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Covid-19 Diligence Briefing

Our briefing for Tuesday, November 30, 2021:

  • The chairman of the United States’ Federal Reserve, Jerome Powell, said on Tuesday that the country’s economy will be negatively affected by new Covid-19 variant. “The recent rise in Covid-19 cases and the emergence of the omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation.” Powell continued to suggest that “greater concerns about the virus” could also negatively impact labor shortages and supply chains issues already plaguing the nation. Vaccine maker, Moderna, also made an announcement on Tuesday that its vaccine could be less effective at combating the omicron variant. “I think it’s going to be a material drop. I just don’t know how much because we need to wait for the data,” said Stéphane Bancel, Moderna’s chief executive. “But all the scientists I’ve talked to … [say] ‘this is not going to be good’.”

  • Canada is considering tightening its border restrictions until the threat from the omicron variant is better understood. Prime Minister Justin Trudeau told reporters on Tuesday that “even though Canada has very strong border measures now — we need vaccinations to come to Canada, we need pre-departure tests, we do testing on arrival,” he added that “obviously, we’re watching very, very closely the situation with omicron.” On Friday the government prohibited travelers from several African nations including South Africa, Mozambique, Namibia, and Zimbabwe from entering the country. The omicron variant was first detected in the continent last week. The World Health Organization says that the risk from the omicron variant is “very high” and early reports are suggesting that it may be more contagious than previous variants.

  • Every adult in the United Kingdom will be able to book a booster shot by the end of January according to British Prime Minister Boris Johnson. While all adults will soon be eligible, Johnson has advised against younger people attempting to book a third dose of the vaccine as there is not currently a large enough supply. “As with the first jabs, we’ll be working through people by age group,” Johnson said, “going down in five-year age bands, because it’s vital that the older and more clinically vulnerable get that added protection first.” The U.K. is ramping up its vaccine effort as news of the omicron variant has sparked concerns worldwide. “Please don’t try and book until the NHS says it’s your turn,” Johnson warned. The U.K. has already administered nearly 18 million doses of the booster shot, “but we’ve got millions more to do to protect the most vulnerable.” Johnson said.

  • The incoming vice chancellor of Germany has called for stricter restrictions for unvaccinated people in the country ahead of the transition of power. The current co-leader of the Green party Robert Habeck said that only those who have recovered from the virus or have had both doses of an approved vaccine should be allowed to enter “public settings” or use non-essential services. “We will need to face the winter with further coordinated measures,” Habeck said in a recent television interview. A sharp rise in cases and the transition to a new government has complicated efforts to curb the virus as Germany enters the winter flu season. On Tuesday, the Constitutional Court ruled against stricter lockdown restrictions in the country, despite the ongoing struggle in containing the surging case load. Helge Braun, the current chancellery minister has already proposed closing hard hit areas such as bars and leisure venues, in hopes that the new government may take action once they assume power.

  • China has announced a major effort to offer humanitarian aid to African countries to help the continent recover from the effects of the Covid-19 pandemic. President Xi Jinping has said the country will donate a billion Covid-19 vaccines, write off interest-free loans and inject billions of dollars to the economy to spur trade and infrastructure investments. China hopes that the vaccines will cover at least 60 per cent of the continent’s population by next year. While 600 million vaccines will be donated directly, the remainder will be produced in a joint effort from African countries in partnership with Chinese companies. China also intends to send several medical teams to the continent to help alleviate the pressure currently facing doctors in many African nations. The World Health Organization estimates that only 7 per cent of Africa’s population have been vaccinated due to limited vaccination services in rural areas and general hesitancy relating to the vaccines.

Covid-19 – Due Diligence And Asset Management

JPMorgan: Omicron Will Have a ‘Diminishing Impact’ on the Economy

Brief: Despite increased market volatility following the news that the Omicron virus variant appears to be spreading, its impact on the economy is likely to be less profound than that of its predecessors, according to J.P. Morgan Asset Management. David Kelly, chief global strategist at J.P. Morgan Asset Management, wrote in his weekly note that the “pandemic waves should have a diminishing impact on the economy” as people adapt to the new normal. He predicted that except for travel and entertainment, which heavily depend on in-person interactions, other sectors would see limited disruption. “Many people have simply mentally moved on from the pandemic and will not accept further restrictions on their activities,” Kelly wrote. “Others have adapted their lifestyles to be very efficient even in pandemic conditions, [by] conducting business over Zoom, buying online, and wearing masks into grocery stores.”

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Equity hedge funds flee Covid-sensitive stocks amid fears of new surge

Brief: Long/short equity-focused hedge funds are offloading or short-selling stocks that are most exposed to tighter Covid-19 restrictions, against a backdrop of surging coronavirus infections in Europe and heightening concerns surrounding the new Omicron variant. With Covid-19 cases rising across Europe – and Germany, Denmark and Austria recently reintroducing tighter restrictions – equities-focused managers in the US and Europe have cut both their net and gross exposures in recent weeks, now converging near their long-term lows, Lyxor Asset Management observed in its latest Cross Asset Research commentary. Stock markets fell sharply towards the end of last week following the emergence of the potentially more serious Omicron strain – considered a variant of concern by the World Health Organisation - which has resulted in fresh travel restrictions and renewed restrictions in several countries.

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How the Omicron Variant Could Impact Your Investments

Brief: If the Omicron variant of the coronavirus has you worrying about your investment portfolio, you’re probably not alone. The World Health Organization (WHO) says the new variant, which was first detected in South Africa in November, is likely to spread internationally and poses a “very high” global risk. That could mean future surges of COVID-19, with “severe consequences” in some areas, the WHO said in a brief. As we’ve seen in the past, surging COVID-19 cases can impact the market. When the virus first hit the U.S. in March of 2020, the S&P 500 — a benchmark commonly used to measure the strength of the overall stock market — dropped more than 30% between February and March. Since then, there has been a close relationship between which investments do well across all financial markets and whether virus cases are trending up or down. (For example, “defensive stocks” like water, gas and electric utilities tend to do well when cases are rising, since investors move towards investments with less market volatility during uncertain times.) On Friday, the Dow Jones Industrial Average had its worst day of the year as investors, and the S&P 500 and Nasdaq Composite slipped as investors got spooked by the Omicron variant. While stocks rebounded Monday, there’s no way to say for sure how much the new variant will continue to impact the market.

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North American stock markets rebound on hopes COVID variant not too severe

Brief: North American stock markets partially recovered from Friday's steep plunge as crude oil prices rebounded on hopes that the latest COVID variant won't result in new lockdowns. Markets suffered their worst day in more than a year to end last week with each losing at least two per cent on worries about the Omicron COVID-19 variant. News over the weekend that the first cases seemed to induce only mild infection gave investors a sense of comfort and saw risk appetite revive itself somewhat, said Candice Bangsund, portfolio manager for Fiera Capital. "It's still very preliminary and it's going to take a few weeks for scientists and for the population in general to see the severity and transmissibility of this strain," she said in an interview. "Markets are likely to trade in a choppy and uneven manner in the coming weeks until there's more clarity around this new strain and its impacts on the economy." Last week's selloff was short-lived but Monday's relief rally, while encouraging, was relatively muted because expectations for 2022 were optimistic for the global economy.

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Will Baillie Gifford’s big bet on Moderna pay off?

Brief: Omicron variant has helped the stock recoup heavy losses, but analysts question whether it can sustain sales momentum. Baillie Gifford’s big bet on Moderna has proved difficult this month, as the Covid vaccine maker has seen weaker sales momentum and competition from Covid pill makers, but could the arrival of the Omicron strain signal better times ahead? The Edinburgh manager is currently the largest institutional shareholder in the biotech firm, owning over 42 million shares or a 10.5% stake at the end of September. Currently eight of its funds and trusts hold Moderna in their top 10 holdings, according to FE Fundinfo. Moderna, which develops mRNA medicines to treat infectious diseases, had been the Edinburgh manager’s MVP during a year in which its funds have been battered by the cyclical recovery from the Covid crisis and the Chinese regulatory crackdown. Earlier this year Moderna’s share price was red hot, jumping 330% from $112 at the start of the year to $485 in early August. However, in early November it saw a third of its value wiped after revealing 2021 sales of its Covid-19 vaccine, known as Spikevax, would be around $3bn-$5bn lower than the $20bn previously forecast.

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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, November 29, 2021:

  • In the United States, President Joe Biden updated the public on the country’s response to the new coronavirus variant omicron.  Officials expect the variant to soon reach the United States, despite bans restricting travel from several countries in Southern Africa where it originated. Biden says the variant is “cause for concern, not a cause for panic.” The country’s top infectious disease expert, Dr. Anthony Fauci, says it will take about two weeks before more definitive data is available. “It clearly is giving indication that it has the capability of transmitting rapidly. That's the thing that's causing us now to be concerned," Fauci told NBC.
  • Canada is set to make a decision on booster shots as cases of the new omicron variant begin to emerge. Experts are currently divided over whether the booster program should be expanded to more Canadians, and the omicron variant is expected to heat up that debate. The U.S., the U.K. and Israel have expanded their booster programs as a way to address their latest surges. Some provinces and territories, such as Manitoba, the Yukon and the Northwest Territories, have already expanded access to boosters, while in other parts of the country they are reserved for certain vulnerable groups and healthcare workers.
  • In the United Kingdom, face masks will become mandatory indoors and on public transit as officials race to contain the spread of the new variant. So far there are two cases of omicron detected in the U.K., and they are linked to travel in South Africa. Under the new rules, everyone entering the U.K. will have to take a PCR test by the end of the second day after their arrival. Anyone in contact with a suspected omicron case will have to self-isolate, regardless of their vaccination status. The health secretary will ask advisers to consider rapidly expanding the booster program, including shortening the length of time between the second shot and the booster.
  • France has postponed its mandatory vaccination requirement for healthcare workers in the French Caribbean territories of Guadeloupe and Martinique. The health ministry made the announcement on Friday, explaining that the deadline for implementing the requirement would be pushed back to December 31 to allow for more dialogue. The announcement comes after several days of widespread protests in the two territories, with reports of journalists and police officers being attacked. Protesters are against the vaccine mandate for healthcare workers which is also in place across mainland France; they are also advocating for higher salaries and lower gas prices.
  • India will resume vaccine exports to the global COVAX initiative, after pausing them for nearly nine months. The Serum Institute of India, the world’s largest vaccine manufacturer, was supposed to have been COVAX’s main supplier, but they abruptly stopped shipments in April due to a major surge in coronavirus cases in the country. Serum resumed exports on Friday, with new infections in India at their lowest level in months. According to Bloomberg, exports of 5 million AstraZeneca doses were made through COVAX to Nepal, Tajikistan and Mozambique, and 20 million doses of the vaccine produced with Novavax went to Indonesia. 
  • New Zealand will still ease coronavirus restrictions this week, despite the threat posed by the new variant, Prime Minister Jacinda Ardern announced. From late Thursday, bars, restaurants and gyms in Auckland can reopen, ending a lockdown that has been in place since August.  New Zealand will move to a traffic light system that will rate regions as either green, red or orange depending on their level of exposure to the virus and vaccination rates. Auckland will begin at red, meaning that face masks are mandatory and there are limits on gatherings. Although New Zealand restricted travel from nine South African countries in response to omicron, Ardern said she doesn’t anticipate any further restrictions. She says more evidence is needed to understand the impacts of the new variant. "It may impact on our vaccines, but it may not. It may be more severe, or it may be more mild than Delta ... we simply don’t know," Ardern said at a news conference.

Covid-19 – Due Diligence And Asset Management

Bill Ackman says the Covid omicron variant could end up being bullish for markets

Brief: Investor Bill Ackman said the new omicron variant of the coronavirus could actually give U.S. stocks a boost if symptoms turn out to be less severe. “While it is too early to have definitive data, early reported data suggest that the Omicron virus causes ‘mild to moderate’ symptoms (less severity) and is more transmissible,” Ackman said in a tweet Sunday evening. “If this turns out to be true, this is bullish not bearish for markets.” The founder and CEO of Pershing Square Capital Management added it would be bullish for the equity market and bearish for the bond market.First detected in South Africa, the new Covid variant has now been found in more than a dozen countries, causing many to restrict travel from southern Africa. The World Health Organization labeled the omicron strain a “variant of concern” on Friday when the Dow Jones Industrial Average dropped 900 points to suffer its worst day since October 2020.

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Markets Face Weeks of Uncertainty in Wait for Virus Answers

Brief: The fate of global markets now depends at least in part on laboratories around the world probing the omicron Covid-19 strain, potentially leaving investors with weeks of uncertainty in the wait for answers. The variant detected in Africa is described as highly worrying and international travel bans are proliferating. Scientists are analyzing whether it can evade inoculations and the severity of illness it causes. Vaccine maker BioNTech SE expects the first data within two weeks, initial findings that will help determine if a passing scare or bigger hit to global economic reopening looms. Reports of mild omicron cases so far brought some stability to markets Monday after a plunge in stocks and crude oil and a spike in volatility on Friday.

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Goldman Outlines Scenarios for Omicron’s Impact on Global Growth

Brief: Goldman Sachs Group Inc. economists set out four scenarios for the potential impact on global economic growth from a new coronavirus variant, while adding that it’s too early to adjust their forecasts given it still isn’t clear which is likely to transpire. Downside Scenario: Omicron transmits faster than predecessor, delta. This results in first-quarter global growth slowing to a 2% quarter-on-quarter annual rate, or roughly 2.5 percentage points below Goldman’s current forecast. For 2022 as a whole, the global economy still expands by 4.2%, or 0.4 percentage points below current forecast, while the inflation outlook is “ambiguous. Severe Downside: Both the disease severity and immunity against hospitalizations are substantially worse than for delta. Global economic growth takes a more substantial hit, while “the inflation impact is again ambiguous”.

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Equity hedge funds flee Covid-sensitive stocks amid fears of new surge

Brief: Long/short equity-focused hedge funds are offloading or short-selling stocks that are most exposed to tighter Covid-19 restrictions, against a backdrop of surging coronavirus infections in Europe and heightening concerns surrounding the new Omicron variant. With Covid-19 cases rising across Europe – and Germany, Denmark and Austria recently reintroducing tighter restrictions – equities-focused managers in the US and Europe have cut both their net and gross exposures in recent weeks, now converging near their long-term lows, Lyxor Asset Management observed in its latest Cross Asset Research commentary. Stock markets fell sharply towards the end of last week following the emergence of the potentially more serious Omicron strain – considered a variant of concern by the World Health Organisation - which has resulted in fresh travel restrictions and renewed restrictions in several countries.

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BlackRock to Pay H.K., Singapore Staff $2,000 for Quarantine

Brief: BlackRock Inc is offering to reimburse some employees in Hong Kong and Singapore as much as $2,000 to help defray costs of hotel quarantine stays of as long as three weeks. The reimbursement is available to permanent employees in the two hubs, who are vice presidents and below and have more than 12 months of continuous service, according to an internal memo that was seen by Bloomberg News and confirmed by a spokesperson. The program, which went into effect at the beginning of November, will compensate employees 50% of the cost of hotel quarantine. A growing number of global firms in Hong Kong are helping with expenses related to hotel quarantine. JPMorgan Chase & Co. and Morgan Stanley are offering employees about $5,000 to offset quarantine costs amid growing concerns over staff retention in the financial hub. 

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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, November 26, 2021:

  • In the United States, President Joe Biden acknowledged Covid-19 victims in his Thanksgiving holiday message, explaining that this year’s celebrations were especially meaningful after last year’s separations. “As we give thanks for what we have, we also keep in our hearts those who we lost, and those who have lost so much. And those who have an empty seat at their kitchen table or their dining room table this year because of this virus or another cruel twist of fate or accident. We pray for them,” Biden said in a pre-recorded video message. His comments come as hospitals and healthcare workers across the country prepare for an increase in Covid-19 patients because of holiday travel. The country is averaging about 95,000 new coronavirus cases per day.   
  • In Canada, the government announced its latest pandemic aid legislation, proposing a spectrum of financial supports for Canadians who are still struggling. “Bill C-2 is designed with an understanding that our economic recovery is still uneven, and that the public health measures that are saving lives continue to restrict some economic activity,” said Deputy Prime Minister and Finance Minister Chrystia Freeland. The new legislation would expand the proposed Tourism and Hospitality Recovery Program to include more businesses in the cultural sector. Businesses would be eligible for a subsidy rate of up to 75%, so long as they can prove revenue losses of at least 40% over the past year, as well as revenue losses of at least 40% during the current month. The government introduced the legislation one month after announcing that the Canada Response Benefit and emergency wage and rent subsidy programs would wind down.
  • In the United Kingdom, flights from six African countries have been suspended as concerns rise over the new Covid-19 variant. Travellers arriving in the U.K. from South Africa, Botswana, Namibia, Zimbabwe, Lesotho and Eswatini will have to quarantine in a hotel for 10 days. Flights from the six countries were suspended until the hotel system is up and running. So far 59 cases of the variant have been identified in South Africa, Hong Kong and Botswana. No cases of the variant have been detected in the U.K. as of yet. Health Secretary Sajid Javid said the B.1.1.529 variant is a cause for major international concern, and that the government must act as quickly as possible. 
  • France will make Covid-19 booster shots available to all adults, the government announced on Thursday. Beginning next week, anyone age 18 and older will be able to get a booster shot, so long as at least five months have passed since their regular second shot. Previously in France, boosters were only available to those age 65 and older, those at high-risk of severe illness and healthcare workers. Those who fail to get a booster in time will see their health passes expire, meaning that they will be barred from entering restaurants, cinemas, and other public venues. After the announcement was made, vaccination rates in France soared, with over 400,000 new reservations being made in a day.
  • The Philippines will reopen its borders to some foreign tourists beginning in December. Travellers must be fully vaccinated and visiting from countries deemed low risk by the Philippines. Currently there are 44 countries included in the Philippines’ green list. Visitors will be allowed to enter over an initial 15-day period, according to Karlo Nograles, acting presidential spokesperson, who also said the two-week window could be extended. Nograles said travellers should also have a negative PCR test within 72 hours prior to departure of their country of origin. The Philippines initially shut its borders at the beginning of the pandemic back in early 2020.
  • Australia’s state of New South Wales (NSW) is scrapping mask requirements indoors from December 15, or once the state reaches 95% vaccination rates. Masks will soon only be required on public transit, planes and at airports. QR code check-ins, which are currently mandatory at all venues, will only be needed at hospitals, long-term care facilities, pubs and nightclubs. Despite only having emerged from one of the strictest lockdowns in the world last month, NSW has accelerated its push for normalization. High vaccination rates have been a big part of it, with some 92% of people in the state having had both shots, Bloomberg reports.

Covid-19 – Due Diligence And Asset Management

Covid risks can still derail U.K. recovery, BOE’s Pill says

Brief: Bank of England Chief Economist Huw Pill said new variants of the coronavirus and the risk of another lockdown are some of the risks that could blow off track the view of policy makers that the U.K. economic recovery is maturing. Speaking Friday as the emergence of the Nu variant of Covid-19 roiled global markets, Pill said the arrival of any new strain could disrupt the BOE’s guidance that rates have to rise in coming months. “If there’s a financial disruption, or if there’s the onset again of a pandemic and a lockdown, those are the type of events which clearly would change our view of the world. We hope those things don’t happen, Pill told business leaders in northern England. “We hope those things don’t happen. We don’t really know what the future holds. It’s those unknown unknowns that the most difficult to manage.”

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Traders unwind rate-hike bets as new COVID fears spread

Brief: Money markets are offloading bets on central bank interest-rate hikes in a hurry, as inflation fears give way to concerns that a new coronavirus strain may spread globally and slow economic growth. Traders have pushed back the timing of a 25-basis-point rate increase by the Federal Reserve to September from June, with only one further hike expected for the remainder of 2022. It’s a similar story in the U.K. where the Bank of England is now expected to tighten policy in February instead of next month. Wagers that the European Central Bank will raise its deposit rate by the end of next year have also been slashed, with only a seven basis-point increase priced in, around half of that seen earlier this week.

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UK entrepreneurship back on track with 15 per cent rise in number of new businesses created last year

Brief: UK entrepreneurs are leading the way out of the Covid-19 crisis with the number of new businesses created up 15 per cent in the last year, according to ECI Partners, a growth-focused mid-market private equity firm. According to figures from the ONS, a total number of 405,555 new businesses were created in the UK in 2020/21, compared to 352,575 in 2019/20. Despite the economic challenges of the pandemic, UK entrepreneurs have shown their resilience and the rise in business creation provides an optimistic outlook for new businesses in the UK. Mark Keeley, Partner at ECI Partners, says: “These figures really demonstrate the UK’s strong entrepreneurial spirit, with business leaders focussing on how to thrive rather than simply survive.”

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Bitcoin enters bear market territory as risk assets plunge on new Covid variant

Brief: Bitcoin fell sharply alongside other assets on Friday, hitting a seven-week low and officially entering bear market territory. The world’s biggest cryptocurrency sank nearly 8% in the last 24 hours to $54,315, according to Coin Metrics data. Bitcoin at one point traded as low as $53,549, its lowest level since early October. Bitcoin is down more than 20% from an all-time high of nearly $69,000 which it hit earlier this month. Bear markets are typically defined by a decline of 20% or more from recent highs. Other cryptocurrencies also plunged Friday. Ether, the second-biggest crypto, fell 10% to $4,062, while XRP slumped 10% to around 95 cents. Digital currencies are falling in tandem with other risk assets amid panic over a new, heavily-mutated variant of the coronavirus first detected in South Africa.

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Airline shares skid on South Africa travel bans tied to variant

Brief: Airline shares tumbled on Friday after the U.K. instituted a temporary ban on flights from South Africa and Germany prepared to restrict entry along with other European Union members. Israel and Singapore have also curbed access from South Africa and neighboring nations to fight an emerging strain of coronavirus that has alarmed health officials across the world. European Commission President Ursula von der Leyen proposed an “emergency brake” on air travel from South Africa, which allows EU member countries to act quickly to limit the risks from emerging virus variants. British Airways parent IAG SA sank 21%, while Deutsche Lufthansa AG fell 14%. Ryanair Holdings Plc, Air France-KLM and other European airlines registered drops of similar magnitude.

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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, November 25, 2021:

  • Beginning on January 22, the United States will require all travelers crossing the land border into the country to be fully vaccinated. All non-residents of the U.S. will now have to show proof of two doses of an approved Covid-19 vaccine, bringing regulations for essential travelers in line with those made for leisure travelers earlier this month. American citizens will remain eligible to cross the border without proof of vaccination, provided they have passed the required tests before entry. The proof of vaccination requirement was temporarily delayed allowing trade between Canada and the United States to remain unimpeded as it was throughout the pandemic thus far. Meanwhile, due to the extensive flooding in British Columbia, some border restrictions have been waved to allow for Canadian residents to pass through the United States to get home as many roads remain closed in the province.

  • Canada has become the first country to grant full approval to the Johnson & Johnson single-shot Covid-19 vaccine. People 18 and over will now be able to receive the Johnson & Johnson vaccine that had been approved for use under an interim order earlier in the year. The vaccine was approved for emergency use in several countries across the globe including the United States. In August, Canada had agreed to send roughly 10 million doses of the J&J vaccine to poorer countries who were unable to secure vaccines on their own. Canada has so far administered over 60 million doses of Covid-19 vaccines since the pandemic began and is currently registering just under 2500 new cases of the virus a day.

  • Ministers in the United Kingdom are urging the public to get a Covid-19 booster shot before the holiday season. Experts are recommending that Britons do everything in their power to get a booster shot before December 11 to ensure they have the strongest amount of protection against the virus before Christmas Day. Earlier this month Prime Minister Boris Johnson acknowledged that the vaccine efficacy wanes over time, and that booster shots remain the best defense against contraction the virus. Nearly 16 million people across the country have already received a booster shot or third dose of the vaccine, currently, anyone over 40 or those deemed especially vulnerable are eligible to receive a third dose. A Department of Health and Social Care spokesperson said, “those eligible for a booster have been urged to take up the offer as soon as possible to protect themselves and their families and help to reduce the pressure on the NHS.”

  • On Thursday, Germany became the fifth country in Europe to surpass 100,000 deaths related to Covid-19. Chancellor Angela Merkel called it a “very sad day” in a press conference in Berlin. “And unfortunately, at the moment, more than 300 deaths are being added to that each day,” she added. Merkel, who is acting as a caretaker before her new replacement Olaf Scholz is sworn in, has praised the new government for creating a specialized group of experts tasked with containing the virus. In the last 24 hours, Germany broke their single day record of new confirmed cases of the virus with 75,961. The country has seen over 5 million confirmed cases of Covid-19 since the start of the pandemic. With ICU beds in the country filling up, Germany has now contracted medical evacuation airlifts to transfer patients to regions with more available hospital beds.

  • South African scientists have found a new variant of the Covid-19 virus on Thursday. The new variant, named B.1.1.529 has been found in Botswana and Hong Kong in travelers that had recently visited South Africa. Virologist Tulio de Oliveira said that the variant has a “very unusual constellation” of mutations that could help the virus evade the body’s immune response, making it very easily transmissible. Health Minister Joe Phaahla said on Wednesday that the variant is behind an “exceptional” rise in cases over the last week, which could make it a “major threat.” New daily infections in the country were close to 1200 on Wednesday, up drastically from roughly 100 earlier in the month. Early indicators show that the new variant has already spread substantially in South Africa’s most populous province of Gauteng. Phaahla has said that it is still too early to tell whether the country will impose stricter restrictions due to the new variant.

Covid-19 – Due Diligence And Asset Management

Four in 10 Canadian businesses say profitability won't return to pre-COVID levels until 2023

Brief: Nearly 40 per cent of Canadian businesses say they do not expect a return to pre-pandemic profitability levels by the end of next year, as concerns about rising inflation and new waves of COVID-19 weigh on business prospects. That's according to HSBC's most recent Voice of Business survey of more than 7,300 business leaders in 14 countries, including 536 Canadian companies. The survey found that 25 per cent of businesses will reach pre-pandemic levels of profitability by the end of the year, and another 36 per cent expect to hit those levels by the end of 2022. But other companies expect a more prolonged recovery period, with 39 per cent reporting that they will return to pre-pandemic levels of profitability after 2022. The survey also found that Canadian businesses are feeling more pessimistic about their future growth prospects than entrepreneurs in other countries. In Canada, 56 per cent of businesses say they feel more optimistic than they did a year ago – a time that was marked by COVID-19 uncertainty – compared to 72 per cent in the U.S. and 64 per cent globally.

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Europe Lockdowns Put $50 Billion of Bonds on Cusp of Junk Grade

Brief: A new wave of junk downgrades looms over Europe as the region shudders under one of the worst outbreaks of the pandemic. Some 84 bonds worth 46 billion euros ($52 billion) are on the cusp of losing their investment-grade ratings -- marking a reappearance for fallen angels that had all but vanished this year, according to Bloomberg Intelligence analysts. “With European lockdowns back on, fallen angels are a worry,” Mahesh Bhimalingam and Bhumika Gupta wrote in research published Thursday. There was just one fallen-angel downgrade in Europe in the past six months, they wrote. The downgrades are another sign of cracks emerging in the European credit market that’s been buttressed by central bank bond buying for years and even more so during the pandemic. But now that support is set to diminish as soon as March -- and the prospect is pushing up borrowing costs and volatility. The risk premium in euro-denominated corporate bonds, as measured by Bloomberg indexes, just rose above 1% for the first time in more than a year. This comes as spread volatility is rising to multi-month highs from depressed levels.

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Europe’s Recovery at Risk From Covid Wave, Inflation Pressure

Brief: Euro-area business activity unexpectedly quickened, though the region’s recovery faces headwinds from a fresh wave of Covid-19 infections and “record inflationary pressures.” IHS Markit’s composite Purchasing Managers’ Index rose to 55.8 in November from 54.2 in October, according to a survey of purchasing managers by IHS Markit published Tuesday. While that defies the median estimate in a survey of analysts that forecast the measure would retreat, it still points to weaker economic growth in the closing quarter of 2021, the report said. That’s partly down to the pandemic’s latest surge across Europe, which looks set to cause renewed disruptions to the economy in December. Any new lockdowns are likely to hit the currently thriving services sector, while manufacturing is already suffering from a global supply squeeze.

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European close slightly higher despite Covid concerns; Telecom Italia up 16%

Brief: European stocks eked out small gains on Wednesday as traders digested a fresh batch of economic data and monitored the region’s latest Covid surge. The pan-European Stoxx 600 closed up 0.1% after choppy trading earlier in the session. Telecoms shares rose 1.2% to lead the gains while autos stocks sank 1.5%. European investors continue to monitor the acute Covid crisis in the region this week, with more countries considering stricter restrictions and partial lockdowns to curb rising infections. Germany is expected to make a decision on stricter measures on Wednesday amid a surge in cases there, and France recorded more than 30,000 new daily infections on Tuesday for the first time since August. In political news, German parties agreed to form a three-way coalition after almost two months of talks. The deal will see Olaf Scholz, the center-left Social Democratic Party’s candidate, become Germany’s next chancellor, replacing Angela Merkel who has led Germany for 16 years.

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Hong Kong’s status as a global financial centre can withstand city’s quarantine rules, SFC chief says

Brief: The head of Hong Kong’s securities watchdog categorically defended the government’s restrictive quarantine policy, saying that it will not affect the city’s status as a global finance hub. “There will be no long-term impact on Hong Kong as an international financial centre,” said Ashley Alder, chief executive of Securities and Futures Commission. Alder, who is currently undergoing a 21-day quarantine after returning from the COP26 climate summit in Glasgow, answered media queries from his hotel room as he remotely took part in the SFC Regulatory Forum. Other financial centres like Singapore, London and New York have eased travel restrictions and opted for “living with Covid”. Hong Kong, on the other hand, has adopted a zero-Covid-19 policy and requires travelers to undergo up to 21 days of compulsory quarantine. “The other cities cannot replicate what we are doing,” he said. “Hong Kong has a range of successful cross-border trading schemes with the mainland, including the two Stock Connect schemes, Bond Connect and Wealth Management Connect schemes.”

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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, November 24, 2021:

  • In the United States, the number of coronavirus deaths for this year has surpassed last year’s number. According to the Centers for Disease Control and Prevention, there were 386,233 Covid-19-related deaths in 2021 as of Tuesday, compared with 385,343 in 2020. The percentage of U.S. deaths that Covid-19 accounted for was also higher this year, at 13% compared with about 11% in 2020. Experts say there are a number of reasons for the higher death toll, with the main reason being the relaxation of curbs like mask wearing and social distancing amidst the circulation of the highly infectious delta variant.  Currently about 59% of Americans are fully vaccinated.
  • In Canada, with vaccines for children ages five to 11 recently arriving in the country, the provinces are outlining their rollout plans. British Columbia will start next week, with families being invited to book appointments after they’ve been registered through the “Get Vaccinated” portal. Quebec’s premier said their vaccine campaign will move into schools next week, while in Alberta, appointments will be available from Friday at Alberta Health Service clinics and some pharmacies around the province. Ontario, Saskatchewan, Manitoba, New Brunswick, P.E.I. and Newfoundland and Labrador have also announced their rollout plans for vaccinating the age group. 
  • In the United Kingdom, experts are warning that some ministers may have “lost the message” around Covid-19 restrictions. As the Independent reports, members of the government’s Scientific Advisory Group for Emergencies (Sage) warned that the messaging has slipped around basic curbs like mask wearing and social distancing, a cause for concern as the weather gets colder and the holidays approach. Despite the prime minister’s position that workers should be returning to the office, Sage members say the government should be encouraging people to work from home wherever possible. With more than 1000 weekly deaths recorded on Tuesday for the first time in eight months, the experts say the U.K. government will need to do more to keep people safe this winter.
  • France’s Prime Minister Jean Castex has tested positive for Covid-19 and is now in isolation. According to the prime minister’s office, Castex contracted the virus from his 11-year-old daughter, who is not able to be vaccinated because vaccines aren’t yet approved in the E.U. for those under 12. Castex, who is vaccinated himself, has only experienced mild symptoms so far and plans to work throughout his 10 days in isolation. Five Belgian ministers are also now in isolation after meeting with the French prime minister on Monday. His positive results come as Covid-19 cases surge across much of Europe, with most governments choosing to tighten restrictions. 
  • Italy’s government is introducing tough new restrictions for unvaccinated people. The Italian “Super Green Pass” comes into effect on December 6 and will only allow vaccinated people to enter non-essential facilities like cinemas, theatres, nightclubs and gyms, as well as be served in bars and restaurants. Under the new rules, the unvaccinated will still be allowed to access their workplaces after testing negative for the virus. Italy remains especially cautious as case numbers and deaths continue to rise steadily. They recently shortened the timeframe for booster shots from six months to five months after the regular second shot.
  • New Zealand will reopen its borders to fully vaccinated foreign travellers beginning in 2022. Covid-19 Response Minister Chris Hipkins explained that the country will take a phased approach to the reopening, beginning with New Zealand citizens and residents travelling from Australia in January. By February, New Zealand citizens travelling from other parts of the world will also be allowed in, and by April 30, fully vaccinated tourists from all other countries, unless they’re deemed high-risk, can enter. "A phased approach to reconnecting with the world is the safest approach to ensure the risk is carefully managed," Hipkins said. "It reduces the potential impacts on vulnerable communities and the New Zealand health system."

Covid-19 – Due Diligence And Asset Management

ECB’s Holzmann Says Pandemic Buying May Be Put on Hold Next Year

Brief: The European Central Bank may decide to only put its 1.85 trillion-euro ($2.1 trillion) pandemic bond-buying program on hold rather than abolish it after net purchases are set to end in March, according to Governing Council member Robert Holzmann. The program, which was launched in 2020 to address the pandemic shock and fragmentation on euro-area bond markets, could enter a “waiting room” rather than be terminated as the ECB’s crisis response moves into a new phase, Holzmann said at a news briefing in Vienna. This will be in order to “save the advantages of flexibility in case they become necessary in the event of economic shocks, which are definitely possible, but we do not expect,” he said.At issue is the question whether the ECB should hold on to the versatility of its crisis tools even after it shifts its focus on more conventional instruments.

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German Business Confidence Slumps as Virus Threatens Rebound

Brief: German business confidence took another hit in November, with a new wave of Covid-19 infections looming over the economy and rising inflationary pressures threatening to weigh on manufacturing. A gauge compiled by the Munich-based Ifo Institute dropped for a fifth straight month to its lowest since April. Economists had predicted a decline to 96.7. Expectations for the next half year also worsened. The report underscores mounting challenges facing German businesses, which are now facing a resurgent pandemic -- having already struggled with supply disruptions for most of 2021 as demand across the globe rebounds following lockdowns. A separate purchasing managers’ index Tuesday showed “unprecedented inflationary pressures” are threatening to restrain output in the coming months. The Bundesbank warned this week that inflation may approach 6% in November, and could stay elevated for a longer period than originally thought.

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Nordea Staff in Denmark Urged to Carry Covid Passport at Office

Brief: Nordea Bank Abp is urging its employees in Denmark to bring a Covid certificate when working at the office. The biggest Nordic bank isn’t currently checking whether employees have a Covid passport, but said staff are “expected to act responsibly” and follow hygiene protocols. The purpose is to limit the spread of the virus, a Nordea spokesman said in an emailed response to questions. The lender also provides Covid testing at its largest locations in Denmark. Nordea’s move comes at a time when Denmark is working on rushing through legislation that will allow employers to demand workers have a valid Covid passport. And even though those proposals are not yet in place, they do have the backing of a major labor organization.

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Millions in U.K. Covid Loans Went to Inactive or Brand-New Firms

Brief: As coronavirus ripped through Britain and businesses faced a potentially fatal cash squeeze, a company controlled by one of the U.K.’s richest financiers, John Beckwith, received a taxpayer-backed relief loan for about 3.7 million pounds ($5 million) — even though the firm hasn’t been trading for years. A Bloomberg News review of almost half of the loans granted under the U.K. government’s 26.4 billion-pound Coronavirus Business Interruption Loan Scheme (CBILS) shows that lenders handed out more than 130 million pounds to companies with similarly questionable claims, despite a requirement that borrowers had to be negatively affected by the pandemic. One emergency loan, for 4.7 million pounds, went to a firm founded just two days before it received the funds, corporate records show.

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Zoom Set to Lose $100 Billion From Peak Value as Pandemic Gains Fade

Brief: Zoom Video Communications Inc., the poster child of the so-called “pandemic winners” basket, is losing more of its luster. The video conferencing company slumped 15% to close at the lowest since June 2020. Its latest quarter showed slowing growth as people started socializing in-person -- also a trend that roiled the shares of other lockdown winners Peloton Interactive Inc. and Teladoc Health Inc. Including Tuesday’s losses, Zoom saw about $100 billion wiped out from its market value since its October 2020 peak, which is a decline of 64% for the stock. Despite the pullback, the stock is still up nearly 500% since its 2019 debut. Both Zoom and Peloton have given back the bulk of their gains since the pandemic’s onset, suffering lockdown withdrawal symptoms.

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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, November 23, 2021:

  • Experts in the United States are suggesting that lockdown measures to curb the spread of Covid-19 will likely continue to be left up to state and local officials. While other countries throughout the rest of the world have imposed nation-wide lockdowns, the United States is unlikely to follow suit. “The political will to do so just isn’t there,” said Nicholas B. Creel, PhD, a political scientist, and assistant professor of business law at Georgia College and State University. “Moreover, the federal government isn’t able to do much in the way of restrictions given our federalist system that largely empowers states to dictate policies that directly impact the health of their population,” he added. Courts in the country are currently deciding whether the proposition from the Biden administration to mandate vaccines for businesses with over 100 employees is legal. If upheld, the move could affect up to 100 million Americans.

  • Today, the Liberal government in Canada will deliver a throne speech marking its third term in office. Governor General Mary Simon will deliver the speech, her first since taking over for the former Governor General, Julie Payette, in July. Liberal Government House Leader Mark Holland said on Monday that the speech “will focus very heavily on the circumstances of the pandemic and putting the pandemic behind us and continuing growth." He went on to say that the speech would announce new support for sectors that have been "adversely impacted by the pandemic." The Liberal government had previously promised to continue with the Canada Recovery Hiring Program, which will help subsidize costs for businesses that are hiring new workers until at least March of 2022. The government also plans to introduce legislation that will criminalize anti-vaccination protests outside of hospitals and other health care facilities.

  • The United Kingdom has officially recognized India’s Covaxin as a valid Covid-19 vaccine. In an announcement the country has said that it will recognize any vaccine that is on the World Health Organization’s Emergency Use Listing (WHO EUL). The list includes Covaxin, Sinovac and Sinopharm Beijing. Earlier this month British High Commissioner to India, Alex Hales tweeted that those who have received a vaccine authorized by the WHO EUL will be allowed to enter the country starting on November 22nd. As of early Monday morning, travelers with two doses of an approved vaccine will no longer be required to self-isolate upon entering the country. The new measures will now benefit people wishing to enter the U.K from countries such as the United Arab Emirates, Malaysia, and India. The vaccines now recognized in the U.K. are Oxford-AstraZeneca (Covishield), Moderna, Janssen, Pfizer BioNTech, Sinovac, Sinopharm Beijing and Covaxin.

  • Amid a rapid surge in Covid-19 cases, Germany’s top health official on Tuesday said that he would not rule out another nation-wide lockdown, but it is something they are actively trying to avoid. Health Minister Jens Spahn said that if lockdowns were to occur that he hopes it would be a “regional measure,” and limited to places where the case increases are “very very dramatic.” Infections in the country on Tuesday were about 400 in every 100,000 people, however, in places like Bavaria incidence rates were numbering close to 650 in every 100,000, and in Saxony nearly 1000. “In these regions, in the hospitals, everything has simply ground to a halt,” Spahn said. “That means you can’t rule out measures in advance.” Europe continues to be the epicenter of the pandemic with Austria imposing a national lockdown on Monday, and partial shutdowns imposed in both the Netherlands and Italy. 

  • Despite other nations easing Covid-19 regulations, China is remaining committed to their Covid Zero policy. The Delta variant has taken hold in the country with China seeing the sharpest rise in new cases since May. In the first 18 months of the pandemic China had seen 177 days without a new infection, now it is the last country unwilling to accept it may have to live with the virus in its midst. “The outbreaks in China’s neighbors and around the world remain elevated,” said Wu Lianyou, an official with China’s National Health Commission,
    “creating a complicated and grave challenge for this winter and next spring,” he continued, reiterating that China will remain sealed off from visitors. Local authorities have initiated blitz testing and stricter lockdown measures to ensure that any flare-ups are quelled as quickly as possible. According to officials, so far China has seen less than 5000 deaths related to Covid-19.

Covid-19 – Due Diligence And Asset Management

Alternative funds industry has deftly navigated pandemic-related disruption and uncertainties, says EY survey

Brief: EY has published the 2021 EY Global Alternative Fund Survey, which offers a comprehensive overview of the perspectives from alternative fund managers and the institutional investors who allocate to these asset classes. The 15th annual survey sheds light on the topics that will be transforming the industry for years to come, including investors' improved perception of alternative funds; the growing importance of ESG and diversity, equity and inclusion (DEI) considerations; and the industry's view on product and strategy expansion into areas such as digital assets and an increased desire for exposure to private markets. "Beyond reflecting on how alternative fund managers and their investors addressed the ongoing challenges posed by COVID-19, this research highlights the resilience of our industry and the key transformations that managers and investors are partnering to affect," saisaysd Natalie Deak Jaros, EY Global Hedge Fund Co-leader and Americas Wealth & Asset Management Co-leader. "2021 was a year in which the industry invested to build significant momentum around various initiatives that will pay dividends for years to come."

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Investors call for restraint on executive pay and bonuses during pandemic recovery

Brief: Investment managers expect companies to restrict executive bonuses if government support has not been paid back during the year under review, according to the Investment Association (IA) latest annual pay guidelines. The majority of companies have been sensitive to the experiences of their stakeholders, employees and customers throughout the Covid-19 pandemic when deciding on pay and bonuses. According to the trade body, 13% of the 83 FTSE companies analysed were "colour topped" by the Institutional Voting Information Service (INVIS) for their Covid response during the 2021, AGM season. The colour code, or ‘Top’, helps highlight the severity of issues to be considered. The IA also wrote to the chairs of FTSE 350 Remuneration Committees, which told companies that ESG metrics should also determine executive pay and bonuses. Fund managers want to see that ESG metrics are clearly linked to company strategy. “The rationale and robustness of ESG performance-related targets should also be made clear to investors,” the IA wrote. “Companies with ESG risks and opportunities incorporated into their long-term strategies should have these similarly incorporated into their remuneration structures, and where they haven’t, should explain to investors how they will do this in future years.”

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Europe’s Recovery at Risk From Covid Wave, Inflation Pressure

Brief: Euro-area business activity unexpectedly quickened, though the region’s recovery faces headwinds from a fresh wave of Covid-19 infections and “record inflationary pressures.” IHS Markit’s composite Purchasing Managers’ Index rose to 55.8 in November from 54.2 in October, according to a survey of purchasing managers by IHS Markit published Tuesday. While that defies the median estimate in a survey of analysts that forecast the measure would retreat, it still points to weaker economic growth in the closing quarter of 2021, the report said. That’s partly down to the pandemic’s latest surge across Europe, which looks set to cause renewed disruptions to the economy in December. Any new lockdowns are likely to hit the currently thriving services sector, while manufacturing is already suffering from a global supply squeeze.

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Private equity on course to invest over USD1tn in US economy in 2021

Brief: For the first time in history, private equity is on track to invest more than USD1 trillion in American businesses over the course of a single calendar year, according to the American Investment Council’s (AIC) 2021 Q3 Investment Trends Report. Through the end of the third quarter, private equity has invested USD788 billion in 4,806 businesses across the United States. The amount invested represents an 86 percent increase from the same period in 2020. “Today’s report confirms that private equity has been a critical partner to help businesses of all shapes and sizes as the American economy recovers from the COVID-19 pandemic,” says AIC President and CEO Drew Maloney. “Private equity is a particularly critical partner for small businesses that need the capital and expertise to survive and grow. The industry’s continued growth is a testament to the strength of these partnerships and private equity’s critical role in powering the American economy.”

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Prudential commits to Support Cambodia in its post pandemic recovery with a special focus on helping students return to schools

Brief: As COVID-19 cases stabilize and Cambodia enters a post pandemic recovery phase, schools have been reopening under the “back to school” campaign. Prudential Cambodia has committed $100,000 in 2021 to support the Ministry of Education, Youth and Sports and other NGO partners in their efforts to provide quality education as well as ensure public safety. The funds will be used to donate high quality thermometers and masks, and other necessary items to encourage students especially those in middle or higher education to return to school. His Excellency Dr. Hang Chuon Naron, Minister of Education, Youth and Sports said, “I would like to thank Prudential Cambodia for their support on our back to school campaign which will enable children to continue their education during this challenging time”. “Prudential is committed to supporting our communities as they recover from the pandemic. Education is critical to an individual’s success in the future and we are happy that we are able to help parents and students in Cambodia continue to access quality education in a safe manner,” said Mr. Sanjay Chakrabarty, Chief Executive Officer, Prudential Cambodia.

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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, November 22, 2021:

  • The United States’ chief medical adviser Dr. Anthony Fauci urged Americans to get their booster shots ahead of the busy Thanksgiving holidays. The nation’s top infectious disease expert warned that colder temperatures are starting to drive cases back up, and that 60 million people across the country are still unvaccinated. “We have a lot of virus circulating around. You can’t walk away from the data, and the data show that the cases are starting to go up, which is not unexpected when you get into a winter season. People start to go indoors more and we know that immunity does wane over time,” Fauci said on CNN’s State of the Union. Fauci also recently clarified that the definition of fully vaccinated remains the same (2 doses of vaccine), despite some officials saying that people are no longer fully vaccinated until they’ve had booster shots.

  • In Canada, the Canadian Medical Association (CMA) is calling on the federal government to make working conditions safer for frontline healthcare workers. In a statement released Thursday, the CMA calls on Ottawa to make changes to the Criminal Code that would make it an offence to obstruct access to any healthcare facility, and to threaten or intimidate any healthcare worker or person seeking healthcare. On September 13, during the federal election campaign, Prime Minister Justin Trudeau promised that his government would make these changes if re-elected.  Now the CMA is urging Ottawa to keep that promise, as well as contacting an array of social media companies to work on an action plan that would stop online harassment and threats against healthcare workers.

  • In the United Kingdom, the government is investigating whether built-in racial bias was present in some medical devices, which may have caused people of colour to get sick and die of Covid-19 in disproportionate numbers.  Oximeters, which estimate the amount of oxygen in a person’s blood, have been shown to be less effective for people with dark skin, which may have led to thousands of unnecessary deaths during the pandemic. “There are research papers already on this and no one did anything about it,” Health Secretary Sajid Javid said. “Now, I’m not saying this was deliberate by anyone, I think it’s just it’s a systemic issue potentially, with medical devices and it may go even further than that with medical textbooks, for example.” Javid said findings from a U.K. review that also looked at gender bias will be released in January.

  • The French government sent dozens of special forces to the Caribbean island of Guadeloupe, an overseas territory of France, amid an eruption of protests over Covid-19 restrictions that escalated into looting and rioting. In Pointe-a-Pitre, the island’s largest urban centre, three people were injured after clashes with police and several shops were looted. Over 30 people were arrested overnight into Sunday morning. Demonstrators were protesting mandatory vaccinations for healthcare workers and France’s Covid-19 health pass. Vaccination rates in Guadeloupe are much lower than in the rest of France, at 33% compared with 75%.

  • Germany has declared a nationwide state of emergency amid surging Covid-19 cases, the head of the Robert Koch Institute announced on Friday. Lothar Wieler called for urgent additional measures to address the rise in cases as they topped 50,000 for the third day in a row. “All of Germany is one big outbreak," Wieler told reporters. "This is a nationwide state of emergency. We need to pull the emergency brake.” His comments came right after the upper house of parliament approved new restrictions that will come into effect on Wednesday. The new restrictions will require proof of vaccination for access to shared workplaces and public transportation. 

  • Australia will allow fully vaccinated foreign visa holders to enter the country from early December, Prime Minister Scott Morrison announced. Australia’s borders have been closed since May 2020, with only restricted numbers of citizens and permanent residents allowed in. From December 1, the rules will change to allow students, business visa holders, and refugees to arrive. Fully vaccinated tourists from South Korea and Japan will also be allowed to enter. “Steps we are taking today are about securing our economic recovery, steps we are taking today are about Australians looking forward, steps we are taking today is about taking Australia forward,” Morrison said at a press briefing.

Covid-19 – Due Diligence And Asset Management

JPMorgan to Reimburse $5,000 to Hong Kong Bankers for Quarantine

Brief: JPMorgan Chase & Co. is offering to reimburse Hong Kong employees up to $5,000 to compensate for their quarantine stay as the financial hub sticks to its zero-Covid policy. All Hong Kong-based employees who are executive directors and below may claim the amount for a single quarantine stay for personal trips undertaken by employees visiting immediate family members, which includes spouses, domestic partners, children, parents and grandparents, according to an internal memo. A Hong Kong-based spokeswoman confirmed the content.“We recognize that the costly quarantine measures in place in Hong Kong associated with COVID-19 have impacted many of you with respect to visiting family and loved ones overseas,” JPMorgan’s Hong Kong chief Harshika Patel said in the memo. The program applies to employees under quarantine between Dec. 1, 2021 and Nov. 30, 2022, the memo said.

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European markets retreat slightly as Covid-19 concerns weigh

Brief: The pan-European Stoxx 600 slipped 0.2% by mid-afternoon, with telecoms climbing 1.3% while travel and leisure stocks fell 1.3%. U.S. stock futures pared earlier gains but were still up marginally in premarket trading on Monday ahead of the holiday-shortened week stateside. U.S. markets will be closed on Thursday on Thanksgiving Day and the stock market closes early at 1 p.m. ET on Friday. Stocks have a track record of posting gains in Thanksgiving week, which will potentially set the stage for a year-end Santa rally. European investors will be keeping an eye on the spread of Covid-19 across the continent after Germany and Austria re-imposed strict containment measures last week. Another big market-moving event this week will be President Joe Biden’s nomination for the next Federal Reserve chief.

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Second Winter of Woe Threatens Global Economy

Brief: The world economy is approaching the northern hemisphere winter in disarray, unable to shake off the coronavirus crisis amid persisting supply disruptions, soaring prices and resurgent outbreaks. Global surveys of purchasing managers this week are likely to point that way. Among the outcomes anticipated by economists are slowing manufacturing and services activity throughout the euro zone and the U.K., and only modest improvement in the U.S. With parts of Europe confronting renewed restrictions to contain another wave of the virus, China’s rebound fading and rising infections taking hold in America too, much of the global economy is now staring at the threat of a second northern winter of woe, compounded by a cost-of-living squeeze amid surging gas prices and supply bottlenecks.

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Manulife set to reopen Canadian offices in late January

Brief: Manulife Financial Corp. plans to reopen its Canadian and U.S. offices on Jan. 24, with some employees on hybrid models that will bring them into the workplace three days a week. Many workers will visit the office on Mondays, Wednesdays and one additional flex day per week, Chief Executive Officer Roy Gori and the firm’s executive leadership team said in a memo to staff on Friday. “We have listened to your feedback, heard from medical experts and government officials, and talked with our peers across the market,” the executives said in the memo.Our goal is to balance the flexibility many of us have enjoyed as a silver lining to the pandemic with our amazing on-campus culture where we can get it done together.” Manulife’s announcement comes two days after Bank of Nova Scotia, Canada’s third-largest lender by assets, set Jan. 17 as the date it would start a phased return to office.

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Less of the same: Investors should brace for positive but below average returns in 2022, says Pictet's Paolini

Brief: The outlook is still good for investors, says Luca Paolini, chief strategist at Pictet Asset Management. “Equity prices have reached a record high, up nearly 100 per cent from the pandemic low, much faster than anticipated. Whilst the outlook should seem good for investors, some factors will cap the expected returns for both equity and bonds in 2022. “Record valuation, tighter monetary/fiscal policy and the surge in inflation will keep the pressure on, resulting in single digit return for equities. Bonds, we think have entered a secular bear market, although a significant breakout in yields looks unlikely.” “Next year will be ‘less of the same’, rather than a turning point. We are in the last third of the expansion in what has been the most accelerated market and business cycle in history.”

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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, November 19, 2021:

  • In the United States, the government is set to purchase 10 million courses of Pfizer’s new Covid-19 treatment, if regulators authorize it. The deal will cost $5.29 billion, though the drugs are about 25% cheaper than the oral Covid-19 pills made by Merck, who the U.S. also has a contract with. Pfizer has asked the Food and Drug Administration (FDA) to approve the experimental pill for emergency use; the FDA is already reviewing the submission from Merck and will have a meeting about it later this month. Both oral treatments have been shown to significantly reduce the risk of hospitalizations and deaths among people with coronavirus infections.
  • In Canada, the province of Ontario announced that they will bring Covid-19 testing sites to shopping malls and other busy locations over the winter months, in an effort to help curb the spread of the virus. Deputy Premier Christine Elliott made the announcement on Thursday, explaining that the sites will offer tests to asymptomatic people in areas with high infection and hospitalization rates and lower vaccination levels. Ontario students will also be sent home over the winter break with rapid Covid-19 tests as part of the government’s winter testing plan. The program is voluntary and instructs students to test every three to four days over the holidays beginning December 23. 
  • In the United Kingdom, the government was not prepared to respond to the Covid-19 pandemic and the impacts it had on society, a new report has found. The report from the National Audit Office (NAO) said the government lacked planning on shielding, job support programs and school disruption. The spending watchdog also said that time and energy spent preparing for Brexit took up a significant number of resources. The NAO also found that overall, the pandemic “exposed a vulnerability to whole system emergencies,” and that there was “limited oversight and assurance” of the plans the government had in place.
  • The Philippines approved emergency use authorization of Novavax’s Covid-19 vaccine, becoming the second country to do so, after Indonesia. The vaccine will be manufactured by Serum Institute of India, under the brand name Covovax.  The shots are to be taken in two doses not less than 21 days apart and are approved for adults ages 18 and older. Only about 35% of the population is fully vaccinated in the Philippines.  The Southeast Asian nation has approved eight other vaccines for emergency use: Pfizer-BioNTech, Moderna, Johnson & Johnson, AstraZeneca, Sinovac, Sinopharm, Gamaleya Sputnik V and Bharat Biotech.
  • Japan’s Prime Minister Fumio Kishida announced a record $490 billion stimulus package to help the economy recover from the coronavirus pandemic. The package includes cash handouts to families with children under 18 who meet an income cap, and support for ailing businesses. It also includes a pay raise for nurses and care workers. "The package has more than enough content and scale to deliver a sense of security and hope to the people," Kishida told reporters. Analysts say Japan’s economy, which contracted at an annual rate of 3% in the July-September period, is not likely to rebound until next year.
  • In Australia, the state of Victoria will pause the debate over a contentious bill that would give pandemic powers to the state premier and health minister. The move came as a motion from the Labor Party, which carried 20 votes to 17. The government had hoped to pass the bill this week but will now have to enter into further negotiations to reach an agreement before the existing pandemic powers end on December 15. The legislation would give the premier the power to make an indefinite declaration of a state of emergency, and the health minister the power to make broad public health orders.

Covid-19 – Due Diligence And Asset Management

UK and US drive global growth in healthtech sector

Brief: The UK and US are driving forward the rapid growth of the global healthtech sector, with latest data from London & Partners and Dealroom.co showing a record USD51.3 billion has been pumped into startups already this year, up 280 per cent on 2016 levels. The findings have been released to coincide with this week’s Silicon Valley Comes to the UK event series, bringing together investors, entrepreneurs and CEOs from the UK and the Bay Area both physically and virtually to discuss the role of technology in building a better future and solving the great challenges of our time. As the world continues to tackle the impacts of coronavirus, the pandemic has acted as a catalyst to an already growing healthtech sector and investment has reached record highs in 2021. The US leads globally with USD31.9 billion in VC investment so far this year, while the UK comes in third with USD3.8bn, close behind China’s USD4.1 billion.

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Europe lockdown rattles Wall Street, boosts safe-havens

Brief: Resurgent concerns about COVID-19 in the face of looming European lockdowns weighed on a range of sectors Friday, pushing stocks and oil down and boosting the dollar. Wall Street opened the day mixed, with the tech-heavy Nasdaq posting a record open but the blue-chip Dow dipping on fears the economic recovery could stall. The Dow Jones Industrial Average fell 0.7%, the S&P 500 lost 0.08% and the Nasdaq Composite added 0.42%. The MSCI world equity index, which tracks shares in 45 nations, fell 0.16%. European stocks also retreated from record highs as the specter of a fresh COVID-linked lockdown in Germany and other parts of Europe cast a shadow over the global economy. Markets went into a tailspin after news that Austria will become the first Western European state to reimpose a full lockdown to tackle a new wave of coronavirus infections and signs that Germany might do the same.

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Hedge funds’ service provider selection “more important than ever before”

Brief: The selection of service providers – be they prime brokers, administrators or software systems – is more important than ever before following the seismic upheaval faced by hedge fund firms over the past 18 months. 2020 and 2021 proved to be “a different world” for hedge funds and the financial services industry more broadly, with firms being forced to evolve through working and trading remotely amid the Covid-19 pandemic, said Billy Murray, head of prime at InterTrader, during the service provider-focused panel at this year’s hedgeweekLIVE European Emerging Manager Summit.  That, in turn, has thrown the whole business of selecting and managing service provider relationships into ever-sharper focus for start-up hedge funds, which Murray said is “more important than ever before”.

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Pandemic puts cybersecurity and succession planning at the heart of due diligence process

Brief: This year’s hedgeweekLIVE European Emerging Managers Summit examined how start-up funds can best organise their approach to operational due diligence, with attendees hearing how cybersecurity and succession planning have emerged as key considerations as a result of the coronavirus pandemic. Sarah-Jane O’Sullivan, director at Willis Towers Watson, set out a range of corporate governance and front-, middle-, and back-office functions which remain central to the ODD process. Along with IT and HR, there has also been an increased emphasis on controls around cybersecurity as a result of Covid-19 and homeworking, according to O’Sullivan and panel moderator Thomas Deinet, executive director at SBAI. The session heard how the wholesale moves towards cloud-based tech have heralded sweeping changes to the operational due diligence process over the past decade, which had been further accelerated by Covid, in turn bringing added cybersecurity challenges.

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Why billionaire Jeff Vinik is “taking the over” on workers going back to the office

Brief: Since buying the Tampa Bay Lightning in 2010, Jeff Vinik has looked to transform downtown Tampa. The NHL team has improved on the ice, winning the 2020 and 2021 Stanley Cups, and he has spearheaded a more than $3.5 billion real estate development. While Vinik told CNBC’s Diani Olick that he is “no commercial real estate expert” during a CNBC Evolve Livestream on Wednesday, the 56-acre development is putting a big bet on office space with more than 1-million-square-feet of new space and the first office tower to be built in Tampa in over 25 years. That comes as the commercial real estate market is still trying to find its footing amid the pandemic as employers and workers embraced hybrid and virtual work arrangements. For example, a recent survey found that only 28% of Manhattan office workers are back at their desks and fewer than half will return by January.

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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, November 18, 2021:

  • In the United States, White House Covid-19 Coordinator Jeff Zients said the Biden administration will spend billions of dollars to expand Covid-19 vaccine manufacturing capacity. Zients made the announcement on Wednesday, explaining that the plan is to invest in companies with experience in making mRNA vaccines, supporting them to expand production to meet the government’s needs. The Biden administration has been under pressure to increase the vaccine supply to other countries. Zients said the plan will make help increase the global vaccine supply in the short-term, while in the long-term it will establish domestic manufacturing capacity to prepare for future pandemics.
  • In Canada, the approval of the Pfizer vaccine for children ages five to 11 is expected to be announced by Health Canada on Friday. While the exact timeline is still unknown, officials say needles could go into arms before the end of the month. The children’s vaccine would be one third the size of the dose given to adults and children over 12. Pfizer’s submission was received by Health Canada on October 18, and earlier this week Moderna announced that they have asked Health Canada to approve their vaccine for children of the same age group. 
  • In the United Kingdom, the new version of the delta variant appears to be on the rise, as it accounted for 12% of samples gathered in the most recent government survey. Researchers on the React-1 study said there was a 2.8% daily growth rate for sub-variant AY.4.2 over the course of their study. The scientists analyzed more than 100,000 swabs taken across England between October 19 and November 5. The subvariant was initially thought to be more transmissible than the original delta variant, but recently experts have been challenging that claim. The study also found that AY.4.2 appears to be less likely to cause symptoms than the dominant delta strain.
  • The Netherlands are running out of Covid-19 tests, after reporting more than 20,000 new coronavirus cases for the second day in a row. These numbers are the highest they’ve been since the pandemic began. The latest surge in cases has caught officials by surprise, as more than 110, 000 people tested positive over the past week, an increase of almost 44% from the week before. The government announced a partial lockdown last week, including reducing the operating hours for restaurants and bars. So far about 85% of the Dutch population is fully vaccinated.
  • France’s top scientific adviser Jean-Francois Delfraissy says authorities might soon be asking companies to have their employees work from home, as case numbers surge in the country.  Though Delfraissy predicted the number of hospital admissions will rise to 1000-1200 per day in December, he said France has the right tools to withstand the fifth wave if everyone cooperates and follows public health measures, adding that it’s important to get vaccines and booster shots. France reported 19,778 new cases on Tuesday, the highest 24-hour increase since August 25, while the death toll currently rests at 91,345. 
  • In Australia, the city of Melbourne will experience more freedoms on Thursday night as authorities lift nearly almost all remaining restrictions. The state of Victoria is expected to reach the 90% full vaccination rate for the eligible population over the weekend. Under the new rules, pubs and restaurants can have unlimited patrons, there will be no limit on home gatherings, and stadiums can operate at full capacity. "Your life will be back to normal, you will be able to enjoy all the things that you have yearned for and missed," State Premier Daniel Andrews said during a media conference.

Covid-19 – Due Diligence And Asset Management

More chief executives join the 'Great Resignation'

Brief: CEO turnover spiked in the first half of 2021, as companies tapped new talent to navigate the aftermath of the COVID-19 pandemic and stressed-out chief executives sought a career change, a study from recruiting firm Heidrick & Struggles found. The findings illustrate how CEOs are not immune to the exhaustion that has swept hundreds of millions of workers worldwide since the onset of the pandemic and has pushed many to consider a new job or lifestyle in a wave dubbed "The Great Resignation." "Our belief is that it will only accelerate going into next year as people have delayed their retirements," said Jeff Sanders, co-managing partner of Heidrick's global CEO and board practice. There were 103 CEO appointments in the first half of 2021 out of 1,095 companies in 24 regions that Heidrick studied, including the United States, China and some European countries.

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HSBC CEO Says Won’t Jeopardize Hong Kong’s China Reopening Plan

Brief: The boss of HSBC Holdings Plc, the biggest bank in Hong Kong, said he won’t do anything that would put the city’s efforts to open up travel to mainland China at risk, even as criticism of the financial hub’s zero-Covid policy grows. In an interview at the Bloomberg New Economy Forum in Singapore, Chief Executive Officer Noel Quinn said he currently has no plans to visit the city, the lender’s biggest market. “It’s important for Hong Kong to establish what they need to establish with China on reopening,” he said in an interview with Francine Lacqua. “I don’t want to do anything that may jeopardize that. I would love to get back to Hong Kong as soon as I can and when the authorities feel it’s right for me to go back, I will.” The finance industry has been ratcheting up pressure on Hong Kong to ease its quarantine rules and abandon its zero-Covid policy amid concern it is becoming increasingly difficult to recruit and retain talent.

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The Way Asset Managers Worked Before the Pandemic Is Over

Brief: Asset managers need to rethink the way they hire, manage, and keep the best people — and fast. Industry executives agree that the pandemic has fundamentally changed the way people want to work and managers need to take those changes seriously and invest in training and support services to make it all function. On Thursday, Deloitte provided some evidence for the big post-pandemic shift. The so-called workplace talent model will continue to change next year, according to Deloitte’s 2022 investment management outlook report released Thursday. Based on a survey of 400 senior investment management executives from July to August of this year, the consulting firm expects that asset managers will invest what’s needed and strengthen their talent organizations. That includes everything from work-from-home policies, comprehensive training, and infrastructure; diversity equity and inclusion; and strategies to communicate a sense of purpose to employees, among other things.

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Asset managers becoming liquidity makers through technology, says report

Brief: The increased use of automated trading is turning asset managers into liquidity makers rather than liquidity takers and has prompted sell-side market makers to call for an overhaul of market rules.This is the finding of a new report into equity and fixed income markets commissioned by the FIA EPTA, the trade association for market-making firms.The report, Turning the Tables on Liquidity Provision, written by Redlap Consulting, found that the greater use of automated trading, driven by the pandemic, has given buy-side firms greater access to a wider range of trading partners and reduced their reliance on traditional sell-side market makers.More than two-thirds (67%) of asset managers now see transparency as a key factor in their selection of liquidity partners while a similar number (70%) said that data and technology play a greater role in deciding where they trade.

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Scotiabank plans phased return-to-office plan for mid-January

Brief: Bank of Nova Scotia plans to start a phased return-to-office plan for headquarters employees who are still working remotely on Jan. 17, marking a major commitment for a broad return from one of Canada’s largest banks. The return will be staggered for different groups, and the majority of head-office employees will be working in a hybrid model, spokesman Clancy Zeifman said in an e-mailed statement Wednesday. All employees at Toronto-based Scotiabank will be required to follow the bank’s mandatory vaccination policy. Canada’s banks have kept the majority of their headquarters employees working remotely as the country has maintained many of its pandemic safety measures into the fall. Scotiabank’s target date for a broad return was selected based on guidance from medical advisers and in consultation with the government, Zeifman said.

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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, November 17, 2021:

  • In the United States, 34 lawsuits challenging the Biden administration’s vaccine mandate were consolidated in a single federal appeals court on Tuesday. The mandate, which was announced by Biden in September, requires businesses with 100 or more employees to ensure their staff are fully vaccinated, by a deadline of January 4. The vaccine mandate is extremely controversial in the United States; opponents say it infringes on their individual liberties. The U.S. Court of Appeals for the Sixth Circuit will determine the fate of the policy, a court that has 11 Republican-appointed judges and five judges appointed by Democrats. Experts say it’s highly likely that the issue will reach the U.S. Supreme Court. 
  • In Canada, the federal government is set to announce changes to Covid-19 measures at the Canadian border. Health Minister Jean Yves-Duclos said on Tuesday that the government plans to make the announcement in the coming days. Currently, there’s a requirement for fully vaccinated travellers entering Canada to provide a negative Covid-19 test. The government has been under pressure for weeks to do away with the requirement, which is part of an order-in-council due to expire on Sunday. "Nov. 21 is the time at which these orders-in-council must be renewed and with the renewal will come announcements," Duclos said.
  • In the United Kingdom, coronavirus vaccine research has become a prime target for cyber attacks, according to the National Cyber Security Centre (NCSC). The watchdog said it handled a record 777 incidents between August 2020 and September 2021, and about 20% of the organizations that the agency had to support were in the healthcare sector, including hospitals and vaccine research centres. The NCSC says protecting the healthcare sector became a major priority over the time period, and that it will support the improvement of online security for an additional 3 million employees working in the sector. 
  • Germany is set to introduce stricter measures for unvaccinated people as cases across the country continue to rise. The Robert Koch Institute reported 52,826 new cases and 294 new deaths, bringing the country’s death toll to 98,274. Less than 70% of the German population is fully vaccinated, one of the lowest rates in Western Europe. Restrictions on unvaccinated people came into effect in areas like Berlin and Saxony, where hospitals are at risk of becoming overwhelmed. They have introduced their so-called 2G rules, which exclude unvaccinated people from all non-essential facilities. 
  • South Korea reported 3,187 new coronavirus cases, nearly matching a one-day record set in September. Questions are now being raised over whether the country eased pandemic restrictions too quickly, as they moved to “live with the virus” back in early November. Officials intended to restore pre-pandemic normalcy and had hoped that vaccination rates would keep hospitalizations and deaths down. There was however, a rise in fatalities among senior citizens who rejected vaccines or had waning immunity. In response, officials have pushed to speed up the administration of booster shots, shortening the interval period from six months to four months for people ages 60 and older and people in long-term care homes. 
  • In New Zealand, the city of Auckland will reopen to fully vaccinated people or those with a negative Covid-19 test on December 15.  Prime Minister Jacinda Ardern made the announcement as New Zealand reported 194 new coronavirus cases and one death, bringing the country’s death toll to 36 since the pandemic began. Some 82% of New Zealanders are now fully vaccinated, with the 90% threshold expected to be reached by mid-December. “Aucklanders have faced restrictions for an extended period of time to keep the rest of New Zealand safe. But with increased rates of vaccination it’s time to open up the ability to travel again,” Ardern said.

Covid-19 – Due Diligence And Asset Management

ECB Warns of Market ‘Exuberance’ as Economy Recovers From Pandemic

Brief: Increasingly stretched prices in property and financial markets, risk-taking by non-banks and elevated borrowing pose a threat to euro-area stability, the European Central Bank warned. While the economic recovery from the coronavirus crisis means near-term risks have dissipated, vulnerabilities are accumulating with potentially grave consequences down the line, according to the Frankfurt-based bank. “Concerns particularly relate to pockets of exuberance in credit, asset and housing markets, as well as higher debt levels in the corporate and public sectors as a legacy of the pandemic,” it said Wednesday in its Financial Stability Review, echoing former Federal Reserve Chairman Alan Greenspan’s description of the dot-com bubble in the 1990s.

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Private equity firms prevented from capital deployment due to conditions

Brief: Over two-thirds, or 67%, of private equity firms have cited market conditions over the last year as a key barrier to deploying capital, according to a new market report from Gallagher, although 57% said the out-turn over the period was either better than expected or exactly as expected. The report, which surveyed 150 private equity firms across the US, UK and Asia, also revealed this was significantly down compared to findings in last year's survey, in which 88% of firms said the out-turn was in line with their expectations. Limited capital capability was felt most acutely in the UK, with 72% of firms revealing conditions prevented capital deployment, compared to 62% of firms in Singapore, where it was least acute, possibly reflecting the harsher effects of the pandemic across Europe.

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Greed outpacing fear in world markets, Goldman Sachs CEO says

Brief: Greed is outpacing fear in world financial markets as investors respond to the pandemic recovery, Goldman Sachs Chief Executive David Solomon says, adding that such periods of exuberance are usually not long-lived. Solomon told Bloomberg's New Economy Forum in Singapore on Wednesday the global economy was facing a 'complicated time' as activity began to strengthen after the sudden shutdown in many parts of the world in 2020 because of coronavirus. The unprecedented levels of stimulus ordered by governments and central banks, he said, had led to exuberance in certain markets. "I think markets generally when I step back and I think about my 40 year career, there's been periods of time when greed has far outpaced fear. We were in one of those periods of time," Solomon told the Singapore event.

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London Firms Sign Up for Acres of New Offices to Lure Workers

Brief: Corporate executives are signing up for acres of new office space in London as they attempt to lure workers back to their desks. Demand for offices in the U.K. capital has rebounded sharply with businesses committing to 819,000 square feet of new space in the six months through September, British Land Co. said in a statement Wednesday. That’s the equivalent of more than 10 soccer fields and includes a new headquarters for law firm Allen & Overy at the developer’s 1 Broadgate development, which is fully pre-leased ahead of completion, and space to Facebook-owner Meta Platforms Inc. There is a “renewed optimism in London offices with occupiers more confident of committing to space as their employees return to the office,” the landlord said in a statement. “Demand is firmly focused on the very best space, with an emphasis on sustainability, wellness, shared and flexible space and excellent transport connections.”

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Global dividends close in on pre-pandemic peak

Brief: Global dividends are expected to hit pre-pandemic levels by the end of the year, according to Janus Henderson, as third quarter figures surge.This is particularly the case for companies in Europe, parts of Asia and emerging markets, the asset management firm said.Dividends jumped 22% year-on-year reaching $403.5 billion, an all-time high for third quarter figures.The majority of companies globally either raised their dividends or held them, while mining dividends were found to drive two thirds of the increase. Recently restored banking dividends also made a significant contribution. Janus Henderson said dividends are now expected to surpass the pre-pandemic peak by the end of December 2021.

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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, November 16, 2021:

  • The United States’ top infectious disease expert Dr. Anthony Fauci acknowledged that political divides are impacting the country’s pandemic response. Speaking with Dr. Bill Frist in an online interview, Fauci referred to the gap in vaccine rates among Republicans and Democrats without actually mentioning the political parties. “You should never have, looking at a map, and seeing that people who are vaccinated fall heavily into one group and people who are unvaccinated fall heavily into another group,” Fauci said. “That is so antithetical with what public health should be, which should be a concerted effort on the part of the entire population.”
  • In Canada, federal employees who have not been vaccinated were placed on unpaid leave from Monday, unless they were granted an exemption. Over 3000 people of the approximately 267,000 federal employees have requested accommodations. A recent poll shows that almost 70% of Canadians surveyed support the dismissal of those employees who refuse vaccines, including for airline staff, teachers, police officers, paramedics, firefighters and medical professionals. About 64% said restaurant staff should also be laid off. The Angus Reid poll was conducted online and surveyed more than 1000 Canadians between November 3-7. 
  • The United Kingdom’s economy is showing strong signs of recovery despite the ending of a government wage subsidy program. The Office for National Statistics said employers added 160,000 employees to payrolls in October, and as the Guardian reports, job vacancies hit a new record of close to 1.2 million in the three months from August to October, almost 400,000 more than before the pandemic. The unemployment rate fell to 4.3% in the three months to September and rests at only a slightly higher rate than pre pandemic levels.  
  • In the Philippines, many students returned to school for the first time in 20 months after classes were cancelled due to the coronavirus. About 100 public schools in low-risk areas will run a two-month pilot of in person classes, with class sizes reduced to half and only vaccinated teachers and staff allowed to interact with students. Following the end of the pilot, the reopening of more schools will depend on vaccination rates and whether there is a decline in Covid-19 cases. The education ministry said in a statement that they recognize the value of in person learning in social development. 
  • India opened its borders to fully vaccinated foreign travellers on Monday for the first time in nearly two years. Tourists entering the country must be fully vaccinated, follow all of the Covid-19 protocols and test negative for Covid-19 within 72 hours of their flight. This is the first time tourists on commercial flights have been allowed to enter the country since March 2020. Fully vaccinated tourists on chartered flights were allowed to enter from last month. So far about 79% of India’s population have had one dose of vaccine, while 38% are fully vaccinated.
  • In Australia, the government of New South Wales (NSW) will extend the use of Covid-19 emergency powers through to March 2023. Health Minister Brad Hazzard put the proposal through cabinet on Monday, which came out of a recommendation from Chief Health Officer Kerry Chant. The emergency powers would grant the health minister the authority to restrict movement, enact mask mandates, impose curfews and lockdowns. The news comes as NSW passes the 90% double dose vaccination rate, with curbs being eased for vaccinated people at the 70% and 80% marks.

Covid-19 – Due Diligence And Asset Management

Bankers and Traders Are Poised for Their Biggest Bonuses Since the Financial Crisis

Brief: Banks are poised to hand investment bankers and traders their biggest bonuses since the financial crisis, with hopes the cash will stem the high levels of turnover sweeping across Wall Street. Equity and debt underwriters will be the biggest winners, with a jump of as much as 35% from a year earlier, according to a report Tuesday by compensation consultant Johnson Associates Inc. Equity traders and M&A bankers may see a 25% increase. Fixed-income traders could be the lone losers, with their bonuses potentially sinking as much as 5%. “Our clients are going to pay people well” amid concern about employee turnover, Alan Johnson, managing director of Johnson Associates, said in an interview. “The business results are terrific so there’s no holding back.” The Covid-19 pandemic was a boon for Wall Street, first with a trading surge on wild market swings and then a dealmaking boom.

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It is time to pick winners amid the Covid weakness

Brief: As economies reopen following months of disruption, economic uncertainty remains. Interest rate rises loom, China's economy slows, and concerns grow about mounting inflation. Headlines also warn of perfect storms, black swans, and bottlenecks. While disruption to global supply-chains is serious, the news stories bely the recovery of sectors worst affected by Covid-19: sports, hospitality, and entertainment. Hotspots within these sectors present attractive opportunities for investors to start positions in solid structural winners during a moment of short-term weakness. The 'empowered consumer' investment theme offers a way to identify these opportunities, as it recognises the influence consumers have on the companies they buy from, the use of data and technology by these companies, and the vertical business models that provide a substantial barrier to entry for competitors.

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JP Morgan chief skips quarantine as he jets into Hong Kong

Brief: JP Morgan’s billionaire leader govt Jamie Dimon used to be allowed to skip Hong Kong’s strict 21-day resort quarantine laws as a result of he runs “an overly large financial institution” with “key industry in Hong Kong”, the territory’s leader govt, Carrie Lam, stated on Tuesday. Dimon flew into Hong Kong on Monday on JP Morgan’s non-public jet, turning into the primary Wall Side road financial institution boss to seek advice from the territory or mainland China for the reason that pandemic started. Wondered about why Dimon used to be allowed to go into the territory with out complying with coronavirus laws, Lam stated: “The justification is said to financial system, as it is a very large financial institution with key industry in Hong Kong. He had to come and paintings for roughly an afternoon in Hong Kong. However there are restrictions, together with restrictions over his itinerary, so the chance is totally manageable.”

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Ethical Hackers Reduce $27 Billion in Risk During COVID-19 Vulnerability Surge

Brief: Bugcrowd, the world's first crowdsourced cybersecurity platform for multiple solutions, today released its annual Inside the Mind of a Hacker '21 report, which provides CIOs and CISOs valuable insight on ethical hackers and the economics of security research. New findings indicate a startling shift in the threat landscape with 8 out of 10 ethical hackers recently having identified a vulnerability they had never seen before. This comprehensive annual study offers an in-depth look at ethical hackers to reveal how they reduce risk, which industries leverage their expertise most, and what organizations are doing to attract high-performing security researchers to their programs. It also indicates the growing geographic disparity in crowdsourced cybersecurity investment, with continental Europe allocating 79% less budget to ethical hacking than North America.

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How hedge funds can navigate Brexit and Covid-19 trade upheaval

Brief: The sweeping changes and far-reaching trade upheaval brought about by Brexit and Covid-19 heralds sizable investment opportunities for hedge fund managers, according to a new study by IG Prime.  The report – ‘An Analysis of Post-Brexit Economies’ – examines the impact of Brexit on international trade, gauging potential growth areas in specific sectors, and considers the broader trends unfolding from evolving international trade patterns as a result of the UK’s decision to leave the European Union. Specifically, the report probes the UK’s main exports prior to Brexit – such as precious metals, vehicles, and pharmaceutical products – as well as the main exporters of those same products in the EU and Singapore, in order to determine which countries may be set to increase exports. It also looks at the impact of the Covid-19 impact on trade over the course of 2020.

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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, November 15, 2021:

  • The United States has hit a new high for weekly Covid-19 vaccinations, administering over 9.5 million doses in the past seven days. This is the highest weekly number of vaccinations the U.S. has seen since late May, White House officials said. Vaccines for children ages 5 to 11 became available this week and are included in the total. President Joe Biden’s Chief of Staff tweeted that the increase is also due to vaccine mandates and booster shots. The news comes as cases in the U.S. are trending upwards, reaching the highest they’ve been in more than a month for the week that ended Friday, according to data compiled by Bloomberg and Johns Hopkins University.
  • Canada has authorized use of the Moderna vaccine as a booster shot, allowing for half-doses to be given to those who are eligible at least six months after they’ve received their regular second shot. It is similar to the Pfizer booster, which was authorized by Health Canada last week, but it is different in that it only involves a half dose, whereas Pfizer’s involves a full dose. Booster shots are recommended in Canada for different populations including those over 70 and those who are immunocompromised, as well as for some frontline healthcare workers.
  • The United Kingdom has expanded the eligibility of its booster program to include people ages 40 to 49 in England and Scotland. The move comes as an attempt to prevent the National Health Service (NHS) from becoming overwhelmed this winter. The Joint Committee on Vaccination and Immunisation (JCVI) also recommended children ages 16 and 17 should be eligible for a second dose at least 12 weeks after receiving their first shot. Health Secretary Sajid Javid said all parts of the U.K. would accept the JCVI recommendations. “I have asked the NHS to prepare to offer those eligible for a vaccine as soon as possible,” he said.
  • In Germany, coronavirus infections continue to reach their highest levels since the start of the pandemic, according to data from the Robert Koch institute. The seven-day incidence rate (the number of new infections per 100,000 people over the week) rose to a record 303, up from 289 the previous day. The number of deaths increased by 43, bringing the total number to 97,715. The three parties in talks to form Germany’s next government are planning to tighten some coronavirus restrictions in response to the numbers. They will focus on measures for the unvaccinated and will also include contact restrictions, according to Reuters. 
  • Japan is preparing for a resurge in Covid-19 cases this winter, as Prime Minister Fumio Kishida outlined his plans to increase hospital beds and other medical resources. The government plans to increase hospital bed capacity by about 30%, and to collect data to be able to predict which hospitals will come under pressure. "In parallel with strengthening the medical system, from December we will use IT systems to make public the number of hospital beds and conditions at each hospital," Kishida said. The country will also rollout booster shots beginning next month. 
  • In Australia, vaccines for children under age 12 likely won’t be available until 2022, officials said. Health Minister Greg Hunt said the country’s regulators are still reviewing the health and safety data and are unlikely to make a decision this year. "The expectation that they have set is the first part of January, hopefully early January," Hunt told television reporters. "But they're going as quickly as possible." On Friday Australia reached the 90% threshold for single vaccine doses, with 83% of people ages 16 and over having had both doses. Health ministry data also shows 57.7% of children ages 12 to 15 have been vaccinated.

Covid-19 – Due Diligence And Asset Management

New Research Finds Almost Half of Financial Executives Expect a Return to Normal Growth by 2022

Brief: OneStream Software, a leader in corporate performance management (CPM) solutions for the world’s leading enterprises, has announced the results of its "Enterprise Financial Decision Makers Outlook - October 2021" survey. The study, conducted by Hanover Research, targeted finance leaders across North America and identified the factors driving their budgets and technology adoption plans for 2022. The COVID-19 pandemic had a long-lasting impact on many companies, but 2021 led to some positive business resurgence. Of the organizations surveyed, four out of ten indicate they have grown since the start of the pandemic. Of those growing, 70 percent are experiencing growth equivalent to pre-pandemic business results.However, 31 percent are still stagnated and another 30 percent have shrunk since March/April 2020. Many financial executives have a renewed focus on the future, exploring people-focused initiatives, technology adoption and new reporting measures for next year.

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Yellen says inflation will come down as US economy recovers from Covid

Brief: US Treasury secretary Janet Yellen has said that the only way to bring inflation back down is to continue to “make progress against the pandemic”, according to the FT. "The pandemic has been calling the shots for the economy and for inflation," Yellen told CBS's ‘Face the Nation' programme. "And if we want to get inflation down, I think continuing to make progress against the pandemic is the most important thing we can do." US inflation reached its highest level since 1990, as October's consumer price index soared 6.2% year-on-year, and recorded a month-on-month increase of 0.9%, exceeding consensus expectations. The FT reported that Yellen expects the recent rise in prices of certain goods, such as fuel, to come down in the second half of next year as long as the economy recovers from Covid-19.

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Pandemic Pushes Asia Fund Managers to Consider Outsource Trading

Brief: Firms such as State Street Corp. and CF Global that offer outsourced trading services are seeing more inquiries in Asia as fund managers and family offices look to cut costs and set up contingency plans. Asia, and China in particular, has lagged behind other regions on the outsourcing front because of a reluctance by particularly family offices to go outside for help, according to executives in the industry. That is now slowly changing in part as the pandemic revealed the need to have backups. “Asia is catching up,” said James Woodward, APAC head of portfolio solutions who runs the outsourced trading desk at State Street, which has been offering the service in Asia since 2010. “There’s obviously an education phase, but as we move forward, some of those Asian funds embrace the benefits that can be garnered from some of these firms’ investments in all the technology and infrastructure and capability sets.”

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The Pandemic Has Changed the Way European Asset Managers Do Business

Brief: It's a new world for European asset managers. In the wake of the pandemic, a growing number of their clients have begun to opt for online communication tools rather than in-person conversations, and these businesses have been forced to rapidly rethink their sales and marketing strategies to meet the demand. According to a Cerulli report, managers in major European economies such as the U.K., Spain, and France are planning to increase their sales headcount and adjust their marketing strategies to catch the latest communication trends. More resources will be deployed to video production, social media, and brand development, a trend that will likely continue as managers compete for digital attention.During the early stages of the pandemic, European asset managers rushed to develop virtual communication tools to show their clients that “they were there if needed,” according to Fabrizio Zumbo, associate director of European retail and wholesale research at Cerulli.

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Astra moves to profit from vaccine as earnings fall short

Brief: AstraZeneca Plc is moving to profit from the COVID-19 vaccine it developed with the University of Oxford after watching Pfizer Inc. and Moderna Inc. reap huge returns over the past year of the pandemic. The U.K. drugmaker will start generating modest profits from the shot as new orders are received, AstraZeneca said in a statement Friday. The vaccine will continue to be sold at cost for developing nations. The company is shifting to a for-profit model even as many countries grapple with rising COVID cases. AstraZeneca Chief Executive Officer Pascal Soriot said COVID is moving into an endemic phase, and the move is in line with the company’s plan early in the crisis, when it pledged not to profit from the vaccine as long as the disease remained a pandemic.

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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, November 12, 2021:

  • In the United States, the department of Labor’s latest data showed a record high 4.4 million people or 3% of the country’s workforce, quit their jobs in September. The latest data highlights the after effects of the pandemic where the tight jobs market shows workers have more leverage to move around, while employers try everything they can to retain the staff they have. People leaving their jobs increased the most in arts, entertainment and recreation (people who staff live events) and other markets ranging from auto workers and hairstylists to local and state government positions. According to the Labor department, roughly 34.4 million have quit their jobs this year, compared to 36.3 million in all of 2020.
  • Canada’s top public health officer stated on Friday that cooler weather and easing restrictions are contributing to a rise of COVID-19 cases in some parts of the country. Dr. Theresa Tam made the comments during her weekly briefing noting she expects “bumps” in Canada’s trajectory as provinces continued to lift gathering restrictions and as the colder temperatures drive more and more people indoors. With the land borders between Canada and United States opening recently, Dr. Tam also commented on the pre-arrival PCR tests for travellers entering the country, noting the conditions are still being actively reviewed, and that there would be further information to come. 
  • United Kingdom’s Prime Minister Boris Johnson is urging elderly and vulnerable people to get their booster jabs of the COVID-19 vaccine to prevent a rise of cases in the country. “I’m seeing the storm clouds gathering over parts of the European continent. And I’ve got to be absolutely frank with people: we’ve been here before. We remember what happens when the wave starts rolling in,” Johnson said. While the prime minster has noted the UK cases have been drifting down after a peak last month, he said it was unclear if the trend was set to continue. 
  • Germany’s chancellor-in-waiting plans to push ahead to phase out of a state of emergency, despite the country recording the highest coronavirus case numbers since the start of the pandemic. Speaking during a parliamentary debate on Thursday, Olaf Scholz called on MPs to support a catalogue of new measures curb the spread of COVID-19 that would replace the state of emergency. Germany has the third-lowest vaccination rate in Western Europe, with 66% of the country’s population fully vaccinated. 
  • Austria’s chancellor is warning the country is days away from ordering millions of unvaccinated people to stay at home. Chancellor Alexander Schallenberg announced the rare move should be given the green light by the government over weekend as he is one of many European leaders fed up with those who have not been inoculated against COVID-19. In a separate press conference on Thursday, Schallenberg admitted Austria’s vaccination rate is “shamefully low” and is disappointed since they have enough vaccines available. Unvaccinated people in Austria are already excluded from entertainment venues, restaurants, hairdressers, and other parts of public life. 
  • Israel started a nationwide drill this week to test its readiness in the event of an outbreak of a new, more lethal COVID-19 variant. Media sources noted the exercise - war-gamed over three sessions - started Thursday to simulate the passage of time after a potential flare-up, will test the resilience of systems that determine lockdown policies, monitor variants, offer economic support for citizens, enforce quarantines, and watch border crossings. “While the situation of the coronavirus in the world is deteriorating, Israel is safe and protected,” Prime Minister Naftali Bennett said in a statement. “In order to maintain this, and to safeguard the continuity of normal life, we must continue to closely monitor the situation and prepare for any scenario.”

Covid-19 – Due Diligence And Asset Management

Biden Agenda Won’t Slow Record Pace of US M&A, says new Survey

Brief: Respondents to Dykema’s 17th annual M&A Outlook Survey believe nothing will break the stride of US M&A dealmakers over the year to come, with most viewing the Biden administration’s legislative agenda as positively impacting activity. A resounding 75 percent of respondents expect the US M&A market will strengthen in the next 12 months, while only 7 percent anticipate it will weaken. Respondents not only predict deal volumes will be up across the board, from small to mid-market to mega-deals of USD1 billion and more, but 9 out of 10 also expect M&A activity among privately owned businesses to increase over the next year…  “This might stem from ongoing supply chain and labor shortage issues associated with the pandemic as well as the general, but persistent, uncertainty it brings,” says Jeff Gifford, leader of Dykema’s Corporate Finance practice group. “That said, now even after the surge in cases, dealmakers have learned how to manage Covid-19-related uncertainties, with respondents ranking Covid-19-related delays sixth in order of the most common obstacles they experienced in deal-making last year.”

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Wall Street is Offering 8-Figure Pay Packages to Woo Top Talent

Brief: The trading desk was just embarking on a second banner year when senior executives started defecting to the likes of Bank of America Corp., Citigroup Inc. and Millennium Management. By this fall, many of the team’s heaviest hitters had gone. The setting wasn’t some struggling investment bank. It was the equity derivatives desk inside the mighty JPMorgan Chase & Co. -- one of many pockets of employee turnover that have erupted there in recent months, keeping the company’s recruiters busy. Pan out, and it’s part of a trend sweeping across Manhattan’s financial industry. Signs of a surge in Wall Street job-hopping are emerging everywhere: An independent recruiter said he’s never seen so many eight-figure hiring packages. A career coach said his banker clients aren’t basing decisions solely on money -- they’re fed up with working so much they can’t even date. An industry veteran said moves are becoming so common that some people left behind are anxious: Are they making a mistake by staying? The trend coincides with the easing of a pandemic that bottled up job changes and prompted many in the industry to question whether they want to resume old commutes, or even stay in the same city. Now, rival firms are dangling money or, in some cases, more flexible lifestyles to lure talent and capitalize on the trading and dealmaking boom. There’s also more competition for women and members of minority groups after virtually every major firm promised to improve diversity in the wake of last year’s racial equity protests.

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Venture Capital and the “Double Bottom Line”: In Conversation with Former UK Vaccine Chief and Health Investor Kate Bingham

Brief: When venture capital investor Kate Bingham was appointed to lead the UK’s coronavirus vaccine procurement effort in May 2020, Prime Minister Boris Johnson tasked her with delivering “speed, not perfection”. By December that year, the UK had approved its first Covid-19 vaccine, developed by Pfizer/BioNTech. Since then, 80 per cent of the UK population over the age of 12 have received at least one vaccine, and the jabs are working “much better than anyone expected”. “To get any vaccine from identification of pathogen through to a vaccine, the quickest historically has been five years, but that was 50 years ago,” says Bingham, managing partner of venture capital firm SV Health Investors, speaking around a virtual impact investing event, GSG Global Impact Summit in October. Bingham has 30 years’ experience in the biotechnology sector, and her investments have helped launch new treatments for inflammatory and autoimmune disease and cancer.

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Billionaire Investor Ray Dalio Warns Inflation is Driving Down Real Wealth

Brief: Ray Dalio sounded the alarm bell on Thursday after inflation in the U.S. surged to the highest level since 1990 and warned his followers that rising portfolio values don’t actually signify increasing wealth. “Some people make the mistake of thinking that they are getting richer because they are seeing their assets go up in price without seeing how their buying power is being eroded,” Dalio wrote in a post on LinkedIn. “The ones most hurt are those who have their money in cash.” Dalio, the billionaire founder of Bridgewater Associates, has long been known for his view that there are better assets to hold than cash amid central bank money printing. In periods of rising prices, he says it’s actually more important to look at what you can buy with that money. “When a lot of money and credit are created, they go down in value, so having more money won’t necessarily give one more wealth or buying power,” Dalio wrote, adding that real wealth becomes a function of production capacity over time. “Printing money and giving it away won’t make us wealthier if the money isn’t directed to raise productivity.”

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Can the Work from Home Experiment Help Close Asset Management’s Gender Gap?

Brief: While most women in asset management would like the hybrid work model to continue, not everyone thinks it will have a positive impact on their career — unless firms address some of the challenges, including helping to foster connections with colleagues and clients. According to the 2021 KPMG Women in Asset Management Survey, 89 percent of respondents said they would like the option to continue remote or flexible work. KPMG’s findings were consistent across age groups. “Although there is a perception that working mothers most desire flexibility, our survey shows that nearly everyone wants it,”  according to KPMG. Employees also want flexibility to care for aging parents, for example. However, 32 percent of respondents said the flexibility at work might have a negative impact on promotions and advancement. Among the 491 surveyed professionals, 93 percent were women, representing asset classes and categories including private equity, hedge funds, real estate, and mutual funds. 

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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, November 10, 2021:

  • According to White House estimates, approximately 900,000 American children aged 5-11 will receive their first dose of the Pfizer-BioNTech vaccine by the end of the day. Daily hospitalizations of patients with Covid-19 remained flat this week averaging around 5000, while weekly diagnosed cases are sitting around 73,000. The U.S. Centers for Disease Control and Prevention Director, Dr. Rochelle Walensky said in a briefing on Wednesday that over the past year 66 American children have died from Covid-19 related illnesses. The virus is the largest vaccine-preventable cause of death in children ages 5-11 in the United States. In New York City alone, over 1000 clinics have been set up to allow for children in every borough to have access to the vaccine. Meanwhile, President Joe Biden will be visiting schools with vaccination sites in an effort to get more children vaccinated.

  • Today, Statistics Canada released figures stating that due to Covid-19, the country saw 19,000 more deaths than they would have had the pandemic not occurred. Between March 2020 and July 2021 approximately 19,488 more Canadians died when placed against the national average for the years previous. The figures represent a 5.2 per cent increase than if the pandemic had never happened. While the total number of deaths that are being attributed to the virus during that time was 25,465, that number includes deaths from substance abuse, and lack of life saving medical procedures due to an overwhelmed health care system. That number still does not reflect all the deaths may have been attributed to virus, as thousands more are still being investigated.

  • In the last week, Covid-19 cases are down roughly 16 per cent in the United Kingdom compared to the week previous. However, 57 people have died within 28 days of contracting the virus, up 8.2 per cent in the last 7 days. Between November 2nd and November 8th, the U.K. recorded 32,322 new cases of Covid-19. However, with the adoption of the new Merck coronavirus pill that has been created in collaboration with Ridgeback Pharmaceuticals, the U.K. hopes to avoid serious hospitalizations and keep more patients out of intensive care units. The United Kingdom last week became the first country to approve molnupiravir, which is touted to cut the risk of hospitalization by 50 per cent. The company is expecting to have 10 million doses ready for circulation by the end of the year.

  • Australia has trialed a new Covid-19 screening system that will allow quicker response times for health care personnel to tell if a patient has been infected with the deadly virus. The COVID-19 Smart Internet of Things (IoT) Screening System was developed by the University of Sydney and Sydney Children's Hospitals Network and was put into action for the first time at the children’s hospital in Westmead. The so-called Covid e-Gate “utilises near real-time data analytics to provide the latest available screening information," said Dr Audrey P. Wang, biomedical informatics and digital health researcher at the University of Sydney. The system can detect a person’s body temperature and if that is above a pre-determined threshold, will automatically alert concierge staff members to administer further clinical checks, including Covid-19 tests.

  • Japan intends to increase the capacity in its hospitals by almost 30 per cent in November. The plans, which will be finalized by Friday, will increase bed space by up to 36,000 amid a surge in cases that started over the summer months. Starting in December, hospitals will be required to submit a bed occupancy ratio in order to continue to receive funding. Under the emergency plan, the country will also enact regulation that will allow children under the age of 12 to be vaccinated, along with providing free testing for people that are asymptomatic. During the height of the third wave in Japan, which occurred over the summer, nearly 28,000 people were in hospital. In the event that a more deadly variant should emerge, emergency personnel will be deployed to regions that are hit hard from regions less affected by the virus.

Covid-19 – Due Diligence And Asset Management

DB schemes at their healthiest since Covid-19, but pandemic may cast long shadow

Brief: The UK’s Defined Benefit (DB) pension schemes are at their healthiest since before the onset of Covid-19, as of Q3 2021, according to Legal & General Investment Management (LGIM). LGIM's DB Health Tracker, a monitor of the current health of UK DB pension schemes, found that the average1 DB scheme can expect to fund 98.3 per cent of accrued pension benefits as of 30 September 2021. This is a rise of 0.1 percentage points from the figure of 98.2 per cent recorded three months before on 30 June 2021. The health of the UK’s DB pension schemes had been gradually improving since March 2020, when it had dropped as low as 91.4 per cent as a result of the immediate impact of the pandemic on financial markets. However, while these figures suggest that the health of UK DB schemes has been improving since the initial spread of Covid-19, it is important to note that these figures may yet still understate the negative impact of the pandemic, due to weakening covenants from pension scheme sponsors, which many schemes have endured.

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Private Equity Funds Fuel Growth in Private Credit

Brief: Private equity funds are a major contributor in the rapid growth of the private credit market, according to global law firm Dechert. In its 2021 private equity outlook, the law firm reported that 45 percent of surveyed private equity firms have increased their use of private credit financing in buyouts over the last three years. This represents a 10 percentage point increase from last year’s survey, in which 35 percent of respondents said they had increased their use of private credit. Dechert surveyed 100 senior-level executives at private equity firms across the globe with $500 million or more in assets under management. According to the report, private credit is currently the third-largest private capital asset class after private equity and real estate. The law firm said that assets under management in private credit are projected to grow to $1.46 trillion by 2025. “People love [private credit],” Markus Bolsinger, Dechert’s private equity practice co-head, told Institutional Investor. He said that private credit also poses a strong opportunity for institutional investors chasing yields without equity risk.

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DWS achieves final close on maiden mid-life secondaries Private Equity Solutions fund

Brief: DWS has held the final close of its inaugural Private Equity Solutions (PES) fund achieving USD550 million, including discretionary co-investment vehicles, which is in excess of its target and hard-cap of USD500 million and USD525 million respectively. Demonstrating significant demand for its mid-life secondaries strategy, the inaugural fund closed with a global investor base consisting of state pension plans, insurance companies, corporate institutional investors and family offices in North America, Europe and the Middle East. The fund has made a total of 12 investments, which have exhibited positive performance to date. The private equity business at DWS has focused on developing a differentiated mid-life secondaries strategy that offers a compelling risk-return profile to investors whilst allowing existing private equity sponsors to continue to back their better performing portfolio companies. Mark McDonald, Global Head of Private Equity at DWS, adds: “It is a testament to the strength of our team globally for the inaugural PES fund to be oversubscribed, and with the majority of the fundraise taking place during the current Covid-19 pandemic. We seek to deliver consistent risk-adjusted returns to our investors as we continue to build out our team and extend our reach going forward.”

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The US$110-trillion investment industry gets tougher on climate

Brief: As COVID-19 ripped through the world in 2020, a cluster of senior figures at Aviva Investors, the £262 billion U.K. asset manager, held a series of virtual meetings over the course of six months to discuss the other big issue looming over their portfolios: climate change. It was a bold move that dramatized a growing dispute within the US$110 trillion investment industry. Many big asset managers still routinely dismiss divestment, arguing it is better to stay invested and try to alter corporate behaviour through background conversations with companies. However, there are a growing number of large, traditional investors who are taking a tougher approach with companies over global warming, a change in attitude that could have huge ramifications for businesses around the world. Big investors including the Netherlands Stichting Pensioenfonds ABP one of the world’s largest pension funds, and Norway’s oil fund, the world’s largest sovereign wealth fund, have announced divestment plans. At the same time, some of the investors who remain as shareholders are willing to adopt more confrontational tactics — most notably, the successful campaign by an activist investor to join the board of ExxonMobil Corp.

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Businesses left in limbo on COVID-19 mandate

Brief: Businesses are in limbo after a federal court halted the Biden administration’s vaccine-or-test mandate for private employers. Employers are preparing to enforce the Occupational Safety and Health Administration’s (OSHA) rule, which would require businesses with 100 or more employees to mandate COVID-19 vaccinations or weekly testing by Jan. 4. But it’s now unclear whether the requirement will survive legal challenges after the 5th U.S. Circuit Court of Appeals temporarily blocked the rule over the weekend, creating confusion among companies on how to move forward. Labor lawyers are urging businesses to continue preparing for key OSHA deadlines, given that the court’s stay, for now, is only temporary. “I think it’s prudent for employers to proceed with planning assuming that the OSHA rule, at least in some form or fashion, will be implemented pending final resolution of the various court cases,” said Michelle Strowhiro, a lawyer at McDermott Will & Emery who advises businesses on COVID-19 employment issues. While the OSHA rule requires businesses to mandate weekly testing for unvaccinated employees by January, the most important deadline is coming up soon. By Dec. 5, employers must collect employees’ proof of vaccination and provide paid leave for those getting the shot, while unvaccinated employees must begin wearing a mask.

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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, November 9, 2021:

  • In the United States, there is a growing gap in the amount of people dying from Covid-19. According to a new report by the New York Times, people in counties that primarily supported Donald Trump are three times as likely to die from the virus than those who live in counties that supported Joe Biden. Roughly 25 out 100,000 people are dying in red counties compared to 7.8 out of 100,000 in blue-backing counties. In September, 53 per cent of the population in counties that supported Biden were fully vaccinated compared to 40 per cent of the population in counties who had voted for Trump. According to White House statistics released last month, unvaccinated Americans are 11 times more likely to die from Covid-19 than their fully vaccinated counterparts. While people living in majority-Republican states may have developed a form of herd immunity to the virus, that immunity is still less effective than that of a vaccinated person.

  • On Tuesday, Health Canada officially approved the Pfizer-BioNTech booster shot for anyone over the age of 18. The new shot is the same in composition as the previous vaccines and is intended to be used as continued protection for those who had received both doses of the original Pfizer vaccines. While the National Advisory Committee on Immunization has said that there is no increased risk of contracting severe symptoms from Covid-19 by already-vaccinated public, they have suggested that a booster shot may increase effectiveness in those who are at an increased risk, such as the immunocompromised, front-line health care workers and the elderly. Provinces across the country will have autonomy in how and when they roll out the booster shots in the coming months.

  • British Health Secretary Sajid Javis says that health care workers in the country will be required to get vaccinated against Covid-19 by April 1st, 2022. It will now be considered a requirement of employment for frontline workers in the National Health Service. “We must avoid preventable harm and protect patients in the NHS,” Javis said, “[we must] protect colleagues in the NHS and of course protect the NHS itself." The April deadline has been put in place with acknowledgement of the strain already put on health care workers and is intended to give them adequate time to book a vaccine, while also managing an increased workload. Countries such as France and Italy have already mandated that health care workers be vaccinated, as well as several U.S. states. There has been vocal opposition to the regulation from lobbyist groups who believe that the mandate will cause thousands of frontline workers to lose their jobs.

  • Vaxine, an Australian pharmaceutical company has created a Covid-19 vaccine which has passed a phase III clinical trial in Iran and is looking to finally bring their product to market in its native country. The protein subunit SpikoGen has been developed by the Adelaide-based company and is now awaiting approval from the Australian Therapeutic Goods Administration (TGA). A GoFundMe has been set up for the vaccine and has so far surpassed its goal of $400,000. In its phase III trial, the SpikoGen vaccine cleared the 60 per cent efficacy rate needed to be considered a viable option in combating the virus. The Australian application will take data from the trial, alongside outside data that will reveal if rarer side effects may occur when looking at a larger trial pool. There were no recorded deaths in either the placebo group or the vaccine group of the Iranian trials.

  • Europe has become the epicenter of the global pandemic with Germany consistently recording its highest number of daily infections since the pandemic began. Experts are suggesting that Germany’s spike in infections is due to the comparatively low numbers of cases that the country experienced over the summer months, causing less of a general immunity within the population. The death toll in Germany remains lower than it was in January, with daily average deaths coming in at 118, a sharp contrast to its highest death rate, which was at one point averaging around 884 people per day. On Sunday there was 2500 people in intensive care units across the European Union’s most populous country, that has a total population of 83.2 million. Nearly 50 per cent of the nation’s health care workers are currently unvaccinated, said Health Minister Jens Spahn, who has suggested that he is not enacting mandatory vaccinations for fear that the surge in new cases could overwhelm an already stretched-thin healthcare system.

Covid-19 – Due Diligence And Asset Management

Regeneron’s antibody drug cuts COVID-19 risk by nearly 82% for up to 8 months

Brief: Regeneron Pharmaceuticals Inc said on Monday a single dose of its antibody cocktail reduced the risk of contracting COVID-19 by 81.6 per cent in a late-stage trial, in the two to eight months period following the drug’s administration. Shares of the company were up about 1.2 per cent on the update as the data is expected to support the ongoing regulatory review to extend therapy’s use in preventing COVID-19 in people who are not exposed to the virus. The antibody therapy, REGEN-COV, is currently authorized in the United States to treat people with mild-to-moderate COVID-19 and for prevention of infection in those exposed to infected individuals, and others at high risk of exposure in settings such as nursing homes or prisons. The extended authorization could help boost sales of Regeneron’s antibody cocktail, in the face of competition from oral COVID-19 pills such as those being developed by Pfizer Inc and Merck & Co.

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Private equity industry runs hot as pent-up demand is unleashed

Brief: Global law firm Dechert has published its annual Global Private Equity Outlook report in association with Mergermarket, a leading provider of M&A data and intelligence. The benchmark report, which examines how private equity (PE) firms continue to successfully navigate their way out of the pandemic, has found that the unprecedented deal activity within the sector shows no signs of letting up, with the industry on course to far exceed past previous records. Between January and September 2021 alone there has been USD1.17 trillion worth of deals recorded, already eclipsing every prior full-year total stretching back to 2015. In other words, the annual PE deal value is on course to more than double year-on-year as the industry heads into 2022, with capital still pouring in. Global PE and venture capital dry powder hit a record level of nearly USD2 trillion in 2020. "Record deal volumes, historically low interest rates and huge amounts of dry powder is a combination for explosive alternative asset industry growth, which is expected to continue for several years, and with our complementary practices, Dechert is well-positioned to take advantage of these extraordinary growth opportunities.

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Pandemic Blows Up Old Business Habits, Opening Path to a Boom

Brief: Jon-Michial Carter was the biggest skeptic of remote work when one of his managers suggested they test the idea in 2019. “We had a 100,000 square-foot facility full of clinicians delivering remote virtual care,” said the founder and chief executive of ChartSpan, a chronic-care provider based in Greenville, South Carolina. “It seemed inconceivable that we could send them home.” When Covid-19 arrived in 2020, that’s what the firm did. As a direct result, it’s making more money. Employees say they’re happier, and the numbers say they’re more productive. Similar, potentially seismic shifts could be under way across the business world. The pandemic has killed more than 750,000 Americans and left millions more out of work. But something else has been happening too. The shock forced managers everywhere to try doing things differently, accelerating innovation. It “opens the door to this radical newness in the way businesses are configured,” said Jason Thomas, head of global research at Carlyle Group.

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Health tech firm Color's valuation hits over $4 billion after latest funding

Brief: Health technology company Color said on Tuesday its valuation reached $4.6 billion after a recent $100 million investment, as venture firms continue to pour money into digital health businesses that saw service demand shoot up during the pandemic. The pandemic has supercharged the sector with healthcare moving to the virtual realm. While companies are looking to expand their scale and offerings, investors are betting on continued demand even after the pandemic for the convenience of the services. With the latest investment, Color plans to widen access to screening, diagnostics and initial treatments. It has more than 6,500 COVID-19 testing and 500 vaccination sites in the United States. Besides COVID-19 testing, the California-based company also conducts genetic testing. It has tied up with nearly 1,000 organizations, including public health departments, universities and employers. It has also partnered with Thermo Fisher Scientific, Salesforce.com Inc and the State of California, among others.

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BioNTech’s Success Offers Antidote to EU Biopharma Skittishness

Brief: Covid-19 vaccine maker BioNTech SE’s success is having a ripple effect for younger companies, drawing interest from investors who might previously have been skeptical about the biotechnology sector in Europe, one of the German company’s early backers said. “I expect more money flowing into the European, particularly German, biotechnology industry through this new excitement,” said Matthias Kromayer, a partner at Munich-based MIG Verwaltungs AG. MIG, a venture capital investor, was among the founding backers of BioNTech, providing 13.1 million euros ($15.2 million). It has returned 600 million euros on that investment in the biggest payout to investors in the firm’s history. BioNTech and partner Pfizer Inc. may reap $29 billion in sales next year for their Covid shot, the U.S. company said last week. The vaccine will most likely be this year’s best-selling drug. The race to bring it to the market has helped companies understand ways to speed up drug development, Kromayer said. Still, it may take at least a decade for enough critical mass to build for European biotechs to choose their home turf for public offerings instead of the U.S. market, Kromayer said.

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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, November 8, 2021:

  • On Monday, the United States reopened the land border with Canada allowing fully vaccinated Canadians to travel southward for the first time since the pandemic began in March 2020. Travelers wishing to enter the United States are once again able to drive across the border, provided they have had 2 doses of a Covid-19 vaccine. Long wait times are expected as the two nations get used to the new regulations at crossings. Each Canadian is required to take a polymerase chain reaction (PCR) before re-entering the country, which will cost between $150 to $300, paid for by the individual traveler. The United States is not requiring that Canadians show proof of a negative covid test before entry. As of Monday, Canadian air-travelers entering the U.S. are required to show a negative PCR test that has been taken no less than 72 hours before entry, while American nationals who are unvaccinated will be required to show proof of a negative test that has been taken no more than 24 hours before re-entry.

  • Experts in Canada and the United States are suggesting that the costly polymerase chain reaction (PCR) test to re-enter Canada from the United States is not necessarily the best policy for stopping cross-border infections. The PCR tests which are to be paid for by the individual traveler are more effective when it comes to detecting the virus, however, rapid antigen tests are quicker, less expensive and could be done at the border crossing. Amesh Adalja, an infectious disease physician and a senior scholar at the Johns Hopkins Center for Health Security in Baltimore says that the antigen tests may be a more viable way to screen for illness at the border, “[travelers] can get one done in 15 minutes or even faster” he says, “rather than a 72 hour-old [PCR] test that's sometimes logistically difficult [and] expensive to get.”

  • As hospitalizations are on the rise among the elderly in the United Kingdom, on Monday, U.K. Prime Minister Boris Johnson is encouraging anyone eligible to receive a third vaccine as more shots become available. The U.K. has opened bookings for a 3rd dose starting one month before they become widely available, only those who have been double vaccinated for 6 months will initially be eligible. “Sadly, the Covid-19 jabs do wane," Johnson said on Monday, “It's (booster) a wonderful thing. People get 95% more protection.” So far in the United Kingdom, nearly 9 million people have received their third dose or three out of five people over the age of 50. At present there is still some confusion over who is eligible for their third and fourth doses of the vaccine, including the immunocompromised, with reports suggesting that some people have had their shots mislabeled as boosters, making them ineligible for further doses as intended.

  • Australian Prime Minister Scott Morrison said the country hit a “magnificent milestone” on Saturday as the country reached its target of 80 per cent of the population now vaccinated. However, that vaccination rate is concentrated to more populous areas of the country with rural states still sitting well below the target numbers. The country has recently opened their international borders, allowing Australians to travel outside of the country for first time since the early days of the pandemic, and states like New South Wales and Victoria have essentially opened their borders to each other, yet some internal borders will remain closed until higher vaccination rate is reached. “This has been a massive Australian national effort and the work doesn’t stop here.” Said Morrison on Facebook. “We are on track to have one of the highest vaccination rates in the world.”

  • In China, the government is accelerating their lockdown measures as the country faces the worst spike in cases since the pandemic began. The sudden surge in cases, according to Chen Zhengming, an epidemiology professor at the University of Oxford, suggests that China will not reopen its borders until next year.  "China's vaccination rate is very high, but most are vaccinated with an inactivated shot" says Zhengming, “without adequate coverage of boosters and a significant change in outbreaks elsewhere, I think the chance of China reopening and giving up Covid Zero is small.” He continued that even though it is unlikely, China is one of the few countries that may be to remain isolated from the rest of the world for the next three or four years due to their self-sustainability. Yanzhong Huang, a senior fellow for global health at the New York-based Council on Foreign Relations says that the Chinese government is unlikely to make any immediate changes to their restrictions. “it's very unlikely they could win the trust of their people when changing the policy abruptly."

Covid-19 – Due Diligence And Asset Management

Real-estate brokers brace for ‘flood’ of wealthy buyers from overseas as travel restrictions lift

Brief: Wealthy real-estate buyers from overseas are expected to descend on the nation’s luxury housing markets Monday, giving a second boost to demand for high-priced apartments and mansions. The U.S. will lift the travel ban on about 33 countries for vaccinated visitors, easing restrictions that prevented most foreign real-estate buyers from entering the country to view and buy properties. Buyers from Europe, China, Brazil, and India will now be able to enter the U.S. for the first time in 20 months. Brokers in cities popular with the overseas wealthy — New York, Miami, Los Angeles — say they have a long list of showings scheduled in the coming weeks from buyers who have been anxious to invest in U.S. property. “This represents another upside in demand that just didn’t exist over the last two years,” said Jonathan Miller, CEO of Miller Samuel. “It will be especially beneficial to the high-end and luxury market.” Sales data suggests the wave of overseas buyers could generate tens of billions of dollars in added sales. Foreign buyers spent $267 billion on U.S. real-estate in 2018 and $183 billion in 2019, before the pandemic, according to the National Association of Realtors.

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Singapore introduces more ‘vaccinated travel lanes’ to include Malaysia, Sweden and Finland

Brief: Quarantine-free travel between Singapore and neighboring Malaysia will start from Nov. 29 for vaccinated travelers, the two countries announced Monday. Sweden and Finland will also be included in Singapore’s so-called “vaccinated travel lanes” from Nov. 29, the health ministry said separately in a press release Monday. Instead of serving quarantines, inoculated travelers from these countries will take Covid-19 tests to ensure they are not infected with the coronavirus. Singapore and Malaysia’s prime ministers said in a joint statement that Covid border restrictions have separated families in both countries for many months. “It is timely to progressively resume cross-border travel between both countries, in a safe manner,” the two leaders said. Singapore has already launched vaccinated travel lanes with at least 12 nations including Australia, the United Kingdom and the United States. The city-state will start its joint vaccinated travel lane arrangements with South Korea on Nov. 15.

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FTSE Edges Lower, Economy Seen Facing Hit From Covid-19, Brexit

Brief: The U.K. economy faces inflation remaining above the Bank of England's 2% target and weaker growth next year, Deutsche Bank says. "The combination of supply shocks because of Covid and Brexit, alongside lower supply via weaker migration/lower participation and investment, should see the U.K. economy experience above-target inflation for almost all of next year at the same time as economic momentum slows materially," Deutsche Bank economist Sanjay Raja says. "We continue to see U.K. GDP coming in around 7% this year but slowing to under 4% next year."

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China Struggles With Worst Covid Outbreaks Since Wuhan Origin

Brief: China is resolutely sticking with its zero-tolerance approach to COVID-19, even as the delta variant continues to penetrate its formidable defenses. Officials are implementing increasingly aggressive measures -- ranging from internal travel restrictions and snap lockdowns to mass testing of millions -- in an attempt to rein in the virus. Yet more parts of the country are grappling with outbreaks than at any time since the deadly pathogen first emerged in Wuhan in 2019. Hundreds of locally transmitted infections have been found in about two thirds of its provinces. The last of the major Covid Zero holdouts, China is becoming ever more isolated, and its unpredictable curbs are beginning to disruptthe world's second-largest economy. How long can the vast nation maintain its strategy as the rest of the world learns to live with Covid, and what factors might force the country to re-open? Jason Brady, chief executive officer and fund manager with Thornburg Investment Management, said the policy gap between greater China and the rest of the world "is going to become more and more stark." As the reality of endemic coronavirus sets in, "investors need to cast their minds forward to what's the world going to look like six months from now."

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UAE real estate has potential to attract up to $450b investments

Brief: The UAE looks set to become a global economic centre of gravity in post-Covid era because of its successful strategy to handle the pandemic and quick rolling out of vaccination drive and it has a potential to attract up to $450 billion investments in real estate sector, according to experts at the Cityscape Summit. Sultan Butti bin Mejren, director-general of Dubai Land Department, on Sunday inaugurated the latest edition of the summit at Expo 2020 site where government, industry and thought leaders descended to take part in a number of topics defining the current and future real estate landscape from across the region and beyond. Ian Goldin, Professor of Globalisation and Development at University of Oxford, shared his thoughts about the future of the world economy and the implications for Dubai and its property sector. Identifying the Urban 2040 Plan and recent amendments to property and visa laws, Goldin believes there are very few places on earth that have achieved what the UAE has in the last 60 years.

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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, November 5, 2021:

  • Canada’s Chief Public Health Officer, Theresa Tam, says that while infections in the country are still above where they need to be that progress is being made. According to the most recent models from the Public Health Agency of Canada, daily Covid-19 infections are trending downwards. New daily infections have dropped to about half of where they were at the height of the fourth wave, with cases numbering around 2300 nationwide. Children aged 12 and under are now making up the majority of new cases, which has exacerbated calls to approve regulation allowing for the vaccination of children. Tam says the youth infection rate is “not unexpected,” given the “high level of vaccination in other age groups.” Children and young adults are less likely to become severely ill from Covid-19. In Canada, there has been less than 20 deaths of people under 19 since the pandemic began.

  • Some areas of the United States are offering to pay children under 12 to get vaccinated against Covid-19. New York City is now offering $100 to any child willing to get their first dose of the Pfizer vaccine at municipally operated vaccination sites. Other incentives include tickets to local attractions including the Statue of Liberty or the Brooklyn Cyclones baseball games. Similarly, in Chicago, children ages 5-11 are also being offered $100 upon receiving the vaccine. In a full-court press to get more children vaccinated, the Chicago public school district is closing schools on November 12th for Vaccination Awareness Day in hopes that more children will choose to get vaccinated. The announcements come after the United States on Tuesday approved smaller doses of the vaccines to be used on children as young as 5 years old.

  • Scientists across the globe are looking to the United Kingdom as a control group to indicate what the trajectory of the Covid-19 virus might look like in future. The U.K. was one of the first nations to aggressively implement mass vaccinations, however, they were also one of the first to remove emergency lockdown measures and mask mandates. From July – when emergency measures were officially lifted – to October, the U.K. has seen roughly three million cases of the virus, a number similar to what they had experienced in the year previous when lockdowns were still in place. According to Susan Butler-Wu, director of medical microbiology at the LAC+USC Medical Center in Los Angeles, California, this data suggests that vaccines alone are not enough to curb the spread of the virus altogether. Wu says that while vaccines are the most effective tool in fight against Covid-19, “we want to give them the best chance by combining them with other measures.”

  • On Friday, state leaders in Western Australia announced that the strict travel measures put in place to stop the spread of Covid-19 will remain standing into the new year. As travel restrictions ease in the other parts of the country, the WA government contends that a 90 per cent vaccination rate must be hit before it will consider the reopening of state borders. Once the state reaches the 80 per cent mark, emergency measures will be relaxed and reopening of non-essential services will resume. If current vaccination rates persist, the state is forecasting to hit 80 per cent by mid-December and hopes to reach 90 per cent by January or February. Western Australia, despite its lower population, has one of the lowest vaccination rates in the country with just under 64 per cent of people having received both doses. Premier Mark McGowan said that if vaccination rates do not increase that parts of the region may have to wait even longer to have restrictions lifted.

  • On Friday, French parliament adopted a bill that will see an extension of the health pass – or green pass – system continue until at least July 31st, 2022. The pass shows proof of vaccination, a negative covid test or recovery from the virus and is required to be shown for entry into non-essential public services such as restaurants and public transport. The pass, which faced staunch opposition at its induction, has now been implemented in one form or another across most European nations. It was touted as a temporary solution to a temporary problem, but as Europe faces another winter grappling with the surging virus, the vaccine passports are likely to be in place for longer than originally expected. On top of the extension of the health pass, elementary school students in France will once again be required to wear a mask while attending class. Opposition lawmakers in the country are calling the new regulations a “blank check” for the government to enact overreaching measures that infringe on individual freedom. 

  • Across many parts of Asia, government issued Covid-19 restrictions are beginning to ease as the surge of new cases from the Delta variant has shown signs of slowing down. In South Korea, where the vaccination rate has reached over 70 per cent of the population, nighttime curfews have been lifted and businesses are slowly returning to regular operation. Due to technologically advanced contact-tracing and rapid testing, the government is aiming to lift social distancing regulations at the end of February. As for travel, South Korea now allowing for people with important business outside the country to leave and return but has not yet stated when it will allow cross-border travel for Korean nationals who wish to go on vacation. There has also been no indication on whether the country will allow for foreign tourism once internal restrictions are fully lifted.

Covid-19 – Due Diligence And Asset Management

Globe says vax checks? Air Canada, others don't bother

Brief: The Globe and Mail reports in its Friday edition that the federal government is refusing to disclose how often the vaccination status of air travellers is being confirmed in what the Liberals billed as a broad vaccine mandate but which is so far only being enforced through random checks. The Globe's Marieke Walsh and Eric Atkins write that on Saturday, the first stage of the government's promised vaccine mandate for air travellers took effect, requiring all passengers to be either vaccinated or present a negative COVID-19 test. However, while passengers need to attest to being vaccinated, their actual vaccination status or test result is not always verified. "We made the decision to randomly check status for a short period in line with advice from the Public Health Agency of Canada. This also prevents further congestion in airports," said a Transport spokesperson. B.C. NDP MP and transport critic Taylor Bachrach said he took three flights to get home from Ottawa on Saturday without once being asked to prove he is vaccinated.

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Emergent Biosolutions shares plunge by more than 38% after U.S. cancels deal with Covid vaccine maker

Brief: Emergent Biosolutions shares plunged 38.6% on Friday after the company disclosed that the federal government had canceled its multimillion-dollar contract with the Covid-19 vaccine manufacturer. Emergent, the Maryland-based company blamed in March for ruining millions of Johnson & Johnson’s Covid doses after the shots were contaminated with ingredients intended for the AstraZeneca vaccine, was awarded a $628 million U.S. government contract last year to help make the shots. An inspection by the Food and Drug Administration later found its plant in Baltimore was unsanitary and unsuitable to manufacture the shots. In a 13-page report, inspectors wrote that the facility used to manufacture the vaccine was “not maintained in a clean and sanitary condition” and was “not of suitable size, design, and location to facilitate cleaning, maintenance, and proper operations.” The U.S. would put J&J in charge of the plant and end the production of the AstraZeneca vaccine at the facility. The company will forgo $180 million due to the contract’s termination, executives told investors on a call Thursday, according to a transcript by FactSet.

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HSBC Requests All of Its Hong Kong Staff to Get Vaccinated

Brief: HSBC Holdings Plc asked all of its Hong Kong staff to get vaccinated against the Covid virus after city authorities issued a new circular to push for higher inoculation rates. Colleagues who have not received a first dose should either get inoculated by Nov. 30 or submit to a Covid test every 14 days, the London-based bank, which counts Hong Kong as its largest market, said in a memo to staff seen by Bloomberg News. The memo was confirmed by a bank spokesman. The Hong Kong Monetary Authority and four other regulator issued circulars to financial institutions last week “strongly encouraging all employees to get vaccinated or undergo virus testing every two weeks,” according to HSBC. The circulars expanded on a June request that staff in client facing roles or support functions get vaccinated.  Hong Kong has struggled to get its population vaccinated, lagging behind rival financial centers such as Singapore, London and New York. The city’s zero-Covid policy has been successful in keeping local cases at bay, and most businesses have been back to close to full capacity over the past months. HSBC opened its offices fully in June.

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European markets close slightly higher as traders digest Covid news, U.S. jobs data

Brief: European markets closed marginally higher on Friday as investors reacted to promising news on Pfizer’s Covid-19 pill and a strong U.S. jobs report. The pan-European Stoxx 600 closed up by just 0.05% with most sectors finishing in the black. Pfizer announced Friday that its easy-to-administer Covid-19 pill, used in combination with a widely used HIV drug, cut the risk of hospitalization or death from the virus by 89% in high-risk adults. Stateside, stocks rallied to record levels on Friday after the October jobs report came in better than expected, boosting optimism about the economic recovery. Job gains for the month roared to 531,000 versus a consensus projection of 450,000. The Bank of England surprised markets on Thursday by holding interest rates at historic lows, after the U.S. Federal Reserve announced Wednesday that it will begin to curb the pace of its monthly bond-buying program “later this month.” British Airways parent IAG, Germany’s Uniper and Spain’s Amadeus were among the European companies reporting earnings before the bell on Friday. In other corporate news, UBS is set to ditch the rank of group managing director as CEO Ralph Hamers looks to streamline the Swiss lender’s management hierarchy.

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Anticipating the next financial crisis

Brief: Should a public utility be compensated like a hedge fund? When the average businessperson thinks of alternative lending, the notion of direct lending platforms — business development companies, private debt funds and other specialty lenders — serving a public utility function does not likely come to mind. Ask these same people whether they believe commercial banks provide a necessary service to a modern economy, however, and one can expect nodding agreement. It is well-established among academics, policymakers and practitioners that the allocation of credit from savers to borrowers is essential financial "plumbing," directing capital to its best uses, and that regulated lenders (along with functioning capital markets) exist in order to provide this service. Since the 2008 financial crisis, a change in market architecture for the allocation of credit (particularly but not exclusively in the middle market) has occurred, with a considerable shift of market share away from traditional commercial banks to alternative lenders. This trend has accelerated further in the COVID-19 era. Preqin reported in February that fundraising for direct lending vehicles had increased 62% from January 2020; funds with direct lending investment mandates were targeting $150.3 billion as of January, compared to a target of $93 billion in January 2020.

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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, November 4, 2021:

  • United States President Joe Biden’s administration announced on Thursday its vaccine rule that will apply to more than 100 million American workers will need to be in place by January 4th, 2022. Private businesses with more than 100 employees, certain health care workers, and federal contractors will need to have received the necessary shots to be fully vaccinated – either two doses of Pfizer or Moderna or one dose of Johnson & Johnson’s COVID-19 vaccine. “Vaccination is the single best pathway out of the pandemic. And while I would have much preferred that requirements not become necessary, too many people remain unvaccinated for us to get out of this pandemic for good. So, I instituted requirements – and they are working,” said Biden in a statement. 
  • Canada’s two most populous provinces – Ontario and Quebec – have decided not to require mandatory COVID-19 vaccinations for healthcare workers. On Wednesday, the Quebec provincial government announced it would be dropping its previous announced vaccine requirement for healthcare workers and Ontario Premier Doug Ford followed suit noting that enforcing such a mandate could exacerbate a labour shortage. On Thursday, the Canadian Medical Association (CMA) responded stating it was “disappointed” that both provinces would not move forward with the mandate. “When governments are unable to adopt every health measure necessary to protect their populations during a pandemic because it will mean that current staffing shortages will worsen, it’s a mark of ongoing system failure,” CMA President Dr. Katherine Smart said in a release. 
  • The United Kingdom became the first country in the world on Thursday to give the green light to approve Merck & Co.’s COVID-19 antiviral pill. The approval extends the UK’s quick action on COVID-19 treatments as they were also the first western nation to give the go-ahead to the Pfizer vaccine last year. Coronavirus infections in England reached their highest level yet last month, even though hospitalizations and deaths remained low. Prime Minister Boris Johnson’s government plans to focus on antiviral treatments while rolling out booster inoculations to bolster immunity levels as the winter months approach.
  • The World Health Organization (WHO) announced Thursday that Europe is facing a worrying resurgence of COVID-19 cases and is once “again at the epicenter of the pandemic.” The comments were made by Dr. Hans Kluge, the WHO’s regional director for Europe and Central Asia during a media briefing. Dr. Kluge noted last week nearly 1.8 million new cases and 24,000 deaths, which was a 6% increase in infections and 12% increase in fatalities. He also noted if the region continues this trajectory, which includes 53 countries, there could be another 500,000 COVID-19 related deaths in the region by February 2022, and that 43 of those countries could face extreme stress on their hospital capacity at some point in the same period.
  • India is celebrating Diwali after having it mostly derailed last year due to the coronavirus pandemic. Diwali – known as the festival that celebrates the triumph of light over darkness – held a special significance this year as the country is reporting some of its lowest COVID-19 cases since the pandemic began. In a country of close to 1.4 billion, India is reporting just over 12,000 cases per day, its lowest active caseload in more than 250 days. However, in an address, Prime Minister Narendra Modi urged people to take precautions and be wary of COVID-19 as complacency during the festival could lead to a new rise in cases, or worse, set in motion India’s third wave of the virus.
  • In Australia, New South Wales (NSW) Premier Dominic Prerottet and Victorian Premier Daniel Andrews released a joint statement on Thursday announcing the border between the two states would open to free travel. It was noted this means there will no testing or quarantine requirement for travellers entering Victoria state but people still have to obtain a permit before they arrive. For Victorians entering NSW, there are no requirements if they are fully vaccinated, unless they have been to a place of high concern in the state. In other COVID-19 related news, NSW Health Minister Brad Hazzard expressed hope that “game-changing” coronavirus vaccines could be available to children by the end of the year. Currently, about 40% of new cases in the NSW are under the age of 20 and about half of those are under the age of 10.

Covid-19 – Due Diligence And Asset Management

Canada’s Banks Get Green Light to Resume Share Buybacks, Dividend Increases

Brief: Canada’s banks will be able to resume buying back shares and increasing their dividends after regulators removed restrictions put in place to protect the financial system during the pandemic. Banks may immediately begin increasing regular dividends and executive compensation, the Office of the Superintendent of Financial Institutions, said in a statement Thursday. Subject to approval by the superintendent, they may once again repurchase their stock as well, OSFI said. The risks associated with capital distributions “have abated somewhat,” Peter Routledge, head of OSFI, said during a virtual event Thursday. “I believe that now is the time for OSFI to lift this expectation.” The move, which comes months after the Federal Reserve lifted similar constraints on U.S. firms, lets Canada’s banks start releasing the stockpile of capital they amassed to protect against a wave of pandemic-induced defaults that never occurred. Canada’s six largest banks could return a combined C$47 billion ($38 billion) in cash to shareholders and still exceed regulators’ capital requirements, according to an analysis by Bloomberg Intelligence.

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PE Firm Carlyle Nears Investment in GTCR-Owned Medical Company Resonetics

Brief: Carlyle Group Inc. is in advanced discussions to invest in Resonetics, a health-care asset owned by fellow private equity firm GTCR, according to people familiar with the matter. Carlyle is in talks to buy half of Resonetics in a deal that will value the medical-device manufacturing company at about $2.3 billion, including debt, the people said, asking not be identified because the matter is private. The deal isn’t finalized and talks could still fall apart. Representatives for Carlyle and GTCR declined to comment. A representative for Resonetics didn’t respond to a request for comment. Resonetics, based in Nashua, New Hampshire, was founded in 1987 and focuses on laser technology for the life-sciences industry, according to its website. GTCR first invested in it in 2018 through its portfolio company Regatta Medical, a statement showed.

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Moderna Lowers Forecast for 2021 COVID-19 Vaccine Deliveries

Brief: Moderna is scaling back expectations for the number of COVID-19 vaccine deliveries it expects to make this year and the revenue it will record from them. Issues including longer delivery lead times for exports and a temporary impact from expanding the company’s capacity to fill vials with vaccine and package them for shipping, which may shift some deliveries to early 2022, the drugmaker said Thursday. The company now expects full-year, 2021 product sales of between $15 billion and $18 billion. That’s down from a prediction for $20 billion in sales that it made in August. CEO Stephane Bancel told analysts on Thursday that his company’s issues stemmed from scaling up production so quickly. He also said the problems are short-term and can be fixed.

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Manulife, Sun Life Profits Rise, as Asset Management Growth Offsets COVID, Hurricane Impact

Brief: Canada's two biggest life insurance companies, Manulife Financial and Sun Life Financial, reported a rise in third-quarter profits on Wednesday, driven by growth in new business and higher assets under management. Sun Life beat analysts' expectations, helped by a 23% surge in earnings from its asset management business that offset losses in the U.S. and Asia from COVID-related claims, but Manulife missed estimates due to weather-related charges. While the pandemic and related claims, largely outside of Canada, have weighed on parts of insurers' businesses, the growth in wealth, lifted by lockdown-induced savings and government stimulus has proved a boon for their wealth management units. Core earnings at Manulife, Canada's biggest life insurer, rose to C$1.5 billion ($1.2 billion), or 76 Canadian cents a share, in the three months ended Sept. 30, from C$1.45 billion, or 73 cents, a year earlier. Analysts had expected 79 Canadian cents.

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Allocators in Asia Rethink Post-Pandemic Growth Opportunities

Brief: Since the second half of 2020, institutional investors in Asia have been changing their strategic asset allocation and shuffling their portfolios to reflect the new policies, research from Cerulli Associates shows. They’ve also been seeking investment strategies to meet what Cerulli called “pent up demand” for yield. Over the next 12 to 18 months pension funds are most interested in allocating to Asian equity, global equity, Asian high-yield bonds, global high-yield bonds, infrastructure, and hedge funds, according to a newly released Cerulli report. Triggered by the low-yield environment, asset owners and managers in Asia are going after growth opportunities using stocks as well as alternatives, including private credit, real estate, and infrastructure. About 30 percent of asset owners in the region have been looking to incorporate alternatives into their portfolio in 2021, according to data from the report. Even with the demand for alternatives, allocators in Asia also have a growing interest in passive investment strategies.

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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, November 3, 2021:

  • In the United States, a recent Deloitte survey is showing a majority of American travellers plan to spend the same or more on trips during the upcoming Thanksgiving and Christmas holidays than what they spent before the pandemic. Deloitte surveyed just over 6,500 Americans about their travel plans in September and noted about 42% plan on travelling by the end of the year, and at least 75% of those are planning to add at least an extra day to their plans due to the remote-work flexibility. However, the survey also noted what the pandemic did to deepen the divide between the rich and the poor. The poll showed many high earners planned to mix their work and pleasure while a third of low-income Americans, who aren’t afforded remote work flexibility, don’t plan on travelling at all. 
  • Canada’s largest airline is short 800 workers as Air Canada suspended employees who are not fully vaccinated. The move is in line with federal rules laid out by Prime Minister Justin Trudeau’s Liberal government who announced last month that as of October 30th, Ottawa would require federally regulated air, rail and shipping companies to establish mandatory vaccination policies for their employees. While 800 appears to be a large number, Air Canada executives noted 96% of their 27,000-cabin crew, customer service agents and others are fully vaccinated. Executives also noted while domestic leisure bookings have bounced back, business travel remains down across the board due in part to the persistence of remote work. “We are pretty confident that come 2022 corporate Canada returns to their offices and business travel should return. But no doubt that for us, business has lagged a little bit,” said Lucie Guillemette, Air Canada’s Chief Commercial Officer.
  • In the United Kingdom, England’s chief deputy chief medical officer announced Wednesday there are “hard months to come in the winter.” Jonathan Van-Tam told the BBC that he is worried over the increasing coronavirus rates in the country and that too many people believe the pandemic is over. Britain’s government recorded close to 34,000 new COVID-19 infections on Tuesday and 293 deaths, the highest daily death figure since February. The UK was recognized as getting a head start compared to their European counterparts - rolling out its vaccination program quickly and now offering booster shots, including everyone over the age of 50. However, the country has been cautious about vaccinating teenagers and younger people, only giving the green light for authorizing jabs for 12-to-15-year-olds in September.
  • India’s locally manufactured COVID-19 vaccine has received the green light for emergency use authorization from the World Health Organization (WHO). Bharat Biotech International Ltd. (Covaxin) received the WHO approval for use in people aged 18 and older on a two-dose schedule with four weeks between shots, according to a statement on Wednesday. The WHO also had impeccable timing for Prime Minister Narendra Modi’s government, who heavily promoted the vaccine, as the agency’s nod of approval came on the eve of Diwali, India’s largest festival.
  • The Philippines vaccine rollout is being hampered by logistical bottlenecks and citizen hesitancy, according to government officials. During a virtual briefing on Wednesday, Health Minister Francisco Duque declared that more than 40 million of the Philippines’ 108 million vaccines are either in warehouses, in transit to the archipelago’s remote islands, or waiting to be used in local health offices. In a separate briefing, Undersecretary Myrna Cabotaje said vaccine hesitancy continues to be a major roadblock due to as much as 25% of the population doubting the effectiveness of COVID-19 vaccinations.
  • Bloomberg is reporting China’s provinces are fighting COVID-19 more now than at any time since the deadly pandemic was first identified in Wuhan in 2019. The report noted the highly-infectious delta variant has accounted for at least 600 locally-transmitted infections in 19 of China’s 31 provinces. This is bad news for the world’s second largest economy who are still taking the COVID-zero approach in handling the pandemic. Several other countries – with drastically smaller populations such as Singapore, Australia and New Zealand tried the COVID-zero approach only to ditch it as vaccines became more readily available. China’s Ministry of Commerce urged residents on Tuesday to stock up on necessities for the fall and winter and be prepared for future outbreaks that could trigger snap lockdowns.

Covid-19 – Due Diligence And Asset Management

Fed to Start Tapering Bond Purchases Later this Month as it Starts Pulling Back on Pandemic Aid

Brief: The Federal Reserve announced Wednesday it soon will begin reducing the pace of its monthly bond purchases, the first step towards pulling back on the massive amount of help it had been providing markets and the economy. Tapering of bond purchases will start “later this month,” the policymaking Federal Open Market Committee said in its post-meeting statement. The process will see reductions of $15 billion each month -- $10 billion in Treasurys and $5 billion in mortgage-backed securities – from the current $120 billion a month that the Fed is buying. The committee said the move came “in light of the substantial further progress the economy has made toward the Committee’s goals since last December.” The statement, approved unanimously, stressed that the Fed is not on a preset course and will make adjustments to the process if necessary. “The Committee judges that similar reductions in the pace of net asset purchases will likely be appropriate each month, but it is prepared to adjust the pace of purchases if warranted by changes in the economic outlook,” the committee said.

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Balyasny, BlueCrest, ExodusPoint Ground Traders over Losses

Brief: The hedge fund traders watched as a nightmare scenario played out in the world’s bond markets. From Australia to the U.K. to the U.S., government bond yields abruptly moved against them last week amid growing speculation that central banks will accelerate plans for raising interest rates in the face of persistent inflation. The losses piled up -- and for a few became so big that the firms halted some trading to contain the damage. Balyasny Asset Management, BlueCrest Capital Management and ExodusPoint Capital Management each curtailed the betting of two to four traders after they hit maximum loss levels, according to people with knowledge of the matter, who asked not to be identified because the information is private. That step stopped traders from changing their positions, an extraordinary risk-management move used so firms can reassess trades or unwind them. ExodusPoint lost about $400 million last month, leaving it down 2% in October, people said. The fund is still up 2.8% year-to-date.

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S&P is up 37% Since Biden’s Election one year ago, Setting Presidential Record

Brief: The S&P 500 just capped its best year ever following a U.S. presidential election, surging 37% since Joe Biden won the vote. The benchmark index gained more in the past year since the 2020 election than any other modern president has seen in their first year in office. But the advance has more to do with the “everything rally” following the vaccine rollout than any specific policy decision, Charles Schwab UK Managing Director Richard Flynn said in a note. “While presidents are always quick to take credit for strong performance and quick to blame their predecessor for poor performance, it is likely that they are responsible for neither,” Flynn wrote. The gains come as the results of Tuesday’s elections offered a warning shot to Biden and the Democrats after Republicans won in key races. While the stock market has rallied to all-time highs, the nation’s mood has been less bullish amid rising prices and mixed economic reports. The last time the S&P 500 recorded a post-election day annual gain above 30% was after Bill Clinton’s re-election in 1996. The index gained 21% during Donald Trump’s first year. 

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US Service Sector Expands at Record Pace in October

Brief: The rate of expansion in the U.S. services sector, where most Americans work, hit a record high in October as demand remained strong even as supply chain problems persisted. The Institute for Supply Management reported Wednesday that its monthly survey of service industries — which includes restaurants and bars, trucking companies, hotels and many other businesses — jumped to a reading of 66.7 from September’s reading of 61.9. Although business activity, new orders, supplier deliveries and backlog of orders all surpassed previous records, sticky issues that have plagued almost every kind of economic activity since infections began to ease in the U.S. continued: labor shortages, supply chain bottlenecks and higher prices. “The broad picture painted by this report is that the economy is overheating,” said Stephen Stanley, chief economist for Amherst Pierpont Securities. “Demand is overwhelmingly strong at the same time that supply is constrained. Still, I am not sure that even a fully-functioning supply side, with more labor and a resolution of snags would be able to handle the pace of demand right now.”

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New Priorities for Family Offices and UHNW Clients Revealed in Global Survey

Brief: Private market investments reign supreme with a sharp increase in interest in this area over the past five years to top position of importance, according to Global wealth manager Julius Baer's just published 2nd Annual Family Barometer 2021 which highlights the top priorities for UHNW families right now. The survey covered more than 800 wealth management industry experts who work with and advise UHNW clients and their families.  However, it is sustainable and impact investing and ESG-related topics which have grown the most (17%) in terms of importance over the past five years when it comes to investing… Against the backdrop of Covid-19, health has replaced regulatory aspects as the third most important topic when it comes to topics ‘beyond investments' for families, with 19% of respondents citing it as the most important topic for their clients.  Guy Simonius, head of family office service at Julius Baer, said: "Perhaps now is the right time to think about starting a meaningful dialogue with your family and your chosen experts. Experience shows that doing so can bring greater peace of mind and contentment, and can also help to mitigate conflict and bring a family closer together.

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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, November 2, 2021:

  • In the United States, the Centers for Disease Control and Prevention (CDC) Advisory Committee on Immunization Practices are meeting on Tuesday where it is expected they will give the green light for Pfizer’s COVID-19 vaccination to be given to kids aged 5-to-11. The Food and Drug Administration (FDA) granted its emergency approval last Friday and the White House said on Monday that it began the process on that same day of moving 15 million Pfizer doses from freezers and facilities to distribution centers. The Biden administration said it has procured enough vaccine to inoculate all 28 million 5-to-11-year-olds in America. According to the CDC committee meeting on Tuesday, there have been at least 1.9 million COVID-19 cases in this age group, with 8,300 hospitalizations and at least 94 deaths.
  • Canada took another step to get the travel industry in the country back to normal – announcing it would open eight more airports to international flights as of November 30th. Currently, there are 10 airports in the country already receiving international flights. British Columbia will open three additional airports, while Ontario and Saskatchewan will do the same with two and Newfoundland’s St. John’s International rounding out the list. “This move will ensure travelers are able to access more regional airports for their international travel this winter while continuing to support our government’s measured approach to reopening its borders,” said Transport Minister Omar Alghabra.
  • The United Kingdom parliament have tightened coronavirus restrictions amid a surge of cases in the country, with tours and banquets canceled for two weeks. Facial coverings were made compulsory for parliamentary staff, contractors, and journalists last week. Ironically enough though, members of parliament can’t be ordered to do wear facial coverings because they’re not employed by House of Common authorities and it was noted in recent weeks, many Conservative MPs have not worn masks. The UK reported just over 40,000 new COVID-19 cases on Monday, along with 40 deaths.
  • Bloomberg is reporting the extent that China will go to in pursuit of COVID-zero cases. The report noted a primary school located in Beijing had parents waiting outside for their children as they were caught in a snap lockdown triggered by a teacher diagnosed hours earlier with COVID-19. The principal appeared a little after midnight telling them some of the kids would have to quarantine with one parent to accompany them through the two weeks of isolation. For students whose test results hadn’t yet come back, parents were asked to bring quilts and pillows to spend the night at school. Beijing – China’s capital – is in the midst of its largest COVID-19 outbreak since the beginning of the year.
  • In Australia, state officials in New South Wales are rewarding those who decided to become fully vaccinated from COVID-19. Fully vaccinated residents will be able to have unlimited visitors to their home, hospitality venues can host more diners, and nightclubs can reopen starting November 8th. People who aren’t fully vaccinated will need to wait until the state has hit 95% full vaccination or December 15th, whichever occurs first, to exit their stay-at-home orders. Unvaccinated people had previously been promised they would be under the same restrictions as the rest of the population from December 1st. Premier Dominic Perrottet said the changes were made because of high vaccination rates as of Tuesday, 88.3% of New South Wales residents aged 16 and over are fully vaccinated.
  • The Nikkei are reporting Japan’s government is considering easing its COVID-19 entry restrictions for visitors on short business trips, foreign students, and technical trainee workers. The Nikkei, not citing how they obtained the information, said the changes would shorten quarantine restrictions from 10 days to three days for those in Japan on short business trips or Japanese nationals returning from business trips. Japan has been noted as having one of the strictest border policies among developed nations since the pandemic hit, effectively banning most foreigners from entering the country unless they already had a visa.

Covid-19 – Due Diligence And Asset Management

With Hedges in Place, Ackman Calls on the Fed to Raise Rates

Brief: Even with five million fewer people employed in the U.S. than before the start of the Covid-19 pandemic, the economy’s recovery has been so robust and thethreat of inflationso high that hedge fund manager Bill Ackman thinks the Federal Reserve should “begin raising rates as soon as possible.” “A ‘wait and see’ approach to raising interest rates creates significant risks given the substantial progress to date on employment and inflation combined with the unprecedented economic backdrop,” Ackman wrote in an extensive presentation of the Investor Advisory Committee on Financial Markets to the New York Federal Reserve on Oct. 20. Ackman, a member of the investor committee, acknowledged on Twitter — where he posted his PowerPoint presentation — that “as we have previously disclosed, we have put our money where our mouth is in hedging our exposure to an upward move in rates, as we believe that a rise in rates could negatively impact our long-only equity portfolio.”

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More Women Check Writers Means More Money for Female-Founded Companies

Brief: When Hannah Olson was in college, she was diagnosed with chronic Lyme disease. The severity of her case required Olson to have a PICC line — essentially, a permanent IV that funnels antibiotics into the patient eight hours a day — inserted in her arm. As a young woman hoping to start her career in marketing, Olson felt anxious about telling her new boss about her condition and its impact on her day-to-day life. “I felt so much fear and shame and stigma,” Olson told Institutional Investor. “No one wants to go into their first job ever and have to be hooked up to an IV all day. I ultimately ended up at a company that wasn’t inclusive and didn't allow me to administer my meds at work, so I was forced to choose between my health and my work.”  In 2020, Olson founded Chronically Capable, a job-matching platform that connects people with disabilities and chronic illnesses to jobs with accommodations. A month after the platform launched, the Covid-19 pandemic hit.

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Pfizer Top Q3 Forecasts as Total COVID Vaccine Sales Soar

Brief: Pfizer is hiking sales expectations for its top-selling COVID-19 vaccine again, and its early look at 2022 also falls well above Wall Street forecasts. The drugmaker said Tuesday that it now expects to book about $36 billion in revenue from Comirnaty this year. That’s about 7% higher than what Pfizer forecast in July and more than twice what the company expected at the start of the year, shortly after distribution of the two-shot vaccine began. Next year, Pfizer says global vaccine sales could total around $29 billion or more, and there’s room for growth. The company expects to recognize revenue for 1.7 billion doses in 2022, but it could produce 4 billion.  “We continue to believe the vaccine has durability, and there will continue to be significant revenue beyond 2022,” Chief Financial Officer Frank D’Amelio told analysts. Analysts forecast, on average, $24 billion in sales from the vaccine next year, according to FactSet. They also expect revenue from the shots to start waning in the following years, depending on how the pandemic plays out.

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Air Canada CEO Hopeful as Revenue Climbs Back Toward Pre-Pandemic Levels

Brief: Air Canada sees hope on the horizon as revenues soared over 2020 levels last quarter, despite continuing to operate far below pre-pandemic capacity and at a loss of hundreds of millions of dollars. Domestic leisure bookings have started to rebound, but business travel remains down across the board amid the persistence of remote work. "We're witnessing a strong rebound in VFR (visiting friends and relatives), and leisure traffic remains strong, specifically within North America, across the Atlantic and to sun destinations," chief operating officer Lucie Guillemette told investors on a conference call Tuesday. "We were pretty confident that come 2022 corporate Canada returns to their offices and business travel should return. But no doubt that for us, business has lagged a little bit." Revenue nearly tripled year over year to $2.10 billion in the quarter ended Sept. 30 alongside an 87 per cent boost in capacity. But revenue and capacity remained more than 60 per cent and two-thirds below Air Canada's third-quarter figures in 2019 respectively as COVID-19 fallout continues to damage carriers' bottom lines.

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UK Renters Prioritise Home Working Space Amid Return-to-Office Returns

Brief: An overwhelming majority of UK renters aged 25-40 want desk space for working from home, according to new research from M&G Real Estate, the real estate investment division of M&G plc – a leading savings and investments business. Almost nine out of ten (87 per cent) of those who have experienced home working questioned in M&G’s 2021 Home Renters Survey said that, in the wake of the Covid-19 pandemic, dedicated home workspace is ‘quite’ or ‘very’ important to them. Furthermore, three quarters (75 per cent) of these home renters stated they were now using rooms and spaces at home differently. More than a third have improved garden or balcony spaces or rearranged internal areas for ‘living or relaxing’ during the various restrictions, while 34 per cent of respondents had used the time to allocate more space for exercising or to improve sleeping areas. When asked if the pandemic had made them more or less likely to continue renting in the future, just over a quarter (26 per cent) said they were less likely to continue renting, rising to 37 per cent among those on higher incomes (GBP50,000 plus per annum). Nearly two thirds (64 per cent) said that Covid-19 has had no impact on their attitude towards renting.

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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, November 1, 2021:

  • The United States has a higher death toll for Covid-19 than any other country in the world. The global tally for coronavirus deaths reached 5 million this morning, and the United States, despite being a wealthy nation with a world class healthcare system, has been the hardest hit. According to data from Johns Hopkins University, about 46 million cases have been reported in the country and over 740,000 have died. The World Health Organization warned last week that cases and deaths are on the rise globally for the first time in two months, another reminder that the pandemic is not over yet.
  • Canada will donate 10 million doses of Moderna’s Covid-19 vaccine to the COVAX global vaccine sharing alliance. Prime Minister Justin Trudeau made the announcement over the weekend at the G20 leaders’ summit in Rome. With donations and financial contributions factored in, Canada aims to donate at least 200 million vaccine doses by the end of 2022. “The size of Canada’s commitment of 200 million doses by the end of 2022 is very significant given our size and given the fact that we do not have our own domestic bio-manufacturing capacity,” said Deputy Prime Minister Chrystia Freeland during a news conference at the summit.
  • In the United Kingdom, walk-in clinics in England are now offering booster shots for Covid-19. The National Health Service in England said more than six million people have already had their booster jab or third dose. In England, those eligible for boosters include people 50 and older, those working in long-term care facilities, those with underlying health conditions and those who share their homes with vulnerable people. About 30 million people in England who had their second shot more than six months ago are eligible, and they’ll be able to show up at one of the hundreds of vaccination sites with no appointment needed.
  • In India, schools in the capital of New Delhi have reopened for the first time since March 2020. The decision to reopen the schools was based on a significant decrease in the number of coronavirus cases reported. During the month of October New Delhi reported only four coronavirus-related deaths, the lowest number in 19 months. Schools are allowed to reopen so long as they comply with certain conditions, such as not allowing more than 50% attendance and not forcing parents to send their children to school. Schools must also ensure the full vaccination of all their staff.
  • Japan’s Prime Minister Fumio Kishida won a mandate in Sunday’s parliamentary election, with his Liberal Democratic Party taking 261 of 465 seats. This outcome was better than expected for Kishida, as many polls predicted a struggle for his party in obtaining the 233 seats needed to win a majority. Supporters of the Liberal Democrats credit the party with the recent drop in Covid-19 cases, with Tokyo reporting just 17 new cases of Covid-19 today compared with 6000 per day during its pandemic peak. Kishida’s campaign was largely focused on Covid-19 response measures as well as economic revitalization. 
  • In Australia, border restrictions were eased for the first time since the beginning of the coronavirus pandemic. Fully vaccinated Australians are now free to travel without a permit or the need to quarantine upon arrival. The travel is limited to Australian citizens and permanent residents; foreign tourists have not been welcomed just yet, with the exception of neighbouring New Zealand. Citizens of Singapore will be the next group allowed in, as of November 21. All travellers will be required to show proof of a negative Covid-19 test prior to boarding, and unvaccinated travellers will still have to quarantine.

Covid-19 – Due Diligence And Asset Management

Short of Workers, U.S. Industry Is Eager for Borders to Reopen

Brief: For years, U.S. businesses could rely on a steady flow of workers arriving from around the world on various types of visas. The pandemic has slowed that to a trickle -– making the current labor shortages even worse. And the shortfall of migrant workers will likely persist even after U.S. borders reopen, as they’re scheduled to do next week. The State Department issued about 850,000 non-immigrant work visas between March 2020, when Covid-19 forced borders and consulates to shut down, and July 2021, according to research by Alex Nowrasteh at the Cato Institute. That’s less than half the number in the previous 17 months. The slowdown is having an impact across the economy, from seasonal work in agriculture to high-paying tech companies. It’s especially challenging for U.S. manufacturers, who say they’ve long struggled to fill mid-skilled positions that require some level of technical training, like machine operators or welders.

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Fed to start reining in economic aid as inflation risk rises

Brief: With inflation at its highest point in three decades, the Federal Reserve is set this week to begin winding down the extraordinary stimulus it has given the economy since the pandemic recession struck early last year, a process that could prove to be a risky balancing act. Chair Jerome Powell has signaled that the Fed will announce after its policy meeting Wednesday that it will start paring its $120 billion in monthly bond purchases as soon as this month. Those purchases are intended to keep long-term loan rates low to encourage borrowing and spending. Once the Fed has ended its bond purchases by mid-2022, it will then turn to a more difficult decision: When to raise its benchmark short-term rate from zero, where it’s been since COVID-19 hammered the economy in March 2020.

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Hong Kong Ends Quarantine Exemptions for Senior Executives

Brief: Hong Kong will end quarantine exemptions for senior executives, bankers and most entitled groups starting Nov. 12, tightening what is already one of the world’s strictest Covid-19 policies as it works to open the border with mainland China. Exemptions for directors of listed companies and senior executives from the banking, insurance, securities and futures sectors will be canceled, Hong Kong’s government said. Consular and diplomatic officers will need to self-isolate at designated quarantine hotels, it said, with home isolation not allowed except for consuls general or representatives at an equivalent or higher level. Only members of some essential groups linked to the city’s daily operations will get exemptions, including airline crew, sea crew working on cargo vessels, government officials and drivers of cross-border buses.

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New Arcapita Venture to Invest $2 Billion in U.S. Warehouses

Brief: A new joint venture between alternative investment firm Arcapita Group Holdings and Arden Group plans to acquire $2 billion worth of industrial property assets in the U.S. as capital pours into niche real estate sectors amid the global pandemic.  The venture already completed the purchase of multi-tenant industrial properties in urban centers valued at over $550 million, with an additional $250 million of real estate closing in the near term, according to a statement on Monday. The goal is to grow the portfolio to as much as $2 billion in gross asset value across the top 25 U.S. industrial markets, it added. The shift toward online shopping is altering supply chains and giving a boost to industrial landlords, especially those with space around major cities.  While hotels and retail properties have been battered by the pandemic, investors have flocked to warehouses as an e-commerce boom that was flourishing before the pandemic accelerates with consumers increasingly shopping online.

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Thailand’s Big Reopening Set to Test Pandemic-Era Tourism

Brief: Thailand is ending quarantine for vaccinated visitors from more than 60 countries, the biggest reopening gamble in Asia and one that could mark a turning point for the revival of mass tourism during the pandemic. Starting Monday, fully-vaccinated travelers flying in from the U.S., China, Singapore, Japan, India and most of Europe will be able to freely tour Thailand’s sandy beaches, temples and tropical islands after testing negative for Covid on arrival. Inoculated visitors from countries not on the list can travel to Bangkok and 16 other regions, but they will be confined to their initial destination for the first seven days before being allowed to travel elsewhere. It’s the biggest step Thailand has taken to welcome back a slice of the nearly 40 million visitors it hosted the year before the pandemic, and is billed as a “fight to win foreign tourists” as countries from Australia to the U.K. also loosen Covid curbs.

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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.