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Our briefing for Monday April 26, 2021:
Apr 26, 2021 3:33:54 PM
- In the United States, the Associated Press is reporting the country will begin sharing its entire pipeline of vaccines from AstraZeneca once they clear federal safety reviews. The Associated Press said as many as 60 million doses are expected to be available for export in the coming months. The AstraZeneca COVID-19 vaccine has yet to be authorized by the Food and Drug Administration (FDA), but is widely used around the world, such as Canada, Mexico and now India, who are struggling with devastating surges of the coronavirus. The United States have vaccinated more than 53% of its population with at least one of dose of the Pfizer, Moderna and recently reactivated Johnson & Johnson vaccine and it expects to have enough supply for their entire population by early summer.
- In Canada, Ontario has made a formal request to the Canadian Armed forces to help deal with a surge of critical care cases associated with the third wave of COVID-19. In a statement released Monday, the Doug Ford-led provincial government is asking for health human resources, along with logistical and operational support. The news comes days after the provincial government refused an offer by the federal government to send in extra personnel, via the Canadian Red Cross. Elsewhere in the country, Nova Scotia is now struggling with its worst wave of COVID-19 cases since the pandemic began. Dealing mostly with single digit cases for months, the province set daily records in back-to-back days on Sunday and Monday. Nova Scotia now has 323 active cases, the most since April 29th, 2020.
- United Kingdom Prime Minister Boris Johnson was busy doing damage control, rebuffing a Daily Mail report on Monday that he would rather see bodies pile high in their thousands before ever agreeing to another lockdown. The comments were allegedly made during an October 2020 meeting at 10 Downing Street, just prior to England’s second national lockdown. Asked by reporters if he had ever made those comments, Prime Minister Johnson, simply said “no” and followed up that governments want to make sure lockdowns work, which they have, and thanked the people of Britain for getting the disease currently under control.
- The European Union (EU) has filed a lawsuit against AstraZeneca over vaccine delivery delays. An EU official said the main objective of the legal action is to obtain the contracted number of doses and was filed by the European Commission on its own behalf and on behalf of all 27 EU member states. AstraZeneca delivered just a quarter of the coronavirus vaccine doses that the EU was expecting in the first quarter. AstraZeneca released a statement of their own, saying they fully complied with the advance purchase agreement with the EU and believe any litigation is without merit.
- India’s mounting coronavirus caseload is showing the difference between the haves and have nots in the country. Wealthy families and even not so wealthy are fleeing the country on private jets. “It’s not only the ultra-rich,” said Rajan Mehra, CEO of New Delhi-based private jet firm Club One Air. “Whoever can afford to take a private jet are taking private jets.” Over the last week, India has consistently set world records for daily case counts – on Monday the country reported 352,991 new infections – another record. The UK, Canada, Hong Kong and the United Arab Emirates are among more than a dozen countries/states that have imposed travel curbs from India, so finding a place to land those private jets might be increasingly difficult.
- Brazil’s President Jair Bolsonaro has threatened using the army to restore order due to lockdown measures in the country. However, it isn’t for the reason you might be thinking. President Bolsonaro is actually threatening to use the army to open up states/cities that are in lockdown, not the other way around. “That lockdown policy, of quarantine, is absurd. If we have problems – we have a plan of how to act. I am the supreme head of the armed forces,” said Bolsonaro. The president said the army could be summoned to “re-establish Article 5 of the Constitution,” which mentions the right to freedoms of movement and of religion. According to data from the Brazilian health ministry, 195,848 deaths have been recorded due to the coronavirus from January 1st to April 25th, 2021, which exceeds the 194,949 deaths Latin America’s largest country suffered from March through December 31st of last year.
Covid-19 – Due Diligence And Asset Management
How COVID-19 Sank Quant Macro Hedge Fund Pioneer IPM
Brief : Long-running systematic macro hedge fund IPM says the Covid-19 pandemic “aggravated” an already challenging situation for the firm, leading to its decision to shut down the business. Stockholm-based systematic pioneer Informed Portfolio Management announced last week it was ending all investment activities. It said the recent investment environment has proved challenging for systematic macro as a strategy and IPM as a manager, which has suffered “lacklustre performance and significant outflows”. “The investment environment has been difficult in recent years for strategies focusing on economic fundamentals, with the Covid-19 pandemic aggravating the situation,” IPM chairman Lars Ericsson said in a statement. Founded in 1998 by Anders Lindell and Jonas Rinné, who had previously been at Swedish fixed income trading house JP Bank, the firm built considerable momentum in its early years, gaining more than 31 per cent in 2008 during the Global Financial Crisis using computer models to trade government bonds, currencies and equities futures. But the systematic hedge fund’s assets steadily eroded in recent times, from a high of some USD9 billion just a few years back to roughly USD1 billion in 2020.
U.S. Private Equity Firm Bets on Boom in U.K. Labs
Brief: Harrison Street Real Estate Capital is betting on the growth of the U.K.’s bio-tech industry with a deal to combine the country’s largest science incubator with a portfolio of science parks. The company’s venture with Trinity Investment Management has agreed to acquire BioCity Group, according to a statement. BioCity helps startups through early stage venture capital investment and accelerator programs. Science parks have become one of the hottest real estate niches in the U.K. as international investors look to piggy-back on increased government funding for a sector that has been among the few beneficiaries of the coronavirus pandemic. The country has a shortage of purpose-built space for commercializing scientific research, despite boasting several of the world’s top academic institutions and pharmaceutical companies. The venture will acquire a portfolio of 12 facilities across five U.K. science parks for about 120 million pounds ($167 million), according to the statement. The new business will be called We Are Pioneer Group and will manage a portfolio spanning 2.6 million square feet.
Why We Need to Reclaim the Finance Industry Like Fans did for Football
Brief: Last week we saw Europe’s rebel soccer league crumble within 72 hours from announcement to demise. One can only imagine what might have happened behind closed doors – frantic phone calls, secret meetings and very tense meetings. Outraged fans took to the streets to protest, players openly expressed their frustration, politicians weighed in and this rogue league made headlines around the world… The pandemic has both highlighted and exacerbated the inequalities that were already present. We have all spent the last year, and some of this year, making enforced sacrifices; some financial, some social. None of us want those sacrifices to have been made in vain. That means a more equitable share both of rewards and prospects for everyone. After the Global Financial Crisis of 2008/9, there was a widespread perception of financial greed and mistrust of the world’s bankers and financiers, none of whom were ever held to account for any misdemeanours, real or imaginary. A decade of austerity left the perception that ordinary citizens were left to suffer the pain and pick up the bill. The reaction to Covid-19 is different.
Strategists See Opportunity for Rotation Trades Amid U.S. Vaccine Success
Brief: Early signs are emerging that the U.S. stock market rotation into cyclicals and out of big tech still has room to run. The reopening trade has lagged for weeks and it’s been the topic of fierce debate among equity strategists. Last week, smallcaps beat tech for the first time in about a month, and the trade looks sets to continue once again on Monday. Evercore ISI and Fundstrat Global Advisors LLC are urging clients to buy stocks tied to the economic recovery. It’s “time to re-engage cyclicals,” said Dennis DeBusschere, head of portfolio strategy at Evercore, in a note on Sunday. “The rapidly improving labor market is inconsistent with peak GDP fears and suggests the output gap will close quickly, putting upward pressure on inflation, bond yields, and cyclical assets.” The U.S. economy is reaping the rewards of a fast vaccine rollout, with about 42% of the population having had at least one dose. Economists have raised growth estimates, and there’s every sign that life is returning to normal for millions of Americans.
British Airways CEO says ‘Great Opportunity’ for UK-U.S. Travel
Brief: The chief executive of British Airways said there was a "great opportunity" for Britain and the United States to open a travel corridor given their high vaccination rates, and said he was optimistic for European travel from June onwards. Airlines are readying their planes, pilots and crew for travel this summer, hoping for a bounce back after over a year of pandemic restrictions, although governments have yet to agree the details of how and when the restart will work. British Airways chief executive Sean Doyle, who took the helm of the IAG-owned airline in the middle of the COVID-19 crisis last October, said that travel between Britain and the United States should be restriction-free. "If you look at the progress of vaccinations that the UK and the US have made, they're almost neck and neck," he said, speaking to an online industry conference. I think the U.S. is a great opportunity to get up and running again. Travel between Europe and the United States is also on the cards.
Value of Private Equity Club Deals Jumps to GBP19.7bn as Investors Look to Target Higher Value Acquisitions
Brief: The total value of UK private equity club deals hit GBP19.7 billion last year, a fourfold increase from the GBP4.5 billion last year, says Pinsent Masons, the multinational law firm. The number of these ‘club deals’ has reached a three-year high (see graph below) – there were 56 deals last year, up 30 per cent from 43 the year before. A ‘club deal’ is when two or more private equity or trade buyers jointly acquire a company. One of the biggest club deals of recent years was the GBP6.8 billion acquisition of ASDA, in October last year by the Issa brothers and TDR Capital. Alasdair Weir, Partner at Pinsent Masons, says by pooling their fire power, club deals allow groups of investors to buy bigger targets and share risk. In some cases this can reduce the amount of leverage needed, allowing deals to be equity funded more quickly and with more certainty. The impact of Covid-19 on the economy has caused some lenders to exercise more caution on leveraged buyouts in those sectors most affected by the lockdown. By increasing the equity slice, club deals allow buyers to use lower levels of debt financing.
