Our briefing for Friday March 26, 2021:

Mar 26, 2021 3:27:04 PM

In the United States, the country’s former director of the Centers for Disease Control and Prevention (CDC) only stoked the flames of tension when it comes to the origin of the coronavirus pandemic between America and China. Speaking to CNN on Friday, Dr. Robert Redfield believes the pandemic began in a lab in China – a controversial theory without any evidence. Dr. Redfield believes the virus “escaped” a Chinese lab, albeit not necessarily intentionally. The former CDC director served under the Trump administration and the current Biden administration was quick to distant themselves from Dr. Redfield’s opinion stating it was only his opinion and they were awaiting the World Health Organization’s full report from their January visit to Wuhan, China before making any of their own assertions. The origin of the coronavirus has been a key source of tension between Washington and Beijing ever since the coronavirus pandemic began.

Canada is expected to hit one million total coronavirus cases next week, according to data released on Friday by the Public Health Agency of Canada (PHAC). “COVID-19 still has a few tricks in store, and we need to hold on together a bit stronger and longer until vaccines have us protected,” said Dr. Theresa Tam, Canada’s chief public health officer. Due to COVID-19 variants spreading throughout the country, daily case counts are expected to rise rapidly over the coming weeks after two months of relative calm. The PHAC stated with current variants in circulation, the case count could hit 12,000 a day if Canadians maintain or increase the number of people they are in contact with daily.

In the United Kingdom, Public Health England (PHE) have released a new study on Friday stating the government’s vaccine rollout plan prevented at least 6,100 deaths due to COVID-19 from early December to late February. PHE’s data says about 5,900 deaths were prevented among people aged 80 and above, and 200 in those aged 70 to 79. “While the vaccines have a striking effect on mortality, we don’t know yet know how much these vaccines will reduce the risk of you passing COVID-19 onto others. Even if you have been vaccinated, it is really important that you continue to act like you have the virus, practise good hygiene and stay at home,” said Dr. Mary Ramsay, PHE head of immunisation.

Italian Prime Minister Mario Draghi is firmly backing new European Union restrictions on vaccine exports and also took a shot at pharmaceutical companies. “The impression is that some companies - I won’t name any names – sold things two or three times,” said Draghi. The prime minister went on to add that individual exports bans must be considered, especially for companies which don’t respect contracts. Almost 10% of the Italian population has received at least one vaccine dose, compared to 26% in the United States and 43% in the UK. Prime Minister Draghi said he will seek parliamentary approval in mid-April to widen Italy’s budget to allow further economic stimulus.

In the Philippines, the government made a move on Friday to attract investments and help businesses recover from the pandemic. President Rodrigo Duterte approved a law that will cut the corporate tax rate from 30% to 25% for most businesses and 20% for smaller enterprises. According to the Philippines’ Department of Finance, the new law will bring the country closer to the average tax rate in Southeast Asia, which is around 22%.

Brazil’s Butantan Institute is going to develop its own domestic COVID-19 vaccine with hopes it could be ready for distribution by July. The Sao-Paulo based Butantan has partnered with China’s Sinovac to produce the CoronaVac shot, which will begin trials in April, pending regulatory approval. The single dose inoculation will begin mass production in May and hope to have 40 million shots ready to go by July. Production would be fully focused to meet Brazilian demand, before opening exports to other countries as well. According to data compiled by Bloomberg, Brazil has only administered first doses to about 6.6% of the population with those fully vaccinated standing at just 2%.

Covid-19 – Due Diligence And Asset Management

Private Equity Thinks Student Property is a Post-Covid Winner

Brief : Private equity firms are ramping up their investments in the U.K.’s student accommodation market, pumping hundreds of millions of pounds into a resilient sector with an eye on high rental returns in post-Brexit, post-Covid Britain. More than one-third of deals for student property in 2021 so far have been financed by private equity, compared to about 15% in total between 2016 and 2019, according to data compiled by real estate advisers Jones Lang Lasalle Inc. With student application numbers projected to rise by 8.5% this year and purpose-built accommodation oversubscribed, property remains attractive for private equity firms. They are sitting on more than $300 billion for property investments alone and want to broaden their assets beyond offices, retail and hotels -- all badly hit by Covid-19. Major deals this year include Los Angeles-based Ares Management Corp.’s first U.K. student property investment. The $197 billion alternative asset manager spent 158 million pounds ($217 million) for two newly built housing units in February, and hopes to build a U.K. portfolio worth 400-500 million pounds, co-head of European real estate Wilson Lamont said in an interview. Ares isn’t alone. A recently launched Sunway Bhd and MBU Capital Group Ltd. fund already stands at 110 million pounds and is targeting almost double that.

New Hedge Fund Launches Hit Highest Level in Three Years, as Managers Seize on Growing Opportunities

Brief: The number of new hedge funds being launched has reached its highest level in three years, as managers look to capitalise on the nascent economic recovery, idiosyncratic and volatility-based opportunities, and a shifting macro environment. New hedge fund launches increased to around 175 in the fourth quarter of 2020, with the number of new funds unveiled exceeding the estimated quarterly liquidations for the second successive quarter, new industry analysis by Hedge Fund Research shows. The number of Q4 launches was up on the previous quarter’s total of 151, bringing the estimated number of new hedge funds launched in 2020 to 539, a period which included a record low in Q1 at the start of the coronavirus pandemic, HFR said this week. “New hedge fund launches continued to rise as industry expansion accelerated into 2021, driven by the strongest performance gains since 2000, as both managers and investors positioned for strong growth throughout 2021,” said Kenneth Heinz, HFR president.

Wall Street Bonuses Jump 10% in 2020, says NY State Comptroller

Brief: The average bonus paid to employees in New York City’s securities industry in 2020 rose by 10% to $184,000, a top New York state financial regulator said in a statement on Friday. “Wall Street’s near-record year shattered all expectations,” New York State Comptroller Thomas DiNapoli said. “The early forecast of a disastrous year for financial markets was sharply reversed by a boom in underwriting activity, historically low interest rates, and surges in trading spurred by volatile markets,” he added. The 2020 bonus pool increased by 6.8% to $31.7 billion, during the traditional December-March bonus season, from $29.7 billion in 2019, according to the report, which called the growth figure “unique after a recessionary event”. Bonuses fell by 33% in 2001 after 9/11 attack and by 47% percent in 2008, the report said. Compensation firm Johnson Associates Inc in November said it expected year-end bonuses for most Wall Street workers to decline in 2020 compared with 2019 due to the impact of the COVID-19 impact on the U.S. economy.

In 2020 the Ultra Rich got Richer. Now They’re Bracing for the Backlash

Brief: In 2020, as the world convulsed under COVID-19 and the global economy faced its worst recession since World War II, billionaires saw their riches reach new heights. Now some are talking to their wealth managers about how to keep a hold of and consolidate their fortunes amid the global debris of the pandemic. Others are discussing how to preempt and navigate demands from governments, and the wider public, to pick up their share of the recovery costs. “The stock market crashed a year ago, by July or so my portfolio was back where it was before, at the beginning of the year, and now it’s far higher,” said Morris Pearl, a former managing director at BlackRock who chairs Patriotic Millionaires, a group that believes the high net worth should do more to close the wealth gap. “The fundamental problem is this gross inequality that’s getting worse.” The plans being discussed by the ultra-rich range from philanthropy, to shifting money and businesses into trust funds, and relocating to other countries or states with favourable tax regimes, according to Reuters interviews with seven millionaires and billionaires and more than 20 advisers to the wealthy.

Lawmakers Urge Scrutiny of Private Equity’s Role in Health Care

Brief: Private equity’s control of health-care companies requires greater scrutiny to better assess the impact on the industry, several U.S. lawmakers said Thursday. Independent industry experts fielded questions from lawmakers at a House Ways & Means subcommittee hearing about private equity’s growing influence and recommended requiring health-care companies to disclose more financial and ownership data. “Private equity’s influence stretches like an octopus,” said Representative Bill Pascrell, a Democrat of New Jersey, who led the hearing. The industry has made a push to expand into every corner of the health system, from nursing homes to home health to doctors practices. Private equity deals in the sector increased 21% from the year earlier, according to Bain & Co. Sabrina Howell, an assistant professor of finance at the NYU Stern School of Business, said all companies that accept government money should disclose who their owners are. Howell co-authored a study that found private equity ownership of nursing homes increased the short-term probability of death by 10%. “The private equity industry is having an overwhelmingly positive impact on health care across America” by lowering costs, improving access, funding cures and delivering more effective treatments, Drew Maloney, president of the American Investment Council, said in a statement Thursday.

Griffin’s Covid Year had Planes, Palm Beach, Philanthropy

Brief: In the early days of the pandemic, Ken Griffin talked with President Donald Trump and Vice President Mike Pence about stimulus and fast-tracking Covid therapies. Now, he sees an opening to work with the Biden administration to address a year of lost learning. “The political party doesn’t matter to me,” said Griffin, 52, who contributed $66 million to Republicans in the last election. “What matters is the receptivity to solving the problem.” The past 15 months have been busy for the billionaire founder of hedge fund Citadel and market-maker Citadel Securities, as both parts of his business successfully navigated the pandemic-fueled volatility. Griffin was acutely aware of the “existential and economic threat” posed by the pandemic early on after hearing from employees in China, Citadel Securities’ chief executive officer, Peng Zhao, and an employee who had family in Wuhan. To combat the work from home challenge, Citadel Securities created a trading outpost in a high-end Palm Beach resort. The firm later profited from the huge influx of retail traders using apps such as Robinhood.

Coronavirus Diligence Briefing