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Our briefing for Friday February 26, 2021:
Feb 26, 2021 4:14:15 PM
- The United States’ head of the Centers for Disease Control and Prevention (CDC) said “things are tenuous” as the downward trend in COVID-19 cases in America stalled. CDC Director Dr. Rochelle Walensky told reporters on Friday the number of cases for the past three days have risen compared to the prior week and that declines in hospitals and deaths were also potentially leveling off at still a very high number. “Now is not the time to relax restrictions. Cases, hospital admissions, and deaths all remain very high and the recent shift in the pandemic must be taken extremely seriously.” States and cities have gradually been lifting restrictions in recent weeks. For instance, New York City reopened for indoor dining earlier this month.
- Canada has approved their third vaccine for emergency use on Friday. Health Canada has given the green light to the AstraZeneca and Oxford University’s COVID-19 vaccine. Canada’s regulatory experts have been assessing the data from the submission since October and concluded that the inoculation has an efficacy rate of 62% and authorized it for use in all adults 18 and over. While other countries have restricted the vaccine to people under the age of 65, Health Canada has no immediate safety concerns for those 65 or older. The country has secured 22 million doses of the AstraZeneca vaccine, most of which are slated to arrive between April and September.
- In the United Kingdom, it was mentioned earlier in the week in Castle Hall’s COVID-19 Diligence Briefing that the government was issuing an advertising blitz to stay vigilant. On Thursday, Queen Elizabeth II urged people to get vaccinated and think about people other than themselves. The Queen participated in a virtual meeting with four senior officers overseeing the vaccine rollout in England, Wales, Scotland and Northern Ireland. Nearly 19 million people in the UK have received at least one dose of the vaccine, one of those included the Queen and in case you are wondering if it hurts – the 94-year-old monarch said it was quick, easy and the jab “didn’t hurt at all.”
- Bloomberg is reporting European Union (EU) leaders are moving towards establishing bloc-wide vaccine certificates to enable countries to reopen travel. During a five-hour video call with the EU’s 27 leaders, Commission President Ursula von der Leyen warned the bloc must move quickly to establish the process or risk Apple Inc. and Google stepping in and filling the void. After Thursday’s talks, German Chancellor Angela Merkel said “we have all agreed that we need vaccine certificates. In the future, it will certainly be good to have such a certificate but that will not mean that only those who have such a passport will be able to travel; about that, no political decisions have been made yet.”
- Japanese Prime Minister Yoshihide Suga said Friday six of its prefectures will move out of their COVID-19 state of emergency at the end of the month. Of the 10 prefectures under the state of emergency, Aichi, Gifu, Osaka, Kyoto, Hyogo and Fukuoka will be removed from the list a week earlier than the scheduled end date of March 7th as infections have declined and strain on hospitals has eased. Noticeably absent from the list was Japan’s capital – Tokyo – their metropolitan area will have to wait for further signs its situation is improving.
- Brazil has recorded more than 250,000 deaths from the coronavirus just one year after confirming their first case. Latin America’s most populous country only trails the United States for most deaths due to COVID-19. “The virus is circulating without any control”, said Christovam Barcellos, who works for the federally funded Fiocruz biomedical institute. Barcellos went on to add Brazil is experiencing a second plateau, not a second wave, “because we’ve been over five weeks with 1,000 deaths per day.” The virus has been spreading mainly through Brazil’s vast cities as there has been a lack of national or even local lockdowns, which means Brazilians are moving freely across the large country.
Covid-19 – Due Diligence And Asset Management
Emerging Markets Hedge Funds Surge on Vaccine Optimism and Lockdown Easing
Brief : Vaccine optimism and hopes of an end to coronavirus quarantines and lockdowns are spurring growth among emerging markets-focused hedge fund managers, new industry analysis shows. Hedge Fund Research said on Friday that an upsurge in both performance and capital over the past year have positioned emerging markets managers – and, in particular, those focused on China – for a “strong continuation” of gains in 2021. EM hedge funds – as measured by HFR’s Emerging Markets (Total) Index – gained 12.7 per cent in 2020. China-focused strategies powered the advance, with the Emerging Markets China Index soaring more than 26.3 percent in the 12-month period between January and December.
CQS Shuts $525 Million Hedge Fund as Narayanan Joins Citadel
Brief: CQS is shutting one of its best-performing strategies because the fund’s chief investment officer is leaving to join Citadel, adding to a string of departures from Michael Hintze’s hedge-fund firm. Prakash Narayanan, who ran CQS Global Relative Value, is exiting after more than three years, according to people with knowledge of the matter. He is joining Citadel’s Global Credit business as a portfolio manager to run a strategy similar to the one at CQS, a spokesman for Citadel confirmed. Narayanan’s was one of the senior partners that Hintze recently included in a succession plan. His strategy was a rare bright spot for CQS last year when the firm’s hedge funds tumbled, with the Global Relative Value fund surging 30% while Hintze’s flagship money pool slumped by a record 35% as his structured credit bets imploded, according to an investor document.
U.S. Urban Office Market, Stung by Pandemic, Hopes Tech Firms Drive Comeback
Brief: The growing footprint in New York of major tech companies like Amazon.com Inc, Facebook Inc and Alphabet Inc’s Google has given property owners and brokers hope that once the coronavirus has been conquered demand for office space will quickly return to pre-pandemic levels. But the popularity of working from home and the exodus of people from expensive coastal cities will likely weigh on demand and change workspace requirements, leaving office buildings that do not adjust less valuable. Big Tech’s expanding real estate clout already hides declining values for lower-quality properties. Prices for premier workspace in U.S. gateway cities have held or even risen during the pandemic in a flight to quality. But leasing volumes and number of buildings sold have plummeted, with valuations at the lower end falling, data shows.
U.K. Takes Stakes in 37 Firms After Covid Loans Converted
Brief: The U.K. government has taken stakes in 37 startup companies after state loans to help them grow during the pandemic were converted into equity. The figure was revealed Friday in response to a freedom-of-information request by Bloomberg to the British Business Bank, which administers the so-called Future Fund program. While the government is usually averse to taking stakes in private companies, the bank said 30.4 million pounds ($42.4 million) of loans had been converted. The Future Fund was announced in April to ensure “high-growth” startups got funding to continue operations as the coronavirus triggered the worst recession in more than 300 years. Billed as a 500-million pound program, it’s issued 1,140 loans worth 1.1 billion pounds. The bank declined to provide details of the companies in which the government now owns stakes, or the size of the state’s holdings. “The Convertible Loan Agreement in place with each investee company is confidential in nature,” it said.
What We Learnt About Venture Capital in the Age of Covid
Brief: Despite COVID, venture capital activity across the globe remained robust throughout 2020 and deal activity, thus far in 2021, suggests venture capital will continue to fly high this year. Below we outline Covid winners, challenges and opportunities in ESG within the VC space and discuss what managers can do to thrive in this new financial environment. The winners. Healthcare and life sciences. Unsurprisingly, healthcare and life sciences have done particularly well. According to Rock Health, 2020 has seen more digital health funding than any other year with USD2.4 billion invested each quarter — significantly outperforming the last 2 years’ quarterly average of USD2.1 billion. The US was particularly strong in this sector. Q3’20 hit USD36.5 billion, a 7-quarter high for VC companies and is an increase of 30 percent from Q2 2020.
History Shows Post-Crisis Buyout Deals Outperform – And Co-Investments Perform Best
Brief: Private equity buyouts have historically performed better in the periods immediately following market collapses like the dot-com bubble or the 2008 financial crisis. But the best performance belongs to co-investment deals, according to a new report from private markets firm Capital Dynamics. In a study of 435 co-investment buyout transactions made between 1998 and 2017, the multi-manager firm found that co-investments delivered higher internal rates of returns than the overall buyout market in the three-year periods following the last major crises before the pandemic. Report authors Andrew Beaton, David Smith, and Kairat Perembetov found that the co-investment deals performed better on the median, as well as delivering higher upper- and lower-quartile returns — and that was on a gross basis, before the more favorable fees associated with co-investments were taken into account.
