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Our briefing for Friday April 9, 2021:
Apr 9, 2021 4:00:25 PM
- In the United States, Bloomberg is reporting the country is sitting on a stockpile of more than 20 million AstraZeneca COVID-19 doses even as the inoculation looks increasingly less likely to factor into President Joe Biden’s domestic vaccination campaign. AstraZeneca has yet to request FDA approval for its vaccine and has already been questioned by American regulators for mistakes made during clinical trials and partial data releases. American health officials believe the FDA authorization of the AstraZeneca vaccine would be seen as “really important” due to all the questions surrounding it. However, most health officials are in agreement; the United States doesn’t need the stockpile of AstraZeneca doses and should start donating it to allies and poorer countries that could actually use it.
- In Canada, Ontario reported 4,227 new cases of COVID-19 on Friday – the second most recorded in a single-day during the pandemic. The country’s most populous province recorded 4,249 new infections on January 8th, but 450 of those were attributed to a data delay. There are currently 552 patients being treated for COVID-19 related sickness in Ontario hospitals – the most since the pandemic began. Due to the record-breaking number, CBC reported Thursday evening that Ontario Health has ordered hospitals in much of the province to stop performing all but emergency and life-saving surgeries because of the growing case load of COVID-19 patients.
- In the United Kingdom, economists are predicting a roaring start next week when the country’s battered hospitality and retail sectors reopen on April 12th. A chief economist at a London brokerage said extra spending from diners, drinkers and shoppers could be worth half a billion pounds in the first week alone. Over the course of the second quarter, the UK’s economy is expected to grow by around £6 billion as lockdowns are lifted under the government’s roadmap.
- German Chancellor Angela Merkel plans on taking control back from state leaders and will look to impose restrictions on regions with high numbers of new infections. The news comes as the head of Germany’s disease control agency has called on the country to enter into a two-to-four-week lockdown to prevent hospitals from being overwhelmed. “Germany is in the middle of a third-wave, so the federal government and the states have agreed to add to the national legislation,” a spokesperson for Chancellor Merkel told reporters on Friday. The change to Germany’s COVID-19 pandemic law will likely be put before cabinet on Tuesday.
- The Japanese government will reimpose restrictions in Tokyo, Kyoto and Okinawa as coronavirus cases rise in those three regions. Prime Minister Yoshihide Suga announced the decision on Friday and the measures will run from April 12th until May 11th in Tokyo and until May 5th in Kyoto and Okinawa. Similar restrictions are already in place in Osaka, Hyogo and Miyagi. Japan’s capital city Tokyo had only been out of their previous restrictions for three weeks. Under the new measures, bars and restaurants are being instructed to close by 8 PM and those that fail to do so, will face fines.
- In Brazil, a congressional investigation of the federal government’s role in the country’s disastrous pandemic response has been given the green light. Not surprisingly, President Jair Bolsonaro was fuming at the move, blaming “leftist” senators and saying the investigation should instead focus on alleged misuse of federal funds to fight the pandemic by state governors and mayors. President Bolsonaro has been constantly at odds with governors and mayors throughout the pandemic who have imposed restrictions on commerce and public gatherings. Brazil set another record on Thursday with 4,429 Brazilians succumbing to the coronavirus.
Covid-19 – Due Diligence And Asset Management
Guardians of World Economy See Long Recovery Road
Brief : The guardians of the global economy this week implored governments to act to avoid a two-speed rebound where vaccinated, rich nations recover more strongly from the pandemic than poorer countries languishing under the burden of disease and debt. The International Monetary Fund said that it sees the U.S., as well as China, as the locomotive for global economic growth. The world’s largest economy, fueled by trillions of dollars in stimulus spending, is expected next year to surpass its pre-pandemic projected level of output. But many emerging and developing economies, struggling with slow growth and mountains of debt, will take much longer. The central theme of the IMF’s virtual spring meetings with the World Bank was “giving everyone a fair shot” -- a slogan that underlined both concerns about inequality and the importance of speeding up the distribution of vaccines globally.
Hedge Funds Enjoy Biggest First-Quarter Gains in 20 Years, as Event Driven and Equity Strategies Fuel Returns
Brief: Hedge funds have made their strongest first-quarter start in more than 20 years, gaining more than 6 per cent in the three-month period to the end of March, with returns powered by a mix of successful calls on deep value equities amid accelerated volatility, renewed economic optimism, and soaring cryptocurrencies. Hedge Fund Research’s main Fund Weighed Composite Index, a global, equal-weighted benchmark of some 1400 single-manager hedge funds, advanced 6.08 per cent in Q1, following a 1.02 per cent gain in March. The March gain proved to be its sixth consecutive monthly rise, with Q1 its best opening quarter since 2000, and the index’s fifth-best opening quarter on record. HFR president Kenneth Heinz said deep value, event-driven equities, coupled with credit strategies – including traditional credit arbitrage exposures – and cryptocurrencies have helped fuel industry gains lately, as performance dispersion between winners and losers continues to narrow. Overall, event driven hedge fund managers led the pack, gaining 1.85 per cent in March to put their first quarter return at 8.21 per cent.
Rebounding Private Flights Fuel M&A Interest in Corporate Jet Services Providers
Brief: As U.S. business aviation traffic rebounds to pre-pandemic levels, a niche, fragmented industry providing services ranging from hangars to fueling is drawing interest from private equity funds and infrastructure investors. Fixed base operators, or FBOs, play a key role in keeping private jets flying, offering services like hangars and fueling, and some buyers are betting the revival in flights could spill over into allied industries. While business jet orders and deliveries dropped in 2020, private flights, which carry smaller groups and promise wealthy passengers less risk of exposure to the coronavirus, have generally fared better than commercial. That is underpinning investor interest in FBOs. The sector recently made headlines when Gatwick Airport owner Global Infrastructure Partners joined forces with Blackstone and Bill Gates’ investment vehicle to make a $4.73 billion offer for Signature Aviation, the largest private jet services firm. There are other deals brewing too. Macquarie Infrastructure Corp has said it is seeking buyers for Atlantic Aviation, the second-largest FBO network, for a deal by year’s end.
The World’s Wealthiest Countries are Getting Vaccinated 25 Times Faster
Brief: Enough vaccines have now been administered to fully vaccinate about 5 per cent of the global population — but the distribution has been lopsided. Most vaccines are going to the wealthiest countries. As of Thursday, 40 per cent of the COVID-19 vaccines administered globally have gone to people in 27 wealthy nations that represent 11 per cent of the global population. Countries making up the least-wealthy 11 per cent have gotten just 1.6 per cent of COVID-19 vaccines administered so far, according to an analysis of data collected by the Bloomberg Vaccine Tracker. In other words, countries with the highest incomes are vaccinating 25 times faster than those with the lowest. Bloomberg’s database of COVID-19 vaccinations has tracked more than 726 million doses administered in 154 countries. As part of our effort to assess vaccine access around the world, the tracker has a new interactive tool measuring countries by wealth, population and access to vaccines.
Dealmakers Optimistic Private Credit Markets Will Fully Rebound, says new Survey
Brief: Initially sideswiped by Covid-19 in early 2020, private credit markets began to bounce back by year’s end, leaving dealmakers optimistic that private credit might fully rebound in 2021. According to a new survey of 112 private credit industry professionals conducted in February, 91 per cent of investors and 80 per cent of lenders surveyed expect deal flow to increase this year and are optimistic about several deal categories and sectors. For the 2021 Private Credit Survey Report, Katten surveyed an almost-equal weighting of lenders and private equity investors. Those surveyed represent a variety of sectors (including financial services, information technology, consumer staples, communications, industrials and health care) about their outlook on deal flow, readiness to address the London Inter-Bank Offered Rate (LIBOR) phaseout and other issues critical to the private credit industry.
How Equity Analysts Filled the Covid-19 ‘Information Void’
Brief: The research output of equity analysts went up dramatically during the Covid-19 pandemic — but the accuracy of their forecasts went down, according to a new study from the University of London’s Cass Business School. Compared to the pre-pandemic months, analyst forecasts for company earnings per share, or EPS, increased by 72 percent in March 2020, indicating that sell-side analysts’ “initial response to pandemic-induced market uncertainty is to increase their provision of information,” according to the study’s author Pawel Bilinski, director of the Centre for Financial Analysis and Reporting Research at Cass. For other forecasts, such as revenue, cash flow, and dividend estimates, Bilinksi uncovered a similar pattern. The number of revenue forecasts increased by 80 percent in March, while cash flow forecasts jumped 59 percent and dividend estimates grew by 11 percent, according to the paper. The study was based on over 400,000 EPS forecasts and revenue, cash flow, and dividend estimates made by sell-side analysts from January 2018 to November 2020. The increase in research activity came as the Covid-19 pandemic sent a series of shock waves rippling through the global economy, creating an uncertain and volatile market environment.
