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Our briefing for Monday January 11, 2021:
Jan 11, 2021 4:38:55 PM
- In the United States, the Centers for Disease Control and Prevention (CDC) said Monday that nearly nine million Americans have received their first doses of the COVID-19 vaccine and nearly 25.5 million doses of vaccines have been distributed among various states. The nearly nine million is still well short of the targeted 20 million which was expected by the end of 2020 as states say they don’t have enough staff or money to administer coronavirus vaccines at the needed rate. CNN is also reporting states are increasingly abandoning guidelines from the CDC on how to administer the vaccines and are taking their own approaches. New York state governor Andrew Cuomo has laid the blame at the feet of the Trump administration, calling the federal government’s response to the pandemic and its vaccine rollout, “an act of gross negligence.”
- The CBC is reporting Canada is rolling out the first study of its kind by mailing out thousands of test kits to gauge the prevalence of coronavirus in the country. The survey involves 48,000 Canadians receiving the kit in hopes they will poke their fingers and return a blood sample to the National Microbiology lab located in the province of Manitoba. The samples will be tested for the presence of coronavirus antibodies with Statistics Canada hoping of a minimum of a 45% response rate in order to obtain a good result. The kits have already been mailed out and received, catching some Canadians off-guard and questioning its validity as there has been little media coverage on the project.
- The United Kingdom is struggling with the latest surge in the coronavirus pandemic and England’s Chief Medical Officer Chris Witty delivered some grim news while appearing on the BBC on Monday. “We’ve got to be very clear that we’re now at the worst point of this epidemic for the UK, in the future we will have the vaccine, but the numbers at the moment are higher than they were in the previous peak – by some distance.” In some of the hardest hit areas in London, Witty says the infection rate is around 1 in 20, compared to about 1 in 50 for the entire UK. During a news briefing on Monday, Health Minister Matt Hancock said it was still unclear the extent of which being vaccinated reduces one’s risk of transmitting the coronavirus.
- A recent survey seems to indicate French citizens are losing faith in their government to lead them through the coronavirus pandemic. The survey from the newspaper Journal du Dimanche said 62% of citizens are lacking confidence in President Emmanuel Macron and Prime Minister Jean Castex. The two have come under criticism for the slow start of vaccinations, which began on December 27th. France has reported an average of 18,000 new cases per day during the month, much higher than the government’s plan of having them around 5,000 cases per day. The country’s health minister was asked over the weekend of a possible third lockdown since the pandemic began and didn’t rule it out.
- India will kick off one of the world’s largest inoculation campaigns on January 16th. The south Asian nation of close to 1.4 billion people will begin administering shots to nearly 30 million healthcare workers and other frontline staff most vulnerable to infection from COVID-19. According to the government’s health ministry, the vaccination program will cover another 270 million people, including senior citizens. Large urban areas such as New Delhi will lean on existing networks such as those used to vaccinate tens of millions of newborns each year against diseases such as polio. India only trails the United States in terms of COVID-19 infections.
- China announced on Monday a World Health Organization (WHO) team of international experts investigating the origins of the coronavirus pandemic will arrive in the country on January 14th. The WHO’s team of 10 experts’ mission has been delayed in what China’s foreign ministry called a “misunderstanding” after a lack of authorization was given from Beijing. China’s National Health Commission also didn’t reveal the WHO’s itinerary, which would likely require a trip to Wuhan – something that hasn’t happened from outside sources since the pandemic began. Ahead of the governing health body’s arrival, China has been on a media blitz to shape the narrative of about when and where the pandemic began, stating more and more studies show the coronavirus emerged in multiple regions. According to Reuters, a health expert with the WHO said expectations should be “very low” that the team will reach a conclusion from their trip to China.
Covid-19 – Due Diligence And Asset Management
Hedge Fund Strategies Soar: Industry Enjoys Biggest Annual Return Since Global Financial Crisis, as Managers Weather 2020 Storm With Double-Digit Surge
Brief: Hedge funds weathered the political, social and economic shocks brought about by the global pandemic and frequent bursts of soaring volatility to score a near-12 per cent return last year – their best since 2009 – outperforming both the Dow Jones Industrial Average and FTSE 100, new data from Hedge Fund Research shows. HFRI’s main Fund Weighted Composite Index – a global, equal-weighted measure of some 1400 single-manager hedge fund strategies – finished 2020 up 11.6 per cent for the year following a 4.5 per cent rise in December. The full-year gains represent a strong rebound for the hedge fund sector as a whole, which had earlier plummeted 11.6 per cent in Q1 following three months of consecutive losses amid the initial coronavirus outbreak. The index’s annual 11.6 per cent rise builds on 2019’s 10.45 per cent annual return. The strong annual showing – the benchmark’s best since a near-20 per cent surge in 2009, at the height of the Global Financial Crisis – is likely to further draw in more yield-hungry allocators, according to HFR president Kenneth Heinz. “Hedge funds effectively navigated both December and calendar year 2020 volatility, and accelerated into 2021 with powerful, broad-based performance which continued yet broadened the high-beta equity- and crypto-driven gains to also include quantitative, trend-following macro, energy and special situations exposures,” Heinz observed.
Singer’s Elliott Returns 12.7% on Investments in 2020
Brief: Activist investor Elliott Management Corp. returned 12.7% on its investments in 2020, turning in one of its strongest years in the past decade, according to an investor letter reviewed by Bloomberg. The New York-based hedge fund reported the same returns for both its international and onshore funds, marking their best year since 2012 and 2016, respectively, according to a person familiar with the matter who asked to not be identified because the matter isn’t public. A representative for Elliott declined to comment. The document shows Elliott was profitable every month in 2020, including in March when it eked out a 0.1% return amid a broader selloff in the markets in the wake of the coronavirus pandemic. The S&P 500 returned 16% over 2020. Elliott’s assets under management grew to $45.2 billion from roughly $41 billion at the end of June. Elliott, which is run by billionaire Paul Singer, took at least 16 new activist positions in 2020, including at Twitter Inc., Softbank Group Corp., and others, according to data compiled by Bloomberg.
Eventus Systems Reports “Unprecedented Growth” in 2020
Brief: Eventus Systems, a global provider of multi-asset class trade surveillance and market risk solutions, has reported 'unprecedented growth' on multiple fronts in 2020, marking its strongest year to date in revenue and new client onboardings. The company has additional expansion plans for 2021, with deeper penetration in asset classes such as equities, foreign exchange (FX), fixed income and digital assets. Eventus CEO Travis Schwab says: “In a year full of so many challenges and hardships for us all, we are profoundly grateful that it was also the most monumental year since our launch. Our Series A funding round enabled us to make strategic investments that accelerated our growth in terms of staff, geographical presence, market coverage, client acquisition, product enhancements, scalability and efficiencies. I’m incredibly proud of our team and Board for the hard work, persistence, insights and first-class client service that made this growth possible. Our Validus platform is now a mission-critical piece of infrastructure for a wide range of leading financial market participants and exchanges. We ended 2020 on a particularly strong note, with one of the world’s largest non-bank cash FX trading firms and a major digital asset exchange both signing in the last week of the year.” Schwab says that following a year in which the firm established leadership as the trade surveillance platform used by many of the largest cryptocurrency exchanges, he expects further market penetration in this space, attracting not only more exchanges but also various other market participants active in digital assets.
U.S. Bank Quarterly Profits Expected to Fall Again From Pre-COVID Levels
Brief: When the biggest U.S. banks begin reporting fourth-quarter results on Friday some of the headlines could show profits plunged by as much as 40% from a year earlier, before the pandemic struck. But investors will be focused on digging out clues to the earnings rebound expected in 2021. “You can look at Q4 as somewhat of a transition quarter as you put some of the challenges from 2020 in the rear-view mirror and look ahead to an improved 2021,” said Barclays analyst Jason Goldberg. The pandemic caused interest rates to plunge and produced a record decline in the margin between what lenders charge for loans and what they pay for money, said Goldberg. The pandemic also pushed big U.S. banks to set aside more than $65 billion for expected loan losses. From those low points, banks could see profits more than double in first and second quarters of 2021, according to Refinitiv’s IBES estimates. Bank stocks have risen 35% since early November. Since then, effective COVID-19 vaccines started being distributed, Democrats took power in Washington, promising more economic stimulus, and the Federal Reserve said it would allow banks to repurchase stock again, which will increase earnings per share.
COVID-19, Political Unrest, Market Volatility Increase the Importance of Private Markets in 2021 and Beyond, says to Mercer Research
Brief: New strategic research from Mercer focuses on what the coming year holds for alternatives, outlining some of the issues investors may want to follow closely in an effort to optimise their portfolios. “We are seeing that though investors have been tested this year, the experiences of previous crises have made them more resilient. There were unorthodox challenges such as not being able to vet new managers in person, but clients continued to put capital to work, especially with existing investment manager relationships across all private market segments,” says Raelan Lambert, global head of alternatives at Mercer. “In 2021, investors should consider stretching their risk appetites and consider their allocation to real estate. Although the pandemic will continue to challenge the property market, 2021 is likely to be an opportune time for entering the asset class with a medium- to longer-term investment horizon. Initially, investors should prioritise allocations to the largest, most-liquid markets, where price discovery is furthest along.”
KKR Raises $3.9 Billion in Biggest Asia Infrastructure Fund
Brief: KKR & Co. raised $3.9 billion for its first Asia-Pacific infrastructure fund, amassing the largest pool of cash in the region for investments in everything from waste management and renewable energy to communication towers. In the process of raising funds, the firm boosted its initial target from $3 billion and stopped fundraising after reaching its cap. It tapped three dozens investors in the U.S., Europe, the Middle East and Asia-Pacific, said Alisa Amarosa Wood, head of KKR’s Private Markets Products Group. KKR and its employees contributed about $300 million. Accelerating its expansion across a region that’s emerging from the pandemic and bolstered by a growing middle class, the firm is also in the midst of raising at least $12.5 billion in a fourth private equity fund and planning its first real estate and credit funds in Asia. KKR declined to comment on the other fund-raisings. Institutional investors are increasingly looking for a “one-stop shop” with deal-making, operational and capital market expertise, favoring assets with a lower-risk profile that aren’t tied to public market indexes, Wood said. “Investors are looking for a safe pair of hands,” she said in an interview.
