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Our briefing for Monday April 20, 2020:
Apr 20, 2020 4:35:50 PM
- As Canada continues to battle the coronavirus pandemic, they are now dealing with a different tragedy. Over the weekend, the country suffered it deadliest mass shooting in its history as at least 19 people, along with the shooter are dead. Nova Scotia RCMP expects that number to rise as they access an almost unthinkable 16 different crime scenes spanning across rural areas of the province.
- In the United States, it didn’t take long for Americans to become restless with their state governors after President Donald Trump introduced plans of easing stay-at-home restrictions. Michigan, Ohio, Kentucky, Minnesota, North Carolina and Utah all experienced protests in some form over the weekend to reopen their respective states. The states were led by both democratic and republican governors, but state leaders seem to be in general consensus that testing needs to be ramped up significantly before they ease restrictions.
- As Boris Johnson continues to recover from the coronavirus, the Sunday Times of London revealed a damning report of the Prime Minister’s initial handling of the pandemic. The report notes Johnson missed five emergency meetings in the beginning stages of the pandemic and missed a string of opportunities to get out front of the growing crisis as it spread across continental Europe. Government officials were quick to try and kill any momentum from the story noting “[t]he idea that the Prime Minister skipped meetings that were vital to our response to the coronavirus, I think is grotesque,” said Michael Gove, a senior Cabinet minister.
- The death toll in Spain dropped to a month long low to just below 400, the lowest figure since March 22nd. Spain’s Prime Minister said he would slowly start lifting the country’s five-week lockdown during the month of May.
- In Germany shops smaller than 800 square meters such as bookshops, florists, fashion stores, bike and car outlets were allowed to reopen on Monday. The country reported 1,775 new cases today, similar to Spain, their lowest total in a month.
- On Sunday, Australia’s foreign minister said her concern about China’s transparency during the coronavirus pandemic was at a very high point. Marise Payne said Australia would be one of the countries pushing for an international investigation into the origins of the virus and how it spread throughout the world.
Covid-19 – Due Diligence And Asset Management
Oil Plunges 321% into Negative Territory for the First Time Ever as Demand Evaporates
Brief: Oil plunged into negative territory for the first time on record. The commodity's latest round of sharp selling comes as uncertainty mounts around storage for excess oil. Demand for crude has plummeted since the coronavirus outbreak has frozen activity worldwide.The price of West Texas Intermediate crude oil futures expiring in May plunged 321% to negative $40.32 cents a barrel, the lowest level ever recorded. Brent crude losses were muted by comparison, with the commodity sliding 9.5% to $25.41 a barrel at intrasession lows. The price of oil has continued to slide even after OPEC and its allies agreed to the biggest-ever production cut — one intended to backstop prices. Investors remain unconvinced the cuts can offset cratering demand for the commodity as the novel coronavirus keeps society from operating normally.
Investor Shock as High-Flying Hedge Fund Posts Savage Slide
Brief: One of Australia's most prominent investment outfits, Regal Funds Management, has posted a shock 59 per cent slide in its high-performance hedge fund during March, leaving some investors fuming. Regal's chief investment officer Phil King told clients in a note distributed late last week that he had "underestimated the speed and scale" of the coronavirus pandemic, leaving a portfolio of stocks owned by the company's Atlantic Absolute Returns Fund exposed to savage share price falls. March was a difficult month for investors, with the ASX 200 falling more than 20 per cent and Wall Street sliding 18 per cent. But Regal's performance was significantly worse than some of Mr King's competitors, with local hedge fund VGI Partners posting a 1.4 per cent return and Totus Capital's Alpha Fund rising 10.4 per cent.
Australian Funds Move to Cut Illiquid Values
Brief: The coronavirus sell-off is prompting big Australian superannuation funds to mark down their allocations to real estate, infrastructure and private equity to ensure defined contribution participants taking out money now to pay bills and cover expenses don't disadvantage those staying put. The move is the latest iteration of an ongoing fiduciary conundrum: Investing with a medium- to long-term investment horizon while participants retain the ability to move their money to competing funds on a short-term basis, said Nick Kelly, a Sydney-based senior investment consultant with Willis Towers Watson PLC.
Managers Show the Money For Virus Relief Efforts
Brief: Money management firms and their senior executives have ramped up their philanthropic efforts in response to the devastation COVID-19 has wrought on communities around the world. The collective support of the 20-plus managers or their parent companies tracked by Pensions & Investments totaled $483 million as of April 16. Projects funded by investment firms range from providing first responders and health-care workers with protective supplies, food and child care through non-profits and government agencies, and funding research for a vaccine to combat COVID-19 to direct financial support for struggling small businesses. The largest amount aimed at COVID-19 relief efforts wasn't a donation, but an investment.
Wells Fargo, JPMorgan Among Banks Sued Over SBA Virus Loan Aid
Brief: Wells Fargo & Co., Bank of America Corp., JPMorgan Chase & Co. and US Bancorp were sued by small businesses that accused the lenders of prioritizing large loans distributed as part of the virus rescue package, shutting out the smallest firms that sought money. The four banks processed applications for the largest loan amounts because they generated the highest fees, rather than processing them on a first-come-first-served basis as the government promised, according to lawsuits filed Sunday in federal court in Los Angeles. As a result, thousands of small businesses that were entitled to loans under the program administered by the Small Business Administration, known as the Paycheck Protection Program, were left with nothing, the plaintiffs said. JPMorgan declined to comment on the lawsuit. The bank said in a FAQ that its smallest business clients received more than twice as many loans as the rest of its clients combined. Representatives for the other lenders didn’t immediately respond to requests seeking comment.
Head of Oil Trader Hin Leong Didn’t Disclose $800 Mln Losses – Court Filing
Brief: The founder and director of Singapore oil-trading company Hin Leong Trading Pte Ltd (HLT) directed the firm not to disclose hundreds of millions of dollars in losses over several years, he said in a court filing reviewed by Reuters. The affidavit signed by Lim Oon Kuin, a Singaporean in his 70s widely known as O.K. Lim, is part of a Friday filing to the Singapore High Court by HLT and subsidiary Ocean Tankers (Pte) Ltd, seeking a six-month moratorium on debts of $3.85 billion to 23 banks. The filing cites a collapse in the oil price and the coronavirus pandemic, which has hammered oil demand and pushed up costs for HLT, one of Asia’s largest oil traders. Despite reporting net profit of $78.2 million for the business year ended in October, “HLT has not been making profits in the last few years,” Lim said in the filing, which has not been made public.
