the time once public health guidelines allow it to fully reopen its offices.A limited number of staff are currently working in the central bank’s offices in Ottawa. The coronavirus pandemic has eased in Canada, with vaccinations rising and cases dropping, so the bank expects to bring back many employees after the summer. But it doesn’t see a return to normal conditions until 2022, an official said. “More employees will be allowed access over the fall, in line with federal and provincial public health guidelines. Based on current conditions, we are not anticipating full on-site staffing levels until the new year,” Chief Human Resources Officer Alexis Corbett said in an email. The 50 per cent guideline will be measured over two-week periods.

Read more...


NYC Hotels See Busiest Week Since Pandemic Struck, Mayor Says

Brief : New York City’s hotel industry is starting to revive as tourists return, driving demand for rooms to the highest since the city became an epicenter of the pandemic in March 2020, Mayor Bill de Blasio said. City hotels sold more than 481,000 room nights last week, a 17,000 increase from the previous week, de Blasio said. Visits to the Statue of Liberty were up 22% last week compared with the last week in June, and the mayor said the city is on its way to exceeding its weekly goal of 500,000 hotel room nights. “We need to see our economy coming back, our jobs coming back,” de Blasio said during a Thursday news briefing, when he spent much of the time promoting musical concerts intended to draw visitors back.

READ MORE...


A New Secondary Market Is Rising Out of Pandemic-Fueled Changes to Real Estate

Brief: A still-fledgling secondary market for private real estate funds is getting a big push forward from institutional investors eager to invest in newly hot areas of real estate and sell off other, less desirable parts of the sector. “Secondaries are really coming into their own. Covid just accelerated the increase,” said Eric Adler, president and CEO of PGIM Real Estate. “Some investors want to stay in real estate, but others want out. Secondaries are becoming a good solution.” In private markets, secondaries trading allows investors to buy and sell fund stakes at any point in that fund’s life, rather than stay in a vehicle designed to be held for a decade or more.

READ MORE...


Contact Castle Hall to discuss due diligence
 
Castle Hall has a range of due diligence solutions to support asset owners and managers as our industry collectively faces unheralded challenges. This is not a time for "gotcha" due diligence - rather this is a time where investors and asset managers can and should work together to share best practices and protect assets. Please contact us if you'd like to discuss any aspect of how Covid-19 may impact your business.

Our briefing for Thursday July 22, 2021:

  • In the United States, the government announced that the land border will remain closed to non-essential travel until August 21st, shortly after Canada announced it would open its border to fully vaccinated American travellers on August 9th. The existing U.S. border restrictions have been in place since March 2020 and were set to expire on Wednesday. Canadian Prime Minister Justin Trudeau said it’s not up to Canadians to “dictate” how the United States reopens its border. “I think every country should and does set its own border policies. We have been working with the United States to keep them informed to make sure that as much as possible our choices are aligned, but you will have seen, everyone will have seen that our countries took different approaches certainly during the beginning of the pandemic,” he said.
  • In Canada, the demand for vaccines has slowed, according to statistics provided by Our World in Data. Less than one per cent of Canadians were vaccinated per day over the last week, a decrease from the all-time high of 1.44 per day at the end of June. The drop is to be expected considering almost 80% of the population has now had at least one dose of vaccine. A new poll by Leger and the Association for Canadian Studies suggests that the majority of Canadians believe proof of vaccination should be required for all travellers. Travellers should be required to show a “vaccine passport” according to 58% of survey respondents, while about 30% say the document is not necessary.
  • The world is watching the United Kingdom, as they continue to live without Covid-19 restrictions while cases numbers rise. The daily numbers have been close to 50,000, higher than those reported in Brazil, India or South Africa. Nadhim Zahawi, the vaccine deployment minister, announced the rollout of the National Health Service (NHS) Covid-19 pass, which may soon be required at events where there are large numbers of people. “For proprietors of venues and events where large numbers are likely to gather and likely to mix with people from outside their households for prolonged periods, deploying the pass is the right thing to do,” Zahawi said. “The pass has an important role to play in slowing the spread of the virus and so we reserve the right to mandate its use in the future.”
  • France rolled out their Covid-19 health pass on Wednesday as new infections soared. People wanting to visit cultural venues like museums or cinemas now have to present the pass in order to do so. To get the pass, French citizens must show proof that they are fully vaccinated, have tested negative for the coronavirus or recovered from Covid-19. In August, the pass will be extended to include restaurants and shopping centres. On Tuesday France reported over 18,000 new infections in a 24 hour period. Authorities have warned that the rise in cases means France has officially entered a fourth wave of infections. 
  • In Germany, Chancellor Angela Merkel is urging citizens to get vaccinated as the country anticipates another rise in coronavirus case numbers. Although Germany’s infection rate remains very low compared to most European countries, Merkel says the numbers are rising with “worrying momentum.” Slightly over 60% of the German population has received a first dose of vaccine, while about 48% are fully vaccinated.  While she encouraged Germans to stick to mask wearing and social distancing rules, Merkel said vaccination is the only way out of the pandemic. “We all want our normality back,” she told reporters. “But we won’t get this normality back alone, only as a community. And for this we need significantly more vaccine protection.”
  • In Japan, Tokyo has hit a six-month high for new Covid-19 cases, just before the Olympic opening ceremony. There were 1,832 new cases reported on Wednesday, the highest number reported since January. Experts have warned that infections will likely worsen in the coming weeks, and noted that cases are rising among younger, unvaccinated people. The African country of Guinea pulled out of this year’s Olympics, citing concerns about Covid-19 and the need to protect the health and safety of their athletes.

Covid-19 – Due Diligence And Asset Management

Hedge Fund Assets Near USD4 Trillion as Fresh Inflation Fears Push Investors Towards Alternatives

Brief : Growing numbers of investors are turning to hedge funds to protect their portfolios in the face of inflationary fears, with total industry capital swelling to almost USD4 trillion and more allocators set to tilt towards alternative assets, new research shows. Alternatives technology provider Vidrio Financial’s latest allocator market survey suggests inflation fears during the first half of 2021 are driving further allocations to alternative asset classes, such as hedge funds and private equity, which have historically outperformed equities and bonds during periods of inflation. The Vidrio Financial Allocator Market Survey quizzed some 4,500 institutional investors globally in late June, collectively representing USD100 billion in assets under management and split roughly 60/40 between North America and EMEA,

READ MORE...


Investors Unlikely to Reward Pandemic-Boosted Canadian Bank Results: Analyst

Brief: Long-time Bay Street banking analyst Nigel D’Souza doesn’t think investors are poised to reward Canada's Big Six banks for their upcoming financial results that may see a boost from pandemic-related factors. D’Souza, the financial services investment analyst at Veritas Investment Research, said in a broadcast interview Wednesday that investors would likely look through the pandemic-related noise towards a more normalized operating environment, which could limit the upside for shares of the Big Six banks. “We think the market is no longer going to reward banks that do well on earnings based on temporary pandemic-related factors such as record or elevated capital market revenues and significant credit loss reversals,” he said.

READ MORE...


Embedded as a Risk, New COVID Cycle Could Challenge Fed, Recovery

Brief: Five weeks after dropping its reference to the coronavirus as a weight on the economy, the U.S. Federal Reserve is confronting a challenging new rise in cases that has fueled doubts about the global recovery and is already forcing other central banks to consider retooling their policies. The daily pace of new infections has more than doubled since the Fed's June 16 policy meeting, when Chair Jerome Powell said that while it was "premature to declare victory" given the appearance of the more infectious coronavirus Delta variant, a decline in infections, hospitalizations and deaths "should continue." It hasn't, and while the worst current outbreaks have been localized, news of rising case loads once again straining hospital capacity spilled into financial markets with a sharp Monday sell-off.

Read more...


Morgan Stanley: 'No Need' to Lower GDP Forecasts on Delta Variant Risks

Brief : The surge in COVID-19 cases from the Delta variant is not yet substantial enough to darken the U.S. economic outlook, said Morgan Stanley’s top U.S. economist. “I feel no need to take down GDP growth forecasts on the risks around the Delta variant,” Ellen Zentner told Yahoo Finance on Wednesday. “I think we’ve done a good job of self-policing all through COVID and that means it can dampen some of the effects.” On Monday, rising case counts rattled equity markets as the major stock indexes logged their worst declines since May. The fear: that the reinstatement of mask mandates in some corners of the country could foreshadow the return of lockdowns if the spread gets worse. Markets largely reversed those losses on Tuesday.

READ MORE...


Hedge Fund Born in Pandemic Reaps 23% Gain From AMC, Hertz

Brief: Hedge fund manager Dan Gropper was short AMC Entertainment Holdings Inc. when the Redditors began their moon launch of the movie theater chain. Just six months into running a new fund, he decided he wouldn’t be going down like that. Gropper, who had managed money at Aurelius Capital Management and Fortress Investment Group before starting Carronade Capital Management, covered 20% of his short on Jan. 26, when AMC closed under $5, and the rest a day later, as the stock soared to $20. AMC wasn’t even a directional short bet for Carronade, a multi-strategy credit fund that now runs $300 million. It shorted the stock as a hedge on an investment in AMC’s second-lien debt, which had been trading at deeply distressed levels. Gropper started buying the bonds at around 20 cents on the dollar, said a person familiar with the matter.

READ MORE...


Contact Castle Hall to discuss due diligence
 
Castle Hall has a range of due diligence solutions to support asset owners and managers as our industry collectively faces unheralded challenges. This is not a time for "gotcha" due diligence - rather this is a time where investors and asset managers can and should work together to share best practices and protect assets. Please contact us if you'd like to discuss any aspect of how Covid-19 may impact your business.

Our briefing for Wednesday July 21, 2021:

  • In the United States, the delta variant now accounts for an estimated 83% of all new coronavirus cases, according to the U.S. Centers for Disease Control and Prevention (CDC). “This is a dramatic increase, up from 50% for the week of July 3,” said Director Dr. Rochelle Walensky in a Senate Committee hearing. Walensky said that the percentage is even higher in some regions where vaccination rates are low. Although vaccines are proven to be effective against the delta variant, CDC data shows that less than half of the U.S. population is fully vaccinated.

  • In Canada, a new report shows that Canadians are anxious about returning to their workplaces after the pandemic. The latest LifeWorks Mental Health Index is based on 3000 survey responses collected online between May 28th and June 4th, 2021. According to the report, 25% of respondents said they are not clear about their employer’s return to work plan. These respondents reported lower mental health scores compared to those who said their employers had a sound return-to-work plan. Approximately 38% expect to return to their pre-pandemic work environments, while 17% said they believe they will be allowed to work remotely. 

  • In the United Kingdom, scientists are warning that mask wearing and other coronavirus restrictions could be reimposed in as early as three weeks, if hospital admissions continue to rise. Members of the Scientific Advisory Group for Emergencies (Sage) have said the prime minister should be prepared to reintroduce restrictions in the first week of August, to avoid excessive pressure on the National Health Service (NHS). On Tuesday, there were 46, 558 new cases, and 96 deaths, the highest daily death toll in nearly four months. Prime Minister Boris Johnson hasn’t ruled out the idea of reimposing restrictions, although he did say he wanted to avoid it.

  • In Italy, the government is expected to impose new restrictions on unvaccinated people as they try to curb the spread of the delta variant. Similar to the rules in France, the government may require people to be vaccinated in order to access some public spaces like indoor restaurants and bars, stadiums and cinemas. They are expected to make showing a “green pass” mandatory for passengers on domestic flights and long-distance trains. The government is expected to finalize their plans this week and changes could take effect as early as July 26th.

  • South Korea continues to grapple with the delta variant as cases surged this week. The country reported 1,784 new cases on Tuesday, breaking its previous record set last week. According to data from the Korea Disease Control and Prevention Agency (KDCA), genetic analyses of 2,381 cases last week found that nearly 40% were the delta variant. So far 32% of South Koreans have received at least one dose of a coronavirus vaccine, while the government hopes to vaccinate 70% by September. Despite the high case numbers, there have been no increases in hospitalizations or deaths.

  • In Australia, Prime Minister Scott Morrison refuses to apologize for the way his government handled the country’s vaccine program. To date, just over 11% of Australians are fully vaccinated. Frustrations are growing as 13 million people (more than half the population) are now living under lockdown. “We have had our problems, there is no doubt about that, and they are problems that are not always things within our control, that is the nature of Covid-19,” Morrison said during a radio interview. Morrison says his government has been focused on resolving the issues around the vaccine rollout.

Covid-19 – Due Diligence And Asset Management

What Companies Can Do To Mitigate Gender Parity Damage of Pandemic

Brief : The pandemic has set back gender equality on company boards in the UK by as much as four years, with new research suggesting that parity between male and female members won’t be reached until 2036. The annual Women Count report, published by consultancy The Pipeline, found that progress in boosting gender diversity has slowed significantly over the past year, with men now holding 78% of all executive committee roles in the FTSE 350 – and women holding just 22% of positions. Although women are in a better position than five years ago, the pandemic has slowed the rate of change. In 2021, we witnessed an increase of 2.5% on the previous year, but in 2020 this same annual measure was 2.7%.

READ MORE...


United Air Sees Profit on Horizon Despite Renewed Virus Fear

Brief: United Airlines Holdings Inc. expects to end a year and a half of losses this quarter despite rising investor anxiety about whether COVID-19 infections will upend a travel resurgence. The forecast for an adjusted pretax profit in the third quarter and another in the fourth quarter excludes any benefit from billions of dollars in federal airline aid, United said in a statement Tuesday as it reported earnings. While the carrier didn’t quantify how much it expected to earn, any profit would top the second-half losses expected by Wall Street. “Our airline has reached a meaningful turning point: We’re expecting to be back to making a profit once again,” United Chief Executive Officer Scott Kirby said in the statement.

READ MORE...


NatWest Chairman Says London Office Life Will Never Return

Brief: The changes wrought by the pandemic on U.K. office life are here to stay, according to the chairman of one of the country’s biggest banks. NatWest Group Plc’s Howard Davies said in a Bloomberg TV interview Wednesday that he doesn’t expect central London’s footfall to revert to pre-pandemic levels as office workers resist a return to five days a week in the office and the daily commute. “The days when 2,500 people walked in through our office door at Bishopsgate at 8:30 a.m. and then walked out again at 6 p.m., I think that is gone,” Davies said. While some workers -- particularly traders -- may remain desk-bound, the majority of NatWest’s staff are expected to come in only intermittently, he said.

Read more...


Stock Market is at Risk of a Correction if This Happens Amid the Spread of the Delta Variant

Brief : Most Wall Street strategists agree that Monday's market rout — fueled by yawning worries about the fast-spreading COVID-19 Delta variant — should serve as a wake-up call to investors who have sent stock prices to record valuations. And they also generally agree on what could send stocks spiraling even lower from here — a subpar second quarter earnings season chock-full of concerning guidance due to the ongoing uncertainty of the pandemic. "This market is vulnerable to a bigger pullback or correction if there’s a new negative introduced, and that negative could be disappointing earnings," warns Sevens Report Research founder Tom Essaye in a research note to clients. "If corporate earnings calls warn about (1) margins (which was hinted at by a few companies) or (2) overall economic activity (if management says activity declined in late June as COVID cases accelerated) then that will combine with the other issues (stretched valuations, complacent investors, summer doldrum trading) to cause a real pullback or a correction of 10% or more."

READ MORE...


CN Reports Strong Earnings Growth as Rail Traffic Recovers From Pandemic

Brief: Canadian National Railway Co. reported a strong uptick in earnings and revenues in its second quarter as the company begins to recover from the COVID-19 pandemic. The Montreal-based railway earned $1.03 billion or $1.46 per share, up from $545 million or $0.77 per share in the first quarter of 2021. Excluding one-time items, adjusted profits were $1.06 billion or $1.49 per share, compared with $988 million or $1.28 per share in the first quarter. Revenue for the three months ended June 30 was $3.60 billion, up from $3.21 billion the previous quarter. The company also declared a dividend for its third quarter, of 61.5 cents per share to be paid in September.In 2020, CN was forced to build longer and heavier trains due to the sharp retreat in rail volumes and customer demand during the COVID-19 pandemic. The company said in a news release that as the economy rebounds, it has been able to revert to its standard operating plan and improve train speeds.

READ MORE...


Contact Castle Hall to discuss due diligence
 
Castle Hall has a range of due diligence solutions to support asset owners and managers as our industry collectively faces unheralded challenges. This is not a time for "gotcha" due diligence - rather this is a time where investors and asset managers can and should work together to share best practices and protect assets. Please contact us if you'd like to discuss any aspect of how Covid-19 may impact your business.

Our briefing for Tuesday July 20, 2021:

  • In the United States, stocks tumbled on Monday, as investors fear the economic impacts of a resurgence of the coronavirus pandemic. With new cases and hospitalizations on the rise, President Joe Biden begged for more people to get vaccinated during a speech he gave about the economy. The Dow Jones Industrial Average closed down 2.1%, the S&P 500 index fell 1.6%, and the yield on the 10-year United States Treasury bill fell to its lowest level in five months. Biden said that economic recovery will depend on the country’s ability to get the pandemic under control, and that four states with low vaccination rates accounted for 40% of all new coronavirus infections last week.
  • In Canada, the federal government announced that it will open the border to fully vaccinated Americans beginning on August 9th. Travellers from other countries can enter by September 7th. Travellers will have to upload proof of vaccination to the ArriveCAN app or website before they board their flights, and also carry the vaccination certificate with them. The rules are similar to those rules for Canadians returning from non-essential travel, where a 14-day quarantine is not required. The Canada-U.S. border has been shut down to non-essential travel since March 2020, with the restrictions renewed each month since.
  • After the United Kingdom lifted almost all of their Covid-19 restrictions on Monday, some businesses are warning of a “pingdemic,” as a large number of people are receiving notifications on their phones telling them to self-isolate. The National Health Service’s test and trace app tells people when they’ve come into close proximity with someone who tested positive for the coronavirus by “pinging” them on their phones. Now, some businesses are warning of staff shortages as so many people are self-isolating, some have had to shut down as a result of key staff being pinged. Beginning on the 16th of August, people will no longer have to self-isolate if they are pinged by the app, they will instead be advised to take a test as soon as possible.
  • In Brazil, Anvisa, the country’s health regulator, has approved trials with a third dose of the AstraZeneca vaccine. Anvisa said that approximately 10,000 volunteers will receive the third shot between 11 and 13 months after receiving their second shot. Millions of Brazilians are already struggling to get their second shot, approximately 3.1 million have not had it yet, despite being eligible for it, according to vaccine researchers. Only about 40% of Brazilians have had one dose of vaccine and just 15% are fully vaccinated.
  • In Japan, just days before the Olympic opening ceremony is scheduled to kick-off, Tokyo is reporting 71 cases of Covid-19 linked to the event. Tens of thousands of athletes, staff and media are arriving in Japan in the middle of a state of emergency, and events are scheduled to begin on Wednesday, two days ahead of the formal ceremony. Japanese Prime Minister Yoshihide Suga told International Olympic Committee members that Japan can deliver a successful event despite the world’s situation. “We will protect the health and security of the Japanese people,” he said.
  • In Australia, three out of six states are now under lockdown, as the delta variant continues to spread. South Australia is the latest to announce a seven-day lockdown, which will be statewide and include schools and the construction industry. “We hate putting these restrictions in place but we believe we have one chance to get this right,” South Australia Premier Steven Marshall said. The state of Victoria extended their lockdown yesterday, while New South Wales has been under lockdown since June 25th. Experts warn that Sydney could be facing an indefinite lockdown until everyone is vaccinated.

Covid-19 – Due Diligence And Asset Management

Slumping Stocks Might Derail Busiest-Ever Summer for IPO Market

Brief : The great IPO boom of 2021 has already smashed the record for the busiest summer ever, and there are plenty of big deals still to come. Now wobbly markets are threatening to cool the frenzy. Since the start of June, listings by the likes of F45 Training Holdings Inc., the provider of fitness classes backed by actor Mark Wahlberg, Membership Collective Group Inc., the company behind the Soho House members clubs, and ride-hailing giant Didi Global Inc. have raised more than $90 billion through initial public offerings, according to data compiled by Bloomberg. Stock indexes at record levels, until last week at least, and cash-rich investors have lured private equity sponsors and startup founders alike to the equity market. But now investors have been spooked by the resurgent coronavirus, sending the MSCI World Index down for six straight sessions, heading for its longest losing streak since the pandemic began.

READ MORE...


Moderna Stock 'Has Taken on a Life of its Own' Ahead of S&P 500 Entrance

Brief: Moderna (MRNA) is set to join the S&P 500 index on Wednesday, replacing Alexion Pharmaceuticals Inc. (ALXN). The stock has soared amid the pandemic after its vaccine became instrumental in the fight against coronavirus. Moderna stock has “taken on a life of its own,” Michael Yee, Managing Director and Senior Research Analyst at Jefferies, told Yahoo Finance (video above). “It's priced in a huge amount of assumptions over the next ten years that haven't played out yet. People believe it’s the Tesla of biotech.” That the biotech firm would be so well-recognized and valued at over $113 billion was no sure bet. For those who invested early in the company, that wager paid off.

READ MORE...


Delta Variant Will Likely Create a 'Sloppy' Stock Market This Summer: Strategist

Brief: A likely summer of concerning COVID-19 Delta variant headlines sets the stage for an ugly stock market in the near-term, said Keith Lerner, Truist Advisory Services' chief markets strategist. "Our view is we're seeing another corrective period within a bull market trend," Lerner said in a note to clients after Monday's brutal start to trading. "While the Delta variant complicates the near-term picture, and is likely to lead to a continuation of sloppy trading through the seasonally-weak summer months, our base case remains that the primary trend over the next 12 months remains higher." To be sure, Monday's session was quite sloppy as investors reassessed their risk appetite with growing COVID-19 infections globally at the hands of the Delta variant.

Read more...


JPMorgan’s Kolanovic Sees Reflation Trade Revival Coming Soon

Brief : The recent selloff in stocks set to benefit most from an improving economy has gone too far and a reversal is imminent, according to JPMorgan Chase & Co. chief global markets strategist Marko Kolanovic. The unwinding of the so-called reflation trade accelerated on Monday with the delta variant of the coronavirus quickly spreading and concerns flaring that the U.S. is reaching peak economic growth. Traders have been piling into growth sectors such as technology that are viewed as safe havens. But Kolanovic sees further gains in those value names that benefit from faster inflation as the global economy recovers from the pandemic.

READ MORE...


Hedge Fund Short Sellers Capitalise on UK ‘Freedom Day’ Fears as Rising Covid Rate Sinks FTSE Stocks

Brief: Hopes that the easing of most Covid-19 restrictions in England this week – with 19 July having been dubbed ‘Freedom Day’ – would help accelerate the UK’s nascent economic recovery were soured as travel, manufacturing and retail names were all dented. Travel and tourism-related stocks were among the hardest hit amid continued uncertainty surrounding the UK’s traffic-light quarantine system for travellers, which threatens summer holidays for many. EasyJet dropped 6.8 per cent and IAG, which owns British Airways, fell 5.5 per cent at one point. Hedge funds betting against EasyJet’s share price include AHL Partners and Kintbury Capital, according to FCA regulatory disclosures. Carnival – the cruise line operator which is one of DE Shaw’s short positions – also fell in value on Monday.

READ MORE...


Wall Street Eyes COVID-19 Delta Variant as Return to Office Looms

Brief: As the Dow Jones Industrial Average posted its worst day since October of last year over pandemic fears, FOX Business has learned that top executives at the Big Banks are closely monitoring the spread of the coronavirus Delta variant and how it may impact plans to re-open offices particularly in large urban areas such as New York City. People at banks such as JPMorgan, Morgan Stanley and Goldman Sachs say that so far they’ve made no changes to their re-opening plans. JPMorgan and Goldman have already told employees to begin to return to the office after about a year of at-home working during the worst of the pandemic. While Morgan Stanley has said it expects employees to return to the office after Labor Day.

READ MORE...


Contact Castle Hall to discuss due diligence
 
Castle Hall has a range of due diligence solutions to support asset owners and managers as our industry collectively faces unheralded challenges. This is not a time for "gotcha" due diligence - rather this is a time where investors and asset managers can and should work together to share best practices and protect assets. Please contact us if you'd like to discuss any aspect of how Covid-19 may impact your business.

Our briefing for Monday July 19, 2021:

  • In the United States, with coronavirus cases on the rise, the surgeon general raised concerns about the millions of people who are still unvaccinated. Dr. Vivek Murthy said in a CNN interview that he’s worried about the future, as the majority of coronavirus-related deaths are among unvaccinated people. He also mentioned social media networks, saying that they’re causing harm by spreading misinformation about vaccines. “We know that health misinformation harms people’s health. It costs them their lives,” Murthy said. President Joe Biden commented on Friday that social media networks were “killing people” by spreading misinformation. Facebook fired back on Saturday, saying it’s not their fault that Biden failed to meet his vaccination goals.

  • In Canada, the federal government is set to receive 7.1 million vaccine doses this week, as Canada adjusts its distribution strategy around increased supply and slowing demand. The new deliveries will include about 3.1 million doses of Pfizer and 4 million doses of Moderna. Canada’s vaccination rate remains among the highest in the world; as of Friday, almost 70% of Canadians had received at least one dose, and nearly 49% were fully vaccinated. Canada has also said it will donate 17.7 million doses of the AstraZeneca vaccine to the COVAX global vaccine-sharing alliance.

  • As the United Kingdom lifts their Covid-19 restrictions, Prime Minister Boris Johnson is urging caution. “Please, please, please be cautious. Go forward tomorrow into the next step with all the right prudence and respect for other people and the risks that the disease continues to present,” Johnson said in a statement on Sunday night. The removal of restrictions means nightclubs will be able to open for the first time since the UK first went into lockdown in March last year. Social distancing rule are gone, and face masks will no longer be required by law although they will be recommended in some public spaces.

  • In France, two vaccination centres have been ransacked as protests against coronavirus rules continue across the country.  Fire hoses were used to flood one site in the southeast of France while another in the southwest was partially destroyed by an arson attack, officials said. More than 100,000 people came out on Saturday to protest the government’s new rules which include mandatory vaccines for healthcare workers and vaccine health passes to access public spaces. The government is trying to curb the spread of the delta variant, which authorities fear could put pressure on hospitals if not enough people are vaccinated.

  • In South Korea, military aircraft were dispatched on Sunday to replace the crew of a naval destroyer, after nearly 70 of the 301 crew members tested positive for the coronavirus. Officials said aerial tankers will bring the new crew and then take home the 301 sailors who were taking part in an anti-piracy operation off the coast of East Africa. Officials say the offloaded crew will be taken to hospitals or quarantine facilities once they arrive back in South Korea. The outbreak comes as South Korea struggles with a rise in coronavirus case numbers that has placed the capital region under a strict lockdown.

  • Australia’s two largest cities, Sydney and Melbourne, are still under lockdown as Australia tries to curb the spread of the delta variant. Melbourne extended their lockdown on Monday, but state Premier Daniel Andrews hasn’t said how long it will last.  Sydney has been under lockdown since June 26th, with a planned end date of July 30th. On Saturday, New South Wales introduced new restrictions and ordered all non-essential stores to close. New South Wales recorded 111 new coronavirus cases in 24 hours, up from 97 the day before.

Covid-19 – Due Diligence And Asset Management

European Airlines Fall as COVID Variants Threaten Travel Revival

Brief : European airline and travel stocks tumbled Monday after Britain reimposed quarantine rules for people returning from France, stoking concern that the spread of coronavirus variants could halt a tourism rebound. U.K. discount carrier EasyJet Plc dropped as much as 6.5 per cent, British Airways owner IAG SA slumped 5.9 per cent, Ryanair Holdings Plc, which has its biggest hub at London Stansted airport, fell 4 per cent and package-holiday giant TUI AG slipped 4.3 per cent. Air France-KLM was down as much as 4.6 per cent. The declines were triggered by the British government’s decision late Friday to continue requiring fully vaccinated arrivals from France to isolate amid concern about the beta COVID variant, creating a new category between moderate and high-risk in its “traffic-light” system. As of Monday, inoculated U.K. residents returning from amber nations are no longer required to quarantine.

READ MORE...


BOE’s Haskel Says It Would Be a Mistake to Tighten Policy Now

Brief: Bank of England policy maker Jonathan Haskel signaled he remains opposed to paring back stimulus for the economy now, saying the U.K. faces headwinds from a tighter fiscal stance and from a surge in the delta variant of the coronavirus. The remarks indicate divisions on the central bank’s Monetary Policy Committee likely to play out next month as the eight-member panel debates how to respond to an unexpected jump in inflation above its 2% target. Two members of the MPC last week said the BOE should consider reining in its bond-buying program. Haskel, who for months has been on the dovish end of the debate, acknowledged that the pace of investment in the economy and productivity gains due to home working may reducing scarring from the pandemic. However, he said that the U.K. is still at risk from a rapid spread of the delta variant of Covid-19 and that much of the growth the U.K. has enjoyed was spurred by government support measures are now in retreat.

READ MORE...


COVID-19 Surge Sparks Bond Rally, Stocks on Worst Run in 18 Months

Brief: Investors moved away from risky assets on Monday as a rise in worldwide coronavirus cases crushed bond yields and left stocks facing losing streaks, with Wall Street falling more than 1%. New COVID-19 cases rose in England and Asia, with U.S. infections soaring 70% last week, dampening optimism on the economic recovery. The 10-year yield fell 8.7 basis points to 1.212%, a low last seen in February, while the S&P 500 fell for a third straight session. “Investors shed risk assets in early morning trading amid fears of a surge in COVID infections that have the potential to curtail global growth," said Peter Essele, head of investment management for Commonwealth Financial Network, in an e-mailed statement. "The risk aversion was most pronounced in the 10-year Treasury yield, which fell to its lowest level since the early days of 2021.

Read more...


Fund Managers Ride Out Pandemic by Sticking With Old Playbooks

Brief : Covid-19 upended almost everything, including the trajectory of the U.S. economy, which sank into one of the worst recessions in history and then rebounded into the fastest expansion in decades. One thing that barely changed this whole time? Professional stock pickers’ tastes. Active fund managers still favor stable growth stocks over cheap ones and are avoiding economically sensitive shares like banks and energy, just as they did during the market’s tumble in March 2020. Except for a growing aversion to industrial firms, managers’ preferences across sectors are almost identical to what they were almost 16 months ago, data compiled by Bank of America Corp. show. In fact, almost three-quarters of the same beloved stocks remain in their portfolios.

READ MORE...


Aegon Asset Management’s Pandemic-Era Makeover

Brief: In 2019, Bas NieuweWeme became the chief executive officer of Aegon Asset Management, a global firm with around $447.3 billion in assets under management. Soon after he joined, NieuweWeme got to work on streamlining the business. Then, the Covid-19 pandemic hit. About a year into his tenure and a month into a restructuring campaign, NieuweWeme’s original plan to globalize the active asset manager was derailed. So, as he told Institutional Investor, the firm adapted. In the past year, Aegon has retired two of its brands, eliminating some overlap between businesses.

READ MORE...


Contact Castle Hall to discuss due diligence
 
Castle Hall has a range of due diligence solutions to support asset owners and managers as our industry collectively faces unheralded challenges. This is not a time for "gotcha" due diligence - rather this is a time where investors and asset managers can and should work together to share best practices and protect assets. Please contact us if you'd like to discuss any aspect of how Covid-19 may impact your business.

Our briefing for Friday July 16, 2021:

  • In the United States, the number of Americans applying for unemployment benefits fell to its lowest level since the beginning of the pandemic. According to data from the US Bureau of Labour Statistics, claims fell by 26,000 to 360,000 last week. Numbers have been steadily falling since early January when they topped 900,000, which shows how quickly the U.S. is emerging from the pandemic recession. Some forecasters have even predicted that the economy will grow by approximately 7 per cent this year. Despite the recent rise in numbers, vaccine rollouts have been successful at reducing new viral cases.
  • In Canada, Brig.-Gen. Krista Brodie, the military general in charge of overseeing vaccine distribution across the country, says the supply of doses could potentially outweigh demand. She says Canada needs a “more nuanced” approach to distribution as provinces currently have an inventory of almost 9 million doses, and there are two million doses already being held back because provinces aren’t able to use them. The goal now is to avoid waste by not distributing doses that provinces don’t need, so that Canada can determine whether to start donating those doses to other countries.
  • As the United Kingdom inches closer to the end of all pandemic restrictions next week, or what some are calling “Freedom Day,” the government’s top medical advisor issued a warning. Chief Medical Officer Chris Witty warned people late Thursday not to underestimate how quickly the pandemic can bring trouble. Witty says hospitalizations could reach “quite scary” levels if current trends continue, where the number of people in hospital with Covid-19 is doubling about every three weeks. "We are not by any means out of the woods yet on this, we are in much better shape due to the vaccine program, and drugs and a variety of other things," he said. "But this has got a long way to run in the U.K., and it's got even further to run globally."
  • In Spain, infections are soaring in unvaccinated young people, as the country faces an uptick in numbers caused by the spread of the delta variant. Barcelona and the surrounding northeast corner of Spain are shutting down and imposing a curfew from 1 am to 6 am amid the rising case numbers. The regional government had already said on Thursday that it was looking to impose the restrictions, pending approval from the courts. This comes after the Spanish constitutional court ruled some lockdown restrictions imposed by the government were unconstitutional.
  • In the Netherlands, a music festival has led to over 1000 new coronavirus infections. The Verknipt outdoor festival, which took place in early July in Utrecht, was attended by over 20,000 people in two days. All attendees of the festival had to show either proof of vaccination or a negative Covid-19 test. While organizers insisted the event was carefully planned, the event exposed problems in the “test for entry” process. People were allowed to show negative Covid-19 tests up to 40 hours before the event. People were also allowed to get festival passes immediately after being vaccinated, when it actually takes several weeks for immunity to build.
  • In Australia, there have been some cases reported of fully vaccinated people contracting the delta variant. In New South Wales on Tuesday a nurse tested positive despite being fully vaccinated and wearing personal protective equipment. Experts are warning that such breakthroughs can happen, that vaccines are not perfect, and people can still get infected despite doing all the right things. New South Wales Chief Health Officer Dr. Kerry Chant confirmed on Friday that one of the 18 people in intensive care had received a single dose of AstraZeneca.

Covid-19 – Due Diligence And Asset Management

As stock prices peak, markets begin to fear looming threats

Brief : With the U.S. economy humming, corporate profits flowing and stock prices peaking, investors on Wall Street are beginning to pose an anxious question: Is it all downhill from here? Financial markets are always trying to set prices now for where the economy and corporate profits are likely to be in the future. And even though readings across the economy are still at eye-popping levels, investors see some areas of concern. New variants of the coronavirus are threatening to weaken economies around the world. Many of the U.S. government’s pandemic relief efforts are fading. Inflation is raging as supplies of goods and components fall short of surging demand. And the beginning of the end of the Federal Reserve’s assistance for markets is coming into sight.

READ MORE...


Sunak May Wait to Spring for Next Budget Key to U.K.’s Recovery

Brief: Rishi Sunak may wait until the spring to deliver his next U.K. budget, people familiar with the matter suggested, giving the Chancellor of the Exchequer time to assess the economic damage caused by the pandemic. After delivering his last budget in March, Sunak was expected to deliver a fresh spending blueprint in the fall, given his predecessor Philip Hammond had shifted the annual statement to that period from the spring in 2016 to give businesses more time to prepare for any tax changes in the new financial year. But on Friday, two people familiar with the matter left open the prospect of a spring budget, telling Bloomberg no decision had been taken on its timing.

READ MORE...


U.S. stocks fall as ebbing sentiment dents confidence

Brief: Stocks declined as an erosion in U.S. consumer sentiment added to concern about the sustainability of the economic expansion. Crude oil futures fluctuated and the dollar strengthened. Energy and material shares led the S&P 500 lower, reversing an earlier gain posed after a report showed June retail sales topped all estimates in a Bloomberg survey. The S&P has closed at either a gain or a loss every other day this week. Moderna jumped after the vaccine maker was named to the U.S. equity benchmark. The 10-year Treasury yield rose for the first time in three trading sessions. 

Read more...


Gundlach says the dollar is ‘doomed’ over the long term because of rising U.S. deficits

Brief : DoubleLine Capital CEO Jeffrey Gundlach offered a dire long-term assessment on the U.S. dollar Thursday, telling CNBC in an interview he thinks the greenback is “doomed.” “Ultimately, the size of our deficits — both trade deficit, which has exploded post-pandemic, and the budget deficit, which is, obviously, completely off the charts — suggest that in the intermediate term — I don’t really think this year, exactly, but in the intermediate term — the dollar is going to fall pretty substantially,” Gundlach said on “Halftime Report.”

READ MORE...


Wells Fargo Says Office Return to Look ‘Mostly’ Like Pre-Covid

Brief: Wells Fargo & Co., the U.S. bank with the most employees, is laying out a back-to-office plan set to begin in September, telling staff their schedules will look a lot like they did before the pandemic. The firm, which has almost 260,000 workers, will start calling those who have been working remotely back to the office on Sept. 7, and the process will continue through October, according to an internal memo Friday. It will also begin collecting employees’ vaccination statuses next week.“When we return, our schedules will mostly resemble our pre-pandemic working approach, with additional flexibility,” Chief Operating Officer Scott Powell wrote in the memo. “Choosing not to get vaccinated will not influence your ability to work remotely.”

READ MORE...


ESG in a time of crisis: Why ESG scores cannot mitigate risk

Brief: When the coronavirus pandemic spread around the world in 2020, investors quickly grasped the gravity of the situation and a sense began to emerge that it was perhaps a moment when firms with strong environment, social and governance (ESG) would be less negatively affected than others. It quickly became evident, however, that this was not the case. During the initial stages of the pandemic when equity markets fell, the established ESG indexes did not appear to capture the outperformance of ESG that many believed to be there. In fact, over the whole of the first quarter of 2020 the difference in performance between a number of ESG indices and the MSCI World Net index was less than 1%.

READ MORE...


Contact Castle Hall to discuss due diligence
 
Castle Hall has a range of due diligence solutions to support asset owners and managers as our industry collectively faces unheralded challenges. This is not a time for "gotcha" due diligence - rather this is a time where investors and asset managers can and should work together to share best practices and protect assets. Please contact us if you'd like to discuss any aspect of how Covid-19 may impact your business.

Our briefing for Thursday July 15, 2021:

  • In the United States, President Joe Biden has kept a ban on European travellers, causing frustration among European governments. Although the U.S. eliminated most of their domestic pandemic rules, they have remained strict on international travel as they try to curb the spread of the highly infectious delta variant. According to diplomats, the Biden administration hasn’t said anything about when the rules might change. Europe already eased many restrictions for American travellers back in June. The issue will likely come up when German Chancellor Angela Merkel visits Washington on Thursday. 

  • In Canada, experts are left to wonder whether rising case numbers in the United States will have an impact on Canada’s border reopening. With the delta variant and slowing vaccine rates, infections in the United States have more than doubled in the past three weeks.  The Canadian border remains closed to foreign travellers, with a few exceptions, until at least July 21st Prime Minister Justin Trudeau reiterated in a news conference on Wednesday that Canada would be taking a cautious approach. “The reality is we know how unbelievably costly and heartbreaking it would be to fall into a fourth wave of this pandemic. We are going to make sure that we don’t do that,” he said.

  • In the United Kingdom, for the first time since January, daily Covid-19 case numbers have exceeded 40,000. As the government prepares to lift all remaining restrictions by next Monday, experts estimate that approximately a third of the population is still unprotected from getting infected. Some scientists strongly oppose the decision to unlock next week, saying the government has decided to achieve herd immunity by letting the virus infect young people, which will lead to disruptions in healthcare and education. Approximately half of the population is now fully vaccinated.

  • In Japan, the Tokyo Olympics are scheduled to start in eight days, despite a surge in Covid-19 case numbers. Tokyo is under its fourth state of emergency, which began on Monday and requires restaurants and bars to close early and not serve alcohol during the Olympics. Government officials noted that the largest increase in serious cases and hospitalizations was among people in their 50s and younger who are largely unvaccinated.  Athletes will be expected to put medals around their own necks to protect against the spread of coronavirus, a significant change from traditional ceremonies. 

  • In France, protests erupted in Paris and other cities on Wednesday over new coronavirus restrictions. On Monday the government announced mandatory vaccines for healthcare workers and plans to bring in a vaccine health pass for most public spaces. This means unvaccinated people who want to eat in restaurants will have to show proof of a negative Covid-19 test. A record number of people booked vaccine appointments following the announcement. French authorities estimated the total number of protesters at 19,000. According to an opinion poll published on Tuesday, most French people approve the new safety measures. 

  • Australia’s second largest city of Melbourne entered a five-day lockdown, the city’s fifth one since the pandemic began. “We must do this,” Victoria state Premier Daniel Andrews said. “You only get one chance to go hard and go fast. If you wait, if you hesitate, if you doubt, then you will always be looking back wishing you had done more earlier.” The country’s slow vaccine rollout is part of the reason why they have been particularly vulnerable to the delta variant. New Zealand has suspended a travel bubble with New South Wales and Victoria in response to the outbreak.

Covid-19 – Due Diligence And Asset Management

Wall Street Itches for Office Return as Variants Muddy Recovery

Brief : Wall Street leaders are pressing ahead with bringing employees back to the office, seeking to resume something that resembles normal work life as soon as possible, even as they keep a wary eye on Covid-19 variants. “At the beginning of Covid, in February of 2020, when I was asked how would this end up, I think I said that I felt 80% of all employee hours worked would be done in one of our offices,” said Morgan Stanley Chief Executive Officer James Gorman. “And that’s probably where it’s going to end up -- not 100% but not zero percent. ”Bank of America Corp.’s Brian Moynihan said he hopes to bring younger staff in front of their bosses soon, but the virus will dictate plans. Citigroup Inc., also watching the evolving delta variant closely, is forging ahead with its flexible approach.

READ MORE...


Asia’s Air Travel May Take Three Years to Recover From Pandemic

Brief: Asian air travel may take another three years to recover fully from the devastation wrought by the pandemic, lagging behind rebounds in other regions and offering a stern headwind for refiners making jet fuel.It’ll take until 2024 for international air travel across the region to reach pre-virus levels, a year after global traffic hits that milestone, according to the International Air Transport Association. Similarly, consultancy Energy Aspects says jet fuel consumption will reach pre-pandemic volumes only in 2023-2024.The drawn-out timelines highlight the difficulties facing Asia and the likely consequences for jet fuel, a traditionally prized part of the oil-products market. Low rates of vaccination in many countries, the challenge posed by the fast-spreading delta variant, and persistent lockdowns have all set back the recovery even as the U.S. and Europe press on. All that means Asia’s aviation industry is unlikely to offer significant support to the region’s hard-pressed refineries, which process crude from the Middle East and elsewhere into fuels.

READ MORE...


Two Major Pension Plans Bet Big on Return-to-Work With Co-Investment Deal

Brief: Two large pension plans are wagering that U.S.-based workers will be returning to the office following the Covid-19 pandemic. The Canada Pension Plan Investment Board and Singapore’s GIC announced Wednesday that they have partnered with Boston Properties, a publicly-traded office space developer, owner, and manager, on a $1 billion co-investment deal. Through the co-investment program, the three firms will acquire office properties in Boston, Los Angeles, New York, San Francisco, Washington, DC, and Seattle. The deal comes as office spaces begin to reopen following the pandemic. Employers remain mixed on whether office workers will ditch working from home, although major financial institutions like JPMorgan and Goldman Sachs have reportedly already encouraged employees to return. 

Read more...


RBC says hybrid work 'here to stay' as bank plots office return

Brief : Royal Bank of Canada is formulating hybrid, flexible work arrangements for its employees and doesn’t plan any “one-size-fits-all mandate” on how much time its staff will need to be in the offices when they reopen.“We believe that flexible and hybrid work models are here to stay, and that the role of the office has forever changed,” Chief Executive Officer Dave McKay said in a post on LinkedIn. “This means we’re going to hold onto the best of what we’ve learned over the past 18 months and recapture the best of everything we’ve missed from the pre-pandemic world.”Decisions on working arrangements will be made to match employees’ “diverse everyday experiences” and their clients’ needs, with the hope of strengthening the bank’s culture, encouraging collaboration and ensuring employees feel supported, said McKay, who oversees Canada’s second-largest lender by assets.“Over the next few months, we’ll test and learn as we go and adjust our plans along the way,” McKay, 57, said. “We need to get this right, and we’re confident that client and employee feedback will continue to inform our journey, and that ultimately we will emerge from this crisis even stronger.”

READ MORE...


K-listed companies to double earnings - JO Hambro

Brief: JO Hambro's new UK Profit Index, showed there was a 19%, or £349bn, decline in UK plc revenue during the first year of the pandemic outbreak - April 2020 to March 2021. However, the asset manager now expects companies to return pre-pandemic levels within an additional year. Alexandra Altinger, CEO, UK, Europe and Asia, at JO Hambro, said: "After the shock of the pandemic, the change of mood in Britain's boardrooms is palpable. "The recovery is now very strong indeed: high government spending, low interest rates, strong consumer demand, resurgent employment and a buoyant housing market mean that profits are now growing very fast, much faster than market expectations."

READ MORE...


Contact Castle Hall to discuss due diligence
 
Castle Hall has a range of due diligence solutions to support asset owners and managers as our industry collectively faces unheralded challenges. This is not a time for "gotcha" due diligence - rather this is a time where investors and asset managers can and should work together to share best practices and protect assets. Please contact us if you'd like to discuss any aspect of how Covid-19 may impact your business.

Our briefing for Wednesday July 14, 2021:

  • In the United States, cases are back on the rise as the quick spreading delta variant tears through the country.  Slower vaccine rates and Fourth of July gatherings are also factors in the rising case numbers. According to data from John Hopkins University, the number of new cases per day has doubled over the last three weeks. Dr. James Lawler, a leader of the Global Center for Health Security at the University of Nebraska Medical Center in Omaha, says the US is headed for the same position as the UK. "The descriptions from regions of the world where the delta variant has taken hold and become the predominant virus are pictures of ICUs full of 30-year-olds. That's what the critical care doctors describe and that's what's coming to the U.S.," he said.
  • In Canada, Prime Minister Justin Trudeau said plans for domestic vaccine passports will be left to the provinces. “Different provinces will be doing different things, where the federal government has a role to play and where we are looking is in terms of vaccine certification for international travel,” he said in a news conference on Tuesday. Provinces of Quebec and Manitoba have already announced their plans for an internal vaccine passport, while provinces of Alberta and Saskatchewan have said they won’t have passport requirements.
  • In the United Kingdom, masks will still be required on London’s transport network, according to the city’s mayor. Sadiq Khan said that he will not put users of the subway, buses and trams at risk by eliminating face covering rules. Face masks have already been mandatory on public transit for the past year, but as of next Monday, face masks will no longer be required by law. This means that enforcement officers can deny access or eject passengers who are not wearing masks, but police won’t be able to get involved. “What would have been far better is for the national rules to apply across the country, not just in London but across the country,” Khan said. “That would have provided clarity in relation to what the rules are.”
  • South Korea continues to battle its worst-ever outbreak of the virus, as new cases on Tuesday soared to 1,615, the highest number since last Friday. The ongoing surge in new cases is largely attributed to the delta variant, which accounted for 30.7% of all new cases from July 4-10. Although new case numbers are on the rise, there are less serious cases and deaths in this outbreak as opposed to previous ones, with more of the older and more vulnerable population now vaccinated.
  • France has opened its border to Canadian travellers and anxiously awaits Canada to do the same in return. The Canadian border remains closed to foreign travellers until at least July 21st.  Ambassador Kareen Rispal, the representative of President Emmanuel Macron’s government, says the Canadian border should open to the French as soon as possible. She warned that relations between the two countries could suffer if not. “Canada is a green country,” she said, referring to the colour system France uses to determine where the virus is under control. “We would be very happy if the French could return to Canada without constraints other than being doubly vaccinated, taking tests, etc. We aren’t asking to return to Canada in a haphazard way.”
  • Australia has extended a lockdown in Sydney for at least another 14 days. New South Wales State Premier Gladys Berejiklian says restrictions must be in place until at least July 30th after announcing 97 new locally transmitted cases. She has repeatedly said the lockdown will be in place until community case numbers are down significantly. According to authorities, more than 65,000 people came forward for testing in the last 24 hours. “I appreciate people are stressed and upset about what is going on, myself included,” Berejiklian said. “None of us want to be in this situation.”

Covid-19 – Due Diligence And Asset Management

Moderna Joins the Biotech Elite as Value Reaches $100 Billion

Brief : Moderna Inc. briefly soared above a $100 billion valuation on Wednesday as vaccinations against the Covid-19 virus continue to ramp up across the globe. Shares of the drug developer rose as much as 6.1% to $249.50 amid a broader rally in the stock market. Moderna has surged more than 220% over the past 12 months as drugmakers raced to develop a vaccine against the coronavirus. The first shots were advanced in record time with Moderna’s inoculation getting emergency use authorization in the U.S. in December, just a week behind the first approval for Pfizer Inc. and BioNTech SE’s vaccine. The breakthrough has helped vault the biotech firm to a household name as Americans identify the jab they received by the company name, “Pfizer” or “Moderna.” In late June, Moderna’s shot was cleared for importation in India where the delta variant has taken hold. Other vaccines authorized in the South Asian country include ones from AstraZeneca Plc, Bharat Biotech International Ltd. and Russia’s Sputnik V.

READ MORE...


Hedge Fund Confidence at Highest Level “In Many Years” as Industry Enjoys Renaissance Among Investors

Brief: The latest Hedge Fund Confidence Index – published jointly by the Alternative Investment Management Association, Simmons & Simmons and Seward & Kissel – shows industry optimism continued to grow in the second quarter of 2021, having earlier surged 40 per cent in Q1. The data shows hedge funds’ optimism for the coming 12 months is now at “the highest it has been for many years”, AIMA, Simmons & Simmons and Seward & Kissel observed. The AIMA Hedge Fund Confidence Index (HFCI) is a quarterly measure of hedge fund firms’ confidence in the economic prospects of their business over the next 12 months. Roughly 300 hedge funds, collectively managing some USD1 trillion in assets, are quizzed on their capital-raising, revenue-generation and cost-managing prospects, along with the overall performance outlook of their funds for the coming year. They then score their confidence levels on a scale of +50 (the highest level of economic confidence) to -50 (the lowest), with 0 indicating a neutral level of confidence.

READ MORE...


Prices of U.S. Hotel Stays Recover to Pre-Pandemic Level

Brief: The cost of hotel and motel accommodations in the U.S. surged 7.9% in June from a month earlier, the second-largest gain on record, the Labor Department’s consumer price index data showed Tuesday. That marked the fourth straight monthly advance and pushed the price index back above where it was before the pandemic. The government figures jibe with industry data showing revenue per available room, which combines occupancy and prices, is finally surpassing pre-Covid levels. So-called RevPar increased 43% in Phoenix during the week ended July 3, compared with the same period in 2019, the highest among major markets, according to data from lodging analytics firm STR. New Orleans and San Francisco notched the steepest declines. “There’s really not much in the way of discounts for hotels, especially the ones people want to stay in,” said Lukas Hartwich, an analyst at Green Street. “There’s a lot of pent-up demand for leisure hotels. ”U.S. hotels recorded the lowest occupancy rates on record in 2020, as the pandemic kept travelers at home and ate up lodging industry profits.

Read more...


JPMorgan CEO Jamie Dimon: Coronavirus in 'Rear-View Mirror' For Consumers

Brief : JPMorgan Chase & Co. CEO Jamie Dimon said COVID-19 appears to be "in the rear-view mirror" for American consumers, who are emerging from the pandemic with more money in their pockets and the desire to spend it. During his second-quarter earnings call with investors on Tuesday, Dimon was asked for his take on how things look today amid talk of "peak inflation" and "peak growth" compared to 2011 or so as the U.S. emerged from the financial crisis from a few years prior. "I think they are completely different, fundamentally," Dimon replied, saying, "coming out of the '09 crisis, the world was massively over-leveraged…the consumer was over-leveraged, companies were over-leveraged." The CEO said that is not the case today."The pump is primed," Dimon said on the call. "The consumer, their house value is up, their stock values are up, their incomes are up, their savings are up, their confidence is up, the pandemic is kind of in the rear-view mirror – hopefully, nothing gets worse with it."

READ MORE...


With Latin American Equities Poised for Outperformance, Investors Are Turning to These Research Providers

Brief: After an unprecedented year, what one word best sums up the equity markets of Latin America? “Busy,” according to Carlos Sequeira, head of research at BTG Pactual. While the region as a whole was largely impacted both socially and economically by Covid-19, each country from Brazil to Chile reacted very differently to the pandemic. This is in part due to global monetary policy, as well as each country’s individual government stimulus plans. With just as varied economic recoveries — despite virus surges — throughout the region, there is cautious optimism across the investment chain in Latin America. But another looming election cycle means there is no downtime for the region’s sell side — or their clients. “From a market perspective, the countries in Latin America rebounded quite quickly from the shutdowns during the pandemic with tons of transactions,” Sequeira said. “Clients, as well as us, have been very busy with all of the IPOs coming to market.”

READ MORE...


Contact Castle Hall to discuss due diligence
 
Castle Hall has a range of due diligence solutions to support asset owners and managers as our industry collectively faces unheralded challenges. This is not a time for "gotcha" due diligence - rather this is a time where investors and asset managers can and should work together to share best practices and protect assets. Please contact us if you'd like to discuss any aspect of how Covid-19 may impact your business.

Our briefing for Tuesday July 13, 2021:

  • In the United States, the Centers for Disease Control and Prevention (CDC) is prepared to meet on July 22nd where COVID-19 safety will be at the top of the list. The announcement by the CDC comes one day after the fact sheet for Johnson & Johnson’s COVID-19 inoculation was revised by federal regulators to note a “small possible risk” of an auto immune disease. In a statement on Monday, America’s Food and Drug Administration (FDA) added the warning after 100 reports of Guillain Barre Syndrome were made among the roughly 12.8 million Americans that were given the one-dose vaccine. 

  • In Canada, as of Tuesday, more than 50% of Canadians have been fully vaccinated against the coronavirus. Prime Minister Justin Trudeau has defended the country’s vaccination strategy noting, mixing and matching vaccines is “bearing out” with increasing take-up and steadily declining new infections. The prime minister felt the need to defend the strategy after Dr. Soumya Swaminathan of the World Health Organization (WHO) noted the data of mixing and matching coronavirus vaccines is “a bit of a dangerous trend”. Health experts in Canada say the comments made by Dr. Swaminathan were taken out of context and that mixing and matching COVID-19 vaccines under public health guidelines is safe and effective. Prime Minister Trudeau noted by continuing this strategy, the country is on track to have everyone who is eligible fully vaccinated against COVID-19 by the end of the summer.

  • In the United Kingdom, leading scientists are urging Prime Minister Boris Johnson to end the mixed messaging on face masks, working from home and vaccine passports as lockdown restrictions are expected to be fully lifted less than a week from now. The scientists, who include Professor Graham Medley, chairman of the modelling advisory SPI-M group, are warning of the dangers of a third wave that could last six weeks after legal restrictions are abandoned on July 19th. Professor Medley noted the evidence that face masks help reduce the spread of the virus, but only if everyone does it, rather than 70% or so – noting he wants the prime minster to reconsider the ditching of mandatory face coverings on public transport and enclosed public spaces. 

  • German Chancellor Angela Merkel said the country will not follow the UK’s lead in dropping restrictions next week and urged more Germans to get the COVID-19 vaccine. Chancellor Merkel noted the more people get the shot, “the more free we will be again.” Vaccination rates have slowed in recent weeks with about 58.7% of the population receiving at least one shot and 43% fully vaccinated. Germany’s Robert Koch Institute, the government run disease control agency, said last week the country should aim to vaccinate 85% of people ages 12-59 and 90% of people over 60 to prevent the delta variant from causing a resurgence of coronavirus cases this fall and winter.

  • France’s President Emmanuel Macron’s pressure to get vaccinated to save the summer season and French economy seems to have worked. More than one million French citizens made COVID-19 vaccine appointments on Tuesday – a new record since the country rolled out coronavirus vaccines in December. President Macron’s announcement on Monday of special COVID-19 passes that will be required starting in early August to enter restaurants and shopping malls and to get on trains and planes raised questions and worried French residents and foreign tourists on what the logistics will look like and what will be expected. 

  • In Australia, government officials on Tuesday announced added financial supports for businesses and households in Sydney negatively affected by the region’s latest coronavirus lockdown. “The New South Wales outbreak has proved to be more severe, more dangerous, and it’s in the national interest that we now put in place an upgraded set of arrangements for cooperation with the states and territories,” said Prime Minister Scott Morrison of the disaster funding deal. New South Wales state Premier Gladys Berejiklian said she would announce on Wednesday whether Sydney’s 5 million residents would remain locked down beyond the three-week mark, which is set to be on Friday.

Covid-19 – Due Diligence And Asset Management

Goldman Says Pandemic is Shaping a More Productive U.S. Economy

Brief : The Covid-19 pandemic is fueling a productivity boost for the U.S. economy by speeding up workplace digitization, according to an analysis by Goldman Sachs Group Inc. Since the crisis began, annualized growth in output per hour has risen 3.1%, compared with 1.4% in the previous business cycle, Goldman economists wrote in a note. “Stronger productivity growth has been one of the silver linings of the pandemic,” they said. Those gains are most visible in sectors that can take advantage of virtual meetings, and where in-person expenses such as travel and entertainment have scope to decline. The gains are being led by sectors including information technology, professional services and wholesale trade, while online shopping has lifted productivity in the retail sector. Figuring out how to boost productivity among workers and companies is often identified as one of the biggest obstacles for global growth. The ability to work from home has been singled out as one area where gains are obvious, with a recent study estimating a productivity lift in the U.S. economy of 5%, mostly because of savings in commuting time. However, that study found gains were disproportionately available to the highly educated and well-paid, with many lower-paying jobs -- such as in food preparation and other essential industries -- unable to be done remotely.

READ MORE...


US and UK Lead the Way as Most Attractive Countries for Post-Covid PE and VC Investment

Brief: The United States remains unparalleled as a magnet for investors, according to the 10th anniversary edition of the Venture Capital (VC) and Private Equity (PE) Country Attractiveness Index.  The index ranks 125 countries according to the quality of their investment environment for adventurous VC and PE investors. The countries are analysed and ranked according to thousands of weighted data points covering six key drivers: economic activity, depth of capital markets, taxation, investor protections and corporate governance, human and social environment, and finally entrepreneurial culture and deal opportunities. Based on its strong performance in all six areas, the United States continues to be the index benchmark with a score of 100. It is followed by the United Kingdom, Japan, Germany, and Canada to round out the top five. Within the top 10, the most remarkable gains were seen for China, South Korea and France, who entered the top 10 for the first time. All top-ranked countries are expected to make swift recoveries from the COVID-related recession, especially China (now 7th), where GDP growth is already recorded.

READ MORE...


Women Push Against Being Left Behind Amid Pandemic Recovery

Brief: Proponents of women’s progress on Tuesday launched a political push in Rome to ensure that global pandemic recovery efforts won’t leave women lagging even farther behind, with the chief of the European Union's executive arm lamenting the scarcity of women in political leadership positions. Advocates are using Italy’s current leadership of the G-20 grouping to campaign for pay equality, greater involvement in decision-making and elimination of cultural stereotypes that hinder women’s advancement. “At the next G-20 summit in Rome, I could be the only woman in the group” of leaders, European Union Commission President Ursula von der Leyen told a forum examining where women lag behind and how they can catch up to men. Italy holds a summit of G20 leaders until the end of October. While von der Leyen didn't elaborate, she appeared to be referring to the prospect that Angela Merkel would no longer be leading Germany's government after elections in September. “There could be no better reminder of how long the road towards gender equality still is,” von der Leyen said, speaking by video message at the opening of the three-day forum.

Read more...


75% of Asset Management Firms do not Want to Return to Pre-Covid Working Arrangements

Brief : Three-quarters of asset managers want to embrace the new normal, with only 25% desiring to return to the pre-Covid work environment, according to a survey from Magellan Advisory Partners. Three-quarters of asset managers want to embrace the new normal, with only 25% desiring to return to the pre-Covid work environment, according to a survey from Magellan Advisory Partners. The Post-Pandemic Working Environment study spoke to management teams across 62 fund houses globally, with assets under management ranging from under $1bn to more than $1trn and found that 75% want the post-Covid hybrid working environment to be permanent. There is an overwhelming preference for three days in the office per week to become the norm, with almost 60% of respondents opting for this balance. Regionally, there was some divergence, with asset managers in the Middle East and Africa and the US  leaning towards a four-day office week, while employees in Asia-Pacific may find themselves in work just two days out of five.  When not in the office, the majority of firms do not mind where their employees base themselves, with 56% stating they would allow staff to work from anywhere in the world that is not their home address.

READ MORE...


B.C. Sees Record Capital Raising and Market Capitalization During COVID-19 Pandemic

Brief: The total market value of B.C.’s  public companies grew nearly 50 per cent in 2020 to reach record highs, despite the impact of the pandemic on global financial markets, according to a new report from the British Columbia Securities Commission (BCSC). The BC Capital Market Report 2020 shows that the total market value of B.C.-based companies grew 47 per cent in 2020 to $286 billion, compared to 2 per cent growth in the previous year. “COVID-19 rattled B.C. investment markets in the first quarter of 2020, but they rebounded quickly, demonstrating their resilience and strength even during a global pandemic,” said John Hinze, the BCSC’s Director of Corporate Finance. “Not only did B.C. public companies finish the year with a record market capitalization, they also reported record capital-raising, including filing a record number of prospectuses with the BCSC.” The annually produced report provides a snapshot of the province’s capital market activity in the calendar year, detailing how much money was raised by B.C. companies and investment funds as well as how much was raised from B.C. investors.

READ MORE...


Private Equity Firms Set ‘Frenetic’ Pace for 2021

Brief: Based on performance in the first half of the year, 2021 is shaping up to be a record-breaking year for private equity. In deals, exit activity, and fundraising, the industry its set to outpace previous highs, according to new data from PitchBook. In the second quarter of 2021, private equity deal making “continued at a frenetic pace,” the report said, with funds closing 3,708 deals worth an estimated total of $456.6 billion. For context, the entire year of 2020 saw 5,734 deals with a combined value of $711.6 billion. “We are running out of metaphors to describe record-breaking deal, exit, and fundraising activity,” said Rebecca Springer, PE analyst at PitchBook and co-author of the study. The report attributed the staggering levels of deal activity to various factors, including a partially vaccinated population, high investor confidence in the equity markets, a “frenzied” demand for high-yield debt, and the regulatory nature of the Biden administration. June’s club buyout of Medline Industries, a medical supply company, was cited as an example of the “risk-on” environment for dealmaking.

READ MORE...


Contact Castle Hall to discuss due diligence
 
Castle Hall has a range of due diligence solutions to support asset owners and managers as our industry collectively faces unheralded challenges. This is not a time for "gotcha" due diligence - rather this is a time where investors and asset managers can and should work together to share best practices and protect assets. Please contact us if you'd like to discuss any aspect of how Covid-19 may impact your business.

Our briefing for Monday July 12, 2021:

  • In the United States, Pfizer plans to meet with officials from the Food and Drug Administration (FDA) after stating Covid-19 boosters will be needed within 12 months. US President Joe Biden’s Chief Medical Advisor Dr. Anthony Fauci says it’s very possible that a booster shot will be needed in the future, but it is too soon for the government to make any recommendations.  “Right now, given the data and information that we have, we do not need to give people a third shot,” he said. Other leading vaccine experts don’t necessarily agree with Pfizer, saying more data is needed to justify a booster shot. 
  • Reopening is the common theme across Canada, as more provinces loosen their pandemic restrictions.  On Sunday, Saskatchewan became the second province, following Alberta, to scrap their remaining rules, meaning masks and physical distancing are no longer required. Premier Scott Moe says falling case numbers show that the province is in a good place. While masks are still mandatory in Quebec, the province will reduce the required distance between two people from different households to one metre.  Sports venues are now allowed to accommodate up to 50 people indoors and 100 people outdoors, and the customer capacity for retail spaces will also increase.
  • In the United Kingdom, Prime Minister Boris Johnson is set to announce the final step to reopening, the removal of all legal restrictions by July 19th.  But Junior Health Minister Edward Argar says people will still be given “clear and strong guidance” about wearing masks, even as the restrictions loosen. “When we move to step four we will see the falling away of all legal obligations and legal restrictions towards personal and corporate responsibility,” he said. Covid-19 cases continue to soar in the UK, with case numbers reaching over 30,000 per day.
  • In France, the country’s health minister says the delta variant will most likely become the new dominant strain. President Emmanuel Macron is expected to announce a new law requiring healthcare workers to get vaccinated. France’s top health advisory body made the recommendation on Friday, saying vaccines should be mandatory for anyone who comes into close contact with Covid-19. Although officials have warned of a new wave of infection, they say new lockdown measures aren’t likely. Approximately 40% of the population of France is vaccinated.
  • New Zealand will operate repatriation flights for citizens who are in Sydney grappling with the latest Covid-19 outbreak. Air New Zealand said within fifteen minutes of being put up for sale, seats on all nine emergency flights had been sold out.  Prime Minister Jacinda Ardern said the government would make quarantine facilities available for approximately 1000 people, as passengers booked on the flights will have to quarantine for 14 days after arriving. New Zealand has had success at eradicating community spread of the virus, while Australia is currently fighting its worst outbreak in over a year.
  • On Sunday Australia reported its first Covid-19-related death of the year and 77 new cases, a record number for 2021. State Premier Gladys Berejiklian says she expects cases will continue to rise in the coming days. “I’ll be shocked if it’s less than 100 this time tomorrow, of additional new cases,” she said. The recent outbreak in Australia has seen a total of 566 cases, the majority of them in and around Sydney. It is highly likely that the current three-week lockdown will be extended, as the country battles the highly infectious delta variant amid a slow vaccine rollout.

Covid-19 – Due Diligence And Asset Management

Cyber-attacks biggest threat to growth, warn financial services CEOs

Brief : Chief executives in financial services rank cyber-attacks as the greatest threat to future growth prospects – more than a pandemic or over-regulation – according to a PwC survey. Executives at some of the world’s biggest banks, insurers and asset managers were asked to choose from a list of potential business, economic, policy, social and environmental threats to growth. They ranked cyber-attacks top (56 per cent), followed by pandemics (51 per cent) and over-regulation (50 per cent). The prospect of financial institutions being subject to a cyber-attack has grown considerably in recent years. Only 33 per cent of CEOs considered cyber threats the biggest concern for their business five years ago in 2016.

READ MORE...


Strong Sovereign performance provides liquidity and stability to Governments through the pandemic

Brief: Invesco today released its ninth annual Global Sovereign Asset Management Study, which details the views and opinions of 141 chief investment officers, heads of asset classes and senior portfolio strategists at 82 sovereign wealth funds and 59 central banks, who together manage USD19 trillion in assets. With Covid-19 top of mind, impacting both operations and investment strategies, the impact of the ongoing pandemic is a major theme running throughout this year’s report. In response to Covid-19, governments rushed to implement policy measures designed to prop up their economies and public services such as health, as well as providing support for businesses and households at a time when tax revenues retreated with depressed economic activity.

READ MORE...


Pace of recovery rises in the world’s leading economies

Brief: The growth-cycle outlook is steadily increasing for the world’s leading economies with the gradual lifting of lockdown measures and progress in vaccinations, the OECD said. The organization’s Composite Leading Indicators, which tend to precede economic turning points by about six months to nine months, continue to expand for the group’s 38 members as a whole and in some large emerging-market economies. The OECD cautioned that despite the improvements in containing the spread of Covid-19, its measures should still be interpreted with care and may say more about the signal than the degree of actual economic growth.

Read more...


Business trips are coming back faster than expected in the U.S.

Brief : In-person conferences are back sooner than anticipated in the U.S., a sliver of good news for industries like airlines and hotels that are relying on corporate travel for a full recovery. About half of attendees at a large annual meeting of accountants are expected to make the trip to Las Vegas this month, substantially more than the organizers anticipated at the start of the year. And some conferences planned in the fall have a full pre-pandemic flavor, with almost all of the speakers and attendees planning to be on site rather than over Zoom. “We are offering digital-only tickets, but are expecting about 95% of our attendees to be in-person,” Jon Weiner, founder and chief executive officer of health-care conference HLTH, said via email. “Attendee sales are trending as they were for our last in-person event (2019) and sponsorships are selling out quick.” This year’s gathering takes place in Boston in October.

READ MORE...


Hedge fund managers who are mothers saw weaker performance during pandemic-related school closures.

Brief: Across industries, mothers bear the burden of household labor and childcare, a trend that translates into weaker performance at work compared to their male counterparts and other women without children. For mothers in the hedge fund industry, the Covid-19 pandemic exacerbated these disparities. According to new academic research, on average, female managers with young children — aged 12 and younger — missed a 7 percent excess return compared to male-only funds during the months of pandemic-related school closures. This cost increased with the proportion of mothers in a firm. In contrast, fund performance was not significantly affected for managers who are fathers or women without children.

READ MORE...


Contact Castle Hall to discuss due diligence
 
Castle Hall has a range of due diligence solutions to support asset owners and managers as our industry collectively faces unheralded challenges. This is not a time for "gotcha" due diligence - rather this is a time where investors and asset managers can and should work together to share best practices and protect assets. Please contact us if you'd like to discuss any aspect of how Covid-19 may impact your business.

Our briefing for Friday July 9, 2021:

  • In the United States, White House officials announced on Thursday that all Covid-19-related hospitalizations and deaths are occurring among unvaccinated people.  White House Coronavirus Response Coordinator Jeff Zients said in a press briefing that cases will continue to rise as the highly infectious delta variant takes hold. Although case numbers are going up, vaccines are still effective against the delta variant. “The bottom line is, there’s simply no reason that anyone 12 or older should be severely impacted by this virus,” Zients said. About 48% of the US population is fully vaccinated, while just over 67% have received one dose.

  • In Canada, vaccine uptake has slowed, according to Chief Public Health Officer Dr. Theresa Tam. While Canadians have been especially focused on getting their second doses, the number of people coming forward to get their first dose has stagnated, Tam says. She notes that reaching those who are unvaccinated is priority across all levels of government, and those more reluctant to come forward for a shot include young people, marginalized populations and certain smaller communities. Infectious disease experts are still divided over whether mask requirements should be relaxed in Canada. British Columbia and Alberta have already relaxed their rules, while Saskatchewan’s mandatory mask policy is set to expire on July 11th.

  • In the United Kingdom, a leading academic has warned that higher Covid-19 case numbers will risk overwhelming the National Health Service (NHS) test-and-trace system. Jon Deeks, professor of biostatistics at the University of Birmingham, says at least 660,000 tests are going to be needed each day if there are going to be 100,000 daily infections this summer. This would be almost three times the current level of testing in the UK, and more than double the highest volume achieved at any point throughout the pandemic. The system is already showing signs of strain, with positive tests up 71% during the last week of June.   

  • In Japan, surging Covid-19 case numbers have caused the International Olympic Committee to ban all fans from Olympic venues. A state of emergency imposed by Prime Minister Yoshihide Suga will go into effect on Monday until August 22nd.  Organizers are still holding out some hope that they might be allowed spectators at the Paralympic games which don’t open until later in August. Tokyo announced 896 new daily infections on Thursday. The Olympic games are scheduled to run between July 23rd and August 8th despite opposition from medical experts.

  • South Korea will raise coronavirus restrictions to their highest level yet in the Seoul area, as authorities warn the record rise in cases has reached “maximum crisis level.” The new restrictions come into effect on Monday and will last for two weeks. New restrictions include bans on gatherings of more than two people after 6 PM, school closures and the shutting down of all entertainment establishments. Health authorities have said people in their twenties and thirties, who are not eligible for vaccinations, are driving up the numbers.

  • In Australia authorities pleaded with Sydney residents to stay home, warning that a three-week lockdown could be extended as they struggle to control their latest Covid-19 outbreak. On Thursday New South Wales reported 38 new coronavirus cases. Premier Gladys Berejiklian says ending the lockdown by next Friday is still possible, “as long as everybody does the right thing.” Berejiklian insists case numbers will have to go down before lockdown measures can lift. “For us to think that we can control a very contagious variant without having a certain proportion of the population vaccinated would be an unrealistic assumption, and that is why it is really important for all of us to do the right thing.”

Covid-19 – Due Diligence And Asset Management

Banks in U.S. poised for weaker results after pandemic windfall

Brief : In the upside-down world of global banking, getting back to normal is bad news for the bottom line. Wall Street churned out massive windfalls during the pandemic, but the economic reopening made possible by widespread vaccinations means this year’s earnings will look weaker by comparison. The big down arrow will be trading revenue, which is expected to show a 28% tumble for the top U.S. investment banks when they begin reporting second-quarter results next week, according to analysts’ estimates. Trading isn’t the only soft spot. Loan growth is still proving elusive as consumers and companies, still flush with cash from trillions of dollars of government stimulus, have yet to demand more bank financing. Total loans for the commercial banks probably fell a combined 3% in the quarter, analysts predict.

READ MORE...


Hedge funds generate strongest first half returns in more than two decades

Brief: Hedge funds gained more than 10 per cent in the six months of 2021, the industry’s strongest first half performance in 22 years, despite June seeing a shift in market sentiment which moderated the sector’s monthly returns. Now, managers are positioning for a “dynamic performance environment” heading into the second half of the year, shaped by ongoing Covid concerns, as well as energy and tech trends. Hedge Fund Research’s main Fund Weighted Composite Index – a monthly measure of more than 1400 single manager hedge funds’ performance across all strategy types – gained 0.4 per cent in June, putting the benchmark up 10.03 per cent over the six-month period starting in January. That January-to-June advance is the hedge fund industry’s best first-half performance since 1999, HFR said. It is also the longest run of consecutive monthly positive returns – which together totals 22 per cent – since the index registered 15 months of consecutive gains ending in January 2018.

READ MORE...


DN Capital, Early Backer of Auto1, Shazam and OLX, Launches New $350m Fund to Shape Post-pandemic World

Brief: DN Capital, one of Europe’s most established Venture Capital firms, today announces the launch of its latest $350m (£220m, €300m) fund. In a year which has already seen four of the DN Capital portfolio reach billion dollar-plus valuations, the firm’s Fund V will back the most ambitious early stage entrepreneurs across Europe, the UK and the US, who are creating businesses built on the pandemic-accelerated surge in digital adoption, and developing technologies critical to the global recovery. Under the leadership of private equity and VC stalwarts Nenad Marovac and Steve Schlenker - who head up a senior team with a combined 100 years-plus of investment experience - DN’s predominantly young and ambitious team has a consistent track record of partnering with some of Europe’s most promising startups, long before they became market leaders.

Read more...


Slide in coronavirus-sensitive stocks suggests growing worries over delta variant

Brief : Diverse reasons are driving the rotation in stocks and a slide in bond yields, but weakness in travel, leisure and other COVID-19-sensitive stocks suggest that fears of the Delta variant are doing their part. Declines in the shares of companies tied to the reopening trade have broadly outpaced those of other so-called value stocks, which have been battered on worries that economic growth will be slower than expected in coming months. Shares of cruise stocks Carnival Cruise Lines and Norwegian Cruise Line Holdings have slumped 10% and 9%, respectively, in July, while American Airlines Group dropped 4% and United Airlines Holdings was off 5%. MGM Resorts International has fallen 5.5%, while Expedia Group has dropped 1.3%.

READ MORE...


U.S. Hotels Finally Surpass Pre-Covid Levels as Travel Surges

Brief: Red-hot demand from leisure travelers boosted a key lodging industry metric higher than it was during the same period in 2019, marking the first time since the pandemic began that U.S. hotels outperformed pre-Covid levels. Revenue per available room, which combines occupancy and prices, increased 5.7% last week compared to the same period in 2019, according to data from lodging analytics firm STR. RevPar in Phoenix increased 43% from 2019, the highest among major markets, while New Orleans and San Francisco notched the steepest decline. Hotels in New York City also continue to struggle.

READ MORE...


Contact Castle Hall to discuss due diligence
 
Castle Hall has a range of due diligence solutions to support asset owners and managers as our industry collectively faces unheralded challenges. This is not a time for "gotcha" due diligence - rather this is a time where investors and asset managers can and should work together to share best practices and protect assets. Please contact us if you'd like to discuss any aspect of how Covid-19 may impact your business.

Our briefing for Thursday July 8, 2021:

  • In the United States, health experts are concerned about the rapid spread of the delta variant, which now accounts for more than half of all new Covid-19 infections in the country. The federal government continues to push for people to get vaccinated as quickly as possible. As of Wednesday, less than half of the US population is fully vaccinated. Some experts are even concerned about potential new variants, asking whether it might be time to start testing vaccinated people just to be sure the vaccine is still effective. The US has the highest number of Covid-19 related deaths at 606,000.
  • In Canada, infectious disease specialists have said a fourth wave of Covid-19 is not necessarily inevitable. Considering the UK’s current position, Canadians may be able to avoid the same as long as they continue to get their vaccines as quickly as possible. Dr. David Naylor, co-chair of Canada’s Covid-19 immunity task force, says the UK has been a good example for Canadians as they’re often a few steps ahead with infections rising and falling.  Even though the UK’s vaccination program outpaced Canada’s early on, Canadians have been more cautious about waiting to lift restrictions until more people are vaccinated. “That may help us mitigate the risks of a big Delta wave,” Naylor said.
  • In the United Kingdom, Prime Minister Boris Johnson continues to defend his government’s approach to easing lockdown restrictions. At the same time, Covid-19 infections are soaring, with cases exceeding 30,000 for the first time since January.  Johnson says the latest wave can be attributed to the delta variant, though he also says the link between infection and serious disease and death has been “severed.” The government’s chief scientific advisor Sir Patrick Vallance is not as optimistic, saying vaccines have “weakened the link between cases and hospitalizations, but it’s a weakened link, not a broken one.”
  • In Germany, calls for more creative ways to reach people who haven’t been vaccinated yet are growing. This comes as the country’s vaccination rates are beginning to ease off. Despite relatively low case numbers, the government wants people to get vaccinated because of the risks posed by the delta variant, which accounts for approximately 59% of all cases in Germany. Germany’s disease control center says 40.8% of the population is fully vaccinated, while 57.6% have received at least one shot. Health Minister Jens Spahn says the pace of vaccinations will determine whether remaining coronavirus restrictions are lifted. 
  • South Korea recorded its highest one-day case total of the pandemic so far, with cases reaching 1275 in a 24-hour period. This marks the second consecutive day above 1200 and breaks the previous record of 1240 set Christmas Day. More than 1000 of the infections were in the greater Seoul area. Complacency and slow vaccination rates have contributed to the growing wave of new cases in the region, which can also be linked to the delta variant. Currently only 10% of people in South Korea are fully vaccinated, while 30% have received one shot, the majority of them being over 60.
  • In Australia, Sydney has recorded its highest one-day jump in Covid-19 cases in months, despite being under lockdown for nearly two weeks. Authorities extended the lockdown earlier this week as case numbers are not dropping – they have been steady at 18-35 new infections per day. The delta outbreak has caused public anger over the federal government’s slow vaccine program. Prime Minister Scott Morrison encouraged residents to get their second dose of AstraZeneca after two months rather than three, as a way to address the growing cluster of infections. Though AstraZeneca was initially recommended for all adults, it is now only recommended in Australia for adults over 60.

Covid-19 – Due Diligence And Asset Management

US jobless claims tick up to 373,000 from a pandemic low

Brief : The number of Americans filing for unemployment benefits rose slightly last week even while the economy and the job market appear to be rebounding from the coronavirus recession with sustained energy. Thursday's report from the Labor Department showed that jobless claims increased by 2,000 from the previous week to 373,000. Weekly applications, which generally track the pace of layoffs, have fallen steadily this year from more than 900,000 at the start of the year. The four-week average of applications, which smooths out week-to-week volatility, is now 394,500 — the lowest such level since the pandemic erupted in March of last year. The rollout of vaccinations is driving a potent economic recovery as businesses reopen, employers struggle to fill jobs and consumers emerge from months of lockdown to travel, shop and spend at restaurants, bars, retailers and entertainment venues.

READ MORE...


London-based fintech firms secure record VC funding in H1 2021

Brief: London-based fintech firms have already raised more VC investment in the first six months of 2021 than any other year, according to new research from Dealroom.co and London & Partners. London’s strong performance has also helped to drive record levels of investment into Europe’s fintech sector, with European fintech firms raising USD13.9 billion, up 51 per cent on full year 2020 investment levels. London was at the heart of this growth, with its fintech firms accounting for over a third of all European fintech funding. The bumper start to the year for VC funding sees the UK capital further cement its position as a global fintech hub, with investors pumping USD5.3 billion into London-based fintech companies – an increase on all previous full year investment figures for London’s fintech sector and over 2.5 times more VC investment than any other European city. Investment into London’s fintechs in the first half of 2021 is 2.4 times greater than during the same time period in 2020, showing investor confidence returning as the UK economy starts to recover from the global pandemic. London ranks second on the worldwide list for fintech VC investment so far this year, slightly ahead of New York (USD5.2 billion) and behind San Francisco in first place (USD7.2 billion).

READ MORE...


Job cuts not planned by most U.K. firms as furlough ends

Brief: Eight in 10 U.K. companies do not expect to make redundancies in the next three months, an indication the labor market could avoid a severe shock as government job support is wound down. The finding is contained in the latest batch of high-frequency indicators from the Office of National Statistics, which said only 1% of firms definitely planned to shed staff when they were asked late last month. Nineteen percent were not sure. The furlough program, which has paid the wages of workers at firms forced to close during the pandemic, was still supporting 2.4 million jobs at the end of May. Employers are now having to contribute to the cost ahead of the program ending altogether in September. That’s led to fears of job cuts at businesses that are continuing to struggle, despite the lifting of lockdown restrictions. The figures painted a generally upbeat picture of the labor market, with online job listings reaching 135% of pre-pandemic levels.

Read more...


The Asset Management Industry Has Surpassed $100 Trillion —And There’s Still Room to Grow

Brief : Despite economic uncertainties rising from the pandemic, the asset management industry has surpassed the centi-trillion mark to reach $103 trillion in assets under management at the end of 2020, an increase of 11 percent from the previous year, according to Boston Consulting Group’s annual report on the industry expected to be released Thursday. Of the total, institutional investments represented 59 percent at $61 trillion, while retail portfolios comprised 41 percent of the global assets, or $42 trillion. North America was seen as the main driver of growth and held the lion’s share of assets at $49 trillion. As the end of the pandemic draws near and remote-working models become “permanent fixtures,” BCG called on asset managers to seek growth opportunities in private markets and data and analytics, which it said will be crucial to everything from client engagement and distribution to customized investment products.

READ MORE...


Private equity emerges from pandemic in bullish mood

Brief: More than two-thirds (67 per cent) of private equity professionals expect to achieve higher returns this year than in 2020, with just 3 per cent expecting lower returns, according to Investec’s annual GP Trends survey. The research, which analyses the views of 219 private equity professionals around the world, reveals an industry upbeat as we emerge from the pandemic, eager to deploy capital and sanguine about the threat of SPACs. When the pandemic struck last year, GPs made significant downward adjustments to their return expectations. This year, optimism has flooded back, with the overwhelming majority (97 per cent) expecting their returns to exceed (67 per cent) or match (31 per cent) those achieved in 2020. This is especially true of smaller funds: 70 per cent of those managing funds smaller than GBP1 billion expect to improve on last year’s performance, compared to 55 per cent of those managing funds larger than GBP1 billion.

READ MORE...


Hedge fund short sellers dented by Sainsbury’s rebound, as UK supermarket giant sees sales surge

Brief: Hedge funds betting against Sainsbury’s have taken a dent after the UK supermarket giant’s share price rose this week on the back of strong Q1 sales numbers, prompting the FTSE 100-listed firm to revise its profit outlook upwards. A number of well-known hedge funds – including BlackRock, Marshall Wace and Citadel – have built negative wagers against Sainsbury’s lately, while the likes of Pelham Capital and Third Point continue to hold longer-standing bearish bets, according to regulatory disclosures made to the FCA. The UK’s second biggest supermarket chain – which is one of the ‘Big Four’ grocers alongside Tesco, Asda, and Morrisons – has been a popular short among hedge funds over the past 18 months. Panic-buying during the initial coronavirus outbreak saw its value slide to around 179p in March 2020, and the company continued to lag competitors last summer amid warnings of increased costs, with several high-profile hedge funds - including AHL and GLG Partners, Man Group’s systematic and discretionary hedge fund units – registering short positions.

READ MORE...


Contact Castle Hall to discuss due diligence
 
Castle Hall has a range of due diligence solutions to support asset owners and managers as our industry collectively faces unheralded challenges. This is not a time for "gotcha" due diligence - rather this is a time where investors and asset managers can and should work together to share best practices and protect assets. Please contact us if you'd like to discuss any aspect of how Covid-19 may impact your business.

Our briefing for Wednesday July 7, 2021:

  • In the United States, new data from the Centres for Disease Control and Prevention shows the delta variant is now the dominant strain of coronavirus in the United States. The World Health Organization said Tuesday that the delta variant is predicted to become the dominant variant globally. US President Joe Biden said the rise in delta variant cases “should cause everybody to think twice.” He encouraged all Americans to protect themselves by getting vaccinated when speaking at the White House on Tuesday. He also said the White House is working closely with state and local partners to support vaccine drives in communities where the uptake has been slow. 

  • In Canada, Prime Minister Justin Trudeau is facing increased pressure to ease travel restrictions across the Canada-United States border. Now that vaccine rates are soaring and case numbers are dropping, border communities, industry groups and long-separated families are criticizing Canadian officials for not at least laying out a detailed reopening plan. Earlier, Trudeau said that restrictions would ease after 75% of Canadians had received one dose of vaccine and 20% were fully vaccinated. But Canada had already achieved that goal before the border closure was extended to July 21st

  • In the United Kingdom, coronavirus case numbers are on the rise. Britain reported 28,773 new cases on Tuesday, up from 27, 334 on Monday and the highest number since January 29th. Health Minister Sajid Javid said Britain is entering “uncharted territory” with their decision to scrap lockdown rules on July 19th. Javid told MPs that modelling suggests case counts could reach as high as 100,000 per day later on in the summer. Javid says these numbers won’t overwhelm the healthcare system because the vaccine program has created a “wall” against mass illness and deaths.

  • In Japan, Tokyo reported 920 new coronavirus cases, the highest since mid-May. Prime Minister Yoshihide Suga says he will consult with a panel of experts before making a final decision on Thursday over whether to extend a state of emergency. An extended state of emergency in Tokyo ahead of the Olympic games will determine whether spectators can attend Olympic events. Medical experts have previously recommended having no spectators as it is the least risky option. Organizers have already banned spectators from overseas and put a cap in place for domestic spectators at 50% capacity.

  • In New Zealand, medical regulators have approved use of the Johnson & Johnson coronavirus vaccine, although the country will still focus primarily on using Pfizer. Prime Minister Jacinda Ardern has said the country will not follow the UK’s lead of “living with” the virus, explaining that the level of death proposed by Boris Johnson would be “unacceptable.” New Zealand may even consider putting Britain on a no-fly list if case numbers get out of control. “The priority for me is how do we continue to preserve what New Zealand has managed to gain and give ourselves options, because this virus is not done with the world yet,” Ardern said.

  • Australia has extended a two-week lockdown in Sydney for another week. Health officials have said the extension happened largely because vaccine rates aren’t where they’re supposed to be. Currently only about 9% of adults in Australia are fully vaccinated. Gladys Berejiklian, the Premier of New South Wales, said the extension was the only way to prevent future lockdowns, until the vast majority of citizens are vaccinated. Sydney and its surrounding communities are the only part of Australia still in lockdown. Sydney residents were warned by health officials that case numbers are expected to rise in the next 24 hours and urged to stay at home.

Covid-19 – Due Diligence And Asset Management

KKR Breaks Its Loan Record With Property Market ‘Roaring Back’

Brief : KKR & Co. has committed to $8 billion in commercial-property loans so far in 2021, more than double its previous full-year record, as the pandemic reopening stokes demand for financing. “The market is just roaring back from a volume perspective,” Matt Salem, KKR’s head of real estate credit, said in an interview. “Pipelines are very big across the board.” Demand for new loans has revived as construction picks up, debt matures and low interest rates spur refinancing on favorable terms. Total debt on U.S. commercial and multifamily properties increased to $3.93 trillion as of March 31, up 1.1% in the first three months of this year, according to the Mortgage Bankers Association. That growth continued as trillions of dollars in stimulus money flowed into the economy and vaccination campaigns fueled a revival of commerce and real estate investors’ appetites for risk.

READ MORE...


ESG criteria crucial for outperformance and resilience – especially in crisis year 2020, says LFDE

Brief: ESG criteria is an outperformance factor and an essential prerequisite for companies' resistance to crises, according to the latest "SRI & Performance Study by LFDE," conducted by French asset manager La Financière de l'Echiquier (LFDE) for the third consecutive year. "The exceptional year of 2020 in particular, with its rapid market collapse and equally rapid recovery, has shown how resilient SRI investments are during crises," says Coline Pavot, Head of SRI Research at LFDE. During 2020, the portfolio with the best ESG scores (Top 40) posted a 15 per cent return, outperforming the portfolio with the worst ESG scores (Flop 40) by a factor of 68. At the same time, the MSCI Europe SRI Index (+1.4 per cent) outperformed the Flop 40 portfolio (0.2 per cent) and the MSCI Europe Index (-3.32 per cent).

READ MORE...


Office workers fled Toronto's financial district — but they'll be back, Metrolinx CEO says

Brief: Toronto’s financial district has been quiet ever since banks sent their employees home at the beginning of the coronavirus pandemic. That may be about to change. New cases of COVID-19 are down more than 95 per cent in Toronto compared with three months ago. About half of adults there are now fully vaccinated, and schools are preparing to reopen in two months. To Phil Verster, the chief executive officer of Metrolinx, the agency that runs commuter rail and bus service in Canada’s largest metropolitan area, that means many workers will go back to the office at least part of the time. “I am very optimistic that we are going to see a resurgence of travel — very much so starting in September and October,” Verster said in an interview, noting that he sends out Metrolinx staff to speak with business leaders about how their return-to-office plans are evolving. “What we’ve seen in our ridership is that considerations about whether children can go back to school or not are critical.”

Read more...


Covid-19 Pushed 22 Million Out of Job Market in Major Economies

Brief : Labor markets in developed nations have recovered only half of the loss of employment they suffered in the pandemic, with the young and low-skilled hurt most. That’s the conclusion of a 400-page study by the Organization for Economic Cooperation and Development, which found that about 22 million jobs disappeared by the end of 2020 in industrial nations. The Paris-based institution said a full recovery to pre-pandemic levels of employment won’t come until the end of next year. The findings indicate that the coronavirus crisis accelerated a number of trends that started over the past decade, including growing income inequality, a shift toward more technically demanding jobs and fewer secure employment opportunities for lower-skilled workers. “Failing to address inequality and exclusion now is likely to result not only in deeper social divisions but will have negative ramifications for productivity and economic recovery,” said Stefano Scarpetta, the OECD’s director for employment, labor and social affairs.

READ MORE...


Digital Health Startups Raised $14.7 Billion In First Half Of 2021, Already Surpassing Total 2020 Funding

Brief: Digital health funding continues to smash new records each quarter, as venture-backed companies raised $14.7 billion in the first half of the year. That sum already surpasses the total venture funding raised in all of 2020, according to a new report from venture firm Rock Health. The Covid-19 pandemic has fueled the adoption of new digital health technologies, which already set an all-time high venture funding record of $6.7 billion in the first quarter of 2021. Rock Health’s CEO Bill Evans says that while even he was a bit surprised by such a huge increase compared to last year, the fundamentals checked out. “We saw pace increase and size per round increase,” says Evans. This translated to an average of 11 digital health deals totaling $548 million each week in the first six months of the year, compared to an average of 7 deals totaling $285 million in the second half of 2020

READ MORE...


Hedge Fund Optimism Is Rising as Managers Deliver Their Best Performance in Years

Brief: Hedge fund managers have grown even more optimistic about their business prospects over the next 12 months.On a scale ranging from -50 to +50, hedge funds rated their economic confidence at +19.5, up from an average of +18.4 the previous quarter, according to the second quarter Hedge Fund Confidence Index from AIMA, Simmons & Simmons, and Seward & Kissel. Confidence is also up significantly from +13.8 in the fourth quarter, according to the index.In a survey of more than 300 hedge funds around the world accounting for approximately $1 trillion in assets, respondents were asked to consider three factors for determining their outlook: “their firm’s ability to raise capital, their firm’s ability to generate revenue and manage costs, and the overall performance of their fund(s).”

READ MORE...


Contact Castle Hall to discuss due diligence
 
Castle Hall has a range of due diligence solutions to support asset owners and managers as our industry collectively faces unheralded challenges. This is not a time for "gotcha" due diligence - rather this is a time where investors and asset managers can and should work together to share best practices and protect assets. Please contact us if you'd like to discuss any aspect of how Covid-19 may impact your business.

Our briefing for Tuesday July 6, 2021:

  • As the United States get back to work after their Independence Day long weekend, President Joe Biden’s administration is looking to do the same against the coronavirus. After failing to reach his own vaccination goal for the Fourth of July, President Biden is having federal, state and municipal health officials narrow its focus on boosting vaccination availability in places such as doctor’s offices and work settings. CNBC also reported the Biden team is looking to increase vaccinations for 12–18-year-olds before they head back to school in the fall. According to the Centers for Disease Control and Prevention (CDC) latest data, currently 157 million people in the country are fully vaccinated, which is less than half of the total population.
  • In Canada, border restrictions started to loosen on Monday, but the federal government remains tight-lipped on when further reopening will happen. As of July 5th, Canadians and permanent residents who have completed their two doses of a COVID-19 vaccine approved for use in Canada are now able to forego the 14-day quarantine. The quarantine requirement had been in place since March 2020. Despite this, the travel restrictions between Canada and the United States preventing all non-essential trips are to remain in place until at least July 21st. When pressed by reporters on Monday on when more border restrictions would be loosened, Prime Minister Justin Trudeau would only say that steps toward reopening the longest undefended land border in the world would be rolled out over the next few weeks.
  • United Kingdom Health Minister Sajid Javid is making plans to get the country back to normal even though admitting on Tuesday that new coronavirus cases could rise to 100,000 a day over the summer. The number comes as the country continues to prepare to relax most of its existing pandemic rules on July 19th. On Tuesday, Javid announced a plan that as of August 16th, “anyone who is a close contact of a positive case will no longer have to self-isolate, if they have been fully vaccinated.” Javid also noted the same rule would apply to those under the age of 18, who are not currently being vaccinated.
  • Israel and South Korea have agreed on a COVID-19 vaccine swap deal. Under the deal, Israel will send 700,000 coronavirus vaccine doses to South Korea this month to inoculate more of its citizens. South Korea will reciprocate in September, sending the same number of doses to Israel. The Prime Minister for Israel, Naftali Bennett, noted the deal as being win-win and that the agreement would “reduce the holes” in the vaccine’s availability. Both countries are experiencing a surge in new infections but are in much different stages of their vaccination campaign due to the size of each country. South Korea has only administered first doses to 30% of its population while Israel has fully vaccinated 5.3 million of its population of 9.3 million.
  • Australia and China are in yet another political conflict – this one over COVID-19 vaccine diplomacy. Australia denied on Tuesday the allegations from the Chinese government and state media that it was interfering in a rollout of Chinese vaccine in Papua New Guinea. In March, Australia became the first country to provide Papua New Guinea – a former Australian colony and the country’s nearest neighbour – COVID-19 vaccines. Just a few weeks ago, the Papua New Guinea government accepted 200,000 doses of the Chinese-made Sinopharm vaccine. Chinese newspaper, the Global Times accused Australia of “planting Australian Consultants” in Papua New Guinea to “undermine China’s vaccine cooperation with Pacific Island countries.” Australia and China’s relationship has continued to deteriorate since last year after Australia called for an independent investigation into the origins of and responses to COVID-19.
  • Brazil’s President Jair Bolsonaro popularity has fallen to its lowest level since assuming office, according to the latest poll. The outspoken leader of Latin America’s most populous country has seen his approval rating plummet to 34%, down from 44% in February, according to an MDA poll published on Monday. Bolsonaro’s weakening position is due to a slow COVID-19 vaccination campaign and more than half a million deaths due to the pandemic. The situation only got worse late last week for the president when Luis Miranda, a government-allied lawmaker, said he had personally warned Bolsonaro about possible irregularities in the purchase of vaccines. A Supreme Court justice has now authorized an investigation into the case.

Covid-19 – Due Diligence And Asset Management

Credit Markets May Not Be So Forgiving Post-Pandemic

Brief : Investors looking to make a buck on corporate distress can only hope the post-pandemic world is more accommodating. Rock-bottom interest rates, a reopening economy and yield-starved investors mean all but the most-troubled businesses have managed to borrow their way out of trouble. Credit markets may not be so friendly if the projections underlying that borrowing prove too rosy once post-Covid results come out, according to Phil Brendel of Bloomberg Intelligence. “The market will shift from pricing on projections and start looking more at actuals,” Brendel said in an interview. “We’re at credit bubble levels of distressed debt. So credit markets are vulnerable to a significant correction.” The pile of distressed debt outstanding, which totaled almost $1 trillion at the height of the pandemic, has sunk to about $60 billion, data compiled by Bloomberg show. By one measure, the proportion of high-yield bonds outstanding that is trading at distressed levels is the lowest since the run-up to the 2008 financial crisis, Brendel said.

READ MORE...


FCA says Firms’ Assessments of Value Lack Credibility

Brief: Fund management firms in a sample study were not implementing rules that should demonstrate how much value they provide to clients. The Financial Conduct Authority (FCA) said most of the 18 firms it reviewed had not implemented Assessment of Value (Avon) arrangements that met FCA standards. Avon rules were brought into force in 2019 and require firms to justify their fund fees by demonstrating value based on certain criteria such as performance, costs and savings from economies of scale. The findings will be a disappointment to the FCA which has increased scrutiny of asset managers in recent years and whose Avon regime is expected to set the standard elsewhere in Europe. However, the firms have escaped any tough regulatory action, such as fines. Reporting on its review, which happened between July 2020 and May 2021, the FCA said “too many” of the fund managers often made assumptions that could not be justified when challenged by the regulator, and that this undermined the credibility of their assessments. Many firms did not consider what the fund’s performance should deliver when set against the investment policy, investment strategy and fees.

READ MORE...


Number of H1 2021 UK IPOs Exceeds Number for the Whole of 2020

Brief: The UK IPO market has continued its resurgence throughout H1 2021 with the number of new listings on the London Stock Exchange already exceeding the number that listed in the whole of 2020, according to research from law firm Pinsent Masons. As of 28 June 2021, 45 companies have listed on AIM and the Main Market and six more say they intend to list this year. That compares to 31 companies that listed in the whole of 2020. There was more IPOs in Q1 2021 (20) on the London Stock Exchange than in any previous first quarter of the year since 2007. Companies have been eager to exploit the renewed investor optimism so far this year. Healthcare companies (6), tech companies (11) and online retailers (7) make up 53 per cent of the businesses to have listed so far in in 2021. Companies from those sectors see now as an ideal time to float as, in many cases, Covid has provided a strong tailwind to help their sales growth. Julian Stanier, head of Corporate Finance at Pinsent Masons says, “This has been the busiest period for London Stock Exchange IPOs for about 15 years.

Read more...


Schroders Institutional Investor Study: Optimism Surges for Investment Returns

Brief : The annual Schroders Institutional Investor Study, which polls 750 industry professionals in 26 locations across the globe, showed an average expectation return of 6.4%, up from 5.6% a year earlier. Almost half of respondents estimate that their average annual total return will be above 6% over the next five years, with 13% expecting returns of more than 9%. These expectations are higher than last year, when only 35% of global investors thought they could return over 6% and 5% believed they could top 9%. Keith Wade, Chief Economist, said: “Clearly, confidence is rising. This is due to a combination of vaccine success, increasing consumer demand across the globe, and indications that the global economic recovery from Covid-19 could be relatively swift. “However, expectations are even higher than before the pandemic hit, indicating a more sustained shift in confidence. It could be that even professional investors are being swayed by the strong real returns achieved by both equity and bonds in the past decade. Understandably, they’re feeling more optimistic. The reality is that, to achieve decent returns, investors will need to navigate a number of challenges, from low rates to demographic shifts to technological disruption.

READ MORE...


European Buyout Industry Bounces Back to Pre-Crisis Levels After Portfolio-Focused Pandemic Hiatus

Brief: The European private equity industry rebounded strongly in the 12 months to 30 June 2021 following the initial shock of Covid-induced lockdowns, according to the first provisional half-yearly data announcement from CMBOR, the Centre for Private Equity and MBO Research, since its re-establishment within Nottingham University Business School last month with support from Equistone Partners Europe. CMBOR’s latest report has found that the volume of private-equity-backed acquisitions in Europe fell to its joint-lowest level since mid-2009 during the first wave of the pandemic. But after just 102 transactions were completed in Q2 2020, the industry quickly recovered to pre-Covid activity levels. The 791 buyouts that took place in the past 12 months, with a cumulative value of EUR116.6 billion, exceed the corresponding figures for 2019 (716 deals with an aggregate value of EUR112.4 billion) and approach the post-2008 high-water mark set in 2018 (811 deals valued at EUR124.7 billion). The resurgence in deal-making since Q3 2020 was also in evidence in exit activity, as private equity investors made 354 realisations totalling EUR98.9 billion in value, compared to 360 exits with a value of EUR73.7 billion in 2019. This too followed a decade-low exit volume of just 46 sales in Q2 2020.

READ MORE...


Asset Managers’ Dash to Digital Accelerates Amid Rising Pressure From Clients

Brief: Asset management firms are accelerating their digital transformation, with almost half planning to boost their digital spend in the coming year. The push to digitalise been driven by the rise of low-cost passive investing and digital-first challenger banks, which have squeezed the margins of traditional asset managers. Alpha FMC recently surveyed 36 asset managers with a collective USD25 trillion in assets under management, and found that almost all, 97 per cent, regard going digital as a top priority. Most managers, 69 per cent, are already undergoing or recently completed a significant digital transformation. However, most believe they are not yet fully meeting their clients’ and customers’ ever-shifting digital expectations. Nearly half of asset managers, 45 per cent, plan to increase spending by between 5 and 20 per cent over the next year.  This is on top of budget rises over the last year, as the coronavirus pandemic forced all areas of business to be conducted online, remotely. “Across the board we have seen managers progress well in shifting to digital and remote ways of delivering services to clients, to respond to the global pandemic,” says Kevin O’Shaughnessy, head of Digital and Agile Transformation at Alpha FMC.  O’Shaughnessy says that asset managers are now thinking about digital as a “core and critical function within the firm”.

READ MORE...


Contact Castle Hall to discuss due diligence
 
Castle Hall has a range of due diligence solutions to support asset owners and managers as our industry collectively faces unheralded challenges. This is not a time for "gotcha" due diligence - rather this is a time where investors and asset managers can and should work together to share best practices and protect assets. Please contact us if you'd like to discuss any aspect of how Covid-19 may impact your business.

About Castle Hall Diligence

Castle Hall helps investors build comprehensive due diligence programs across hedge fund, private equity and long only portfolios More →

Subscribe to Daily Covid-19 Updates