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Our briefing for Monday March 29, 2021:
Mar 29, 2021 3:58:40 PM
- The United States’ director for the Centers of Disease Control and Prevention (CDC) is pleading with Americans to continue to take the necessary precautions to prevent the spread of COVID-19 amid an increase in cases across the country. Using words like “scared” and phrases such as “impending doom”, CDC Director Dr. Rochelle Walensky said during a briefing on Monday that the United States’ current trajectory in regard to the pandemic looks similar to Germany, Italy and France, who are experiencing a third wave of the virus. “We do not have the luxury of inaction. For the health of our country, we must work together now to prevent a fourth surge,” said Dr. Walensky. America surpassed 30 million total COVID-19 cases over the weekend, and a 10% increase of more than 60,000 cases per day last week, compared to the previous week.
- The AstraZeneca COVID-19 vaccine roller coaster in Canada went for another ride on Monday. CBC is reporting Canada’s National Advisory Committee on Immunization (NACI) is expected to recommend a pause on the AstraZeneca vaccine for anyone under the age of 55 because of safety concerns. Canada is expected to receive 1.5 million doses of the AstraZeneca COVID vaccine from the United States on Tuesday. Monday’s news marks just the latest setback for the drugmaker. Earlier this year, a number of European countries halted use of the AstraZeneca vaccine for those over 65 due to questions on efficacy, only to restart them after new evidence emerged. Last week, American health regulators found “outdated information” may have been reported by the company when it released data on U.S. trials. The NACI’s recommendations for the AstraZeneca vaccine have changed multiple times since being approved in the country just last month.
- In the United Kingdom, people can now meet in larger groups outside and resume outdoor swimming and organized sports thanks to the government’s roadmap for lifting coronavirus restrictions. Speaking at a news conference on Monday, Prime Minister Boris Johnson said he is “hopeful” he will not need to put the country in lockdown again with infection rates at their lowest in six months and nothing in the data to suggest the government will need to keep restrictions in place longer than planned. The next major stage in the roadmap is April 12th when non-essential retail will reopen while pubs and restaurants will be allowed to serve customers at tables outside.
- German Chancellor Angela Merkel threatened to assert federal authority over the weekend as some state leaders have opted not to enforce restrictions agreed with her administration. With a federal election expected later this year and Chancellor Merkel already announcing she won’t run again, the once respected leader is now in lame duck status. There has been mounting public opposition to lockdown measures and frustration with Germany’s vaccination drive. In an interview with ARD television on Sunday, Chancellor Merkel stated in regard to broken commitments: “We can’t go on like this. We meet every four weeks and then we just keep going the same way as before.”
- In the Philippines, Metro Manila and the adjacent provinces of Bulacan, Cavite, Laguna and Rizal were moved back into strictest lockdown phase on Monday. The move made by government officials is expected to at least remain in place until April 4th and a curfew will be imposed from 6 PM to 5 AM during the lockdown. In a move hoping to boost inoculations, Philippine President Rodrigo Duterte said he will allow private companies to import vaccines “at will”. Businesses can choose where to source and import vaccines. Previously, private companies were required to enter into a deal with the government and vaccine manufacturer to secure supplies.
- The United Arab Emirates (UAE) have been chosen by China to make millions of doses of its state-backed Sinopharm vaccine. The deal marks the first time China has allowed for manufacturing of their shot overseas and deepens Beijing’s influence in the Middle East. According to the new joint venture between Sinopharm CNBG and Abu-Dhabi based G42, a plant is expected to become operational later this year and produce up to 200 million doses annually. Production has already started on a smaller scale in an existing plant in the UAE with a capacity of 2 million doses per month.
Covid-19 – Due Diligence And Asset Management
SEC says it’s been Monitoring Archegos Fallout Since Last Week
Brief : The U.S. Securities and Exchange Commission has been monitoring the forced liquidation of more than $20 billion in holdings linked to Bill Hwang’s investment firm that has roiled stocks from Baidu Inc. to ViacomCBS Inc. “We have been monitoring the situation and communicating with market participants since last week,” an SEC spokesperson said in emailed statement. Hwang’s New York-based Archegos Capital Management is at the center of a margin call that led to the forced liquidation on Friday, according to people familiar with the transactions. Among the companies sold were GSX Techedu Inc. and Discovery Inc. Banks including Credit Suisse Group AG and Nomura Holdings Inc. are warning investors that they may face “significant” losses after an unnamed U.S. hedge fund client defaulted on margin calls. Goldman Sachs is telling shareholders and clients that any losses it faces from Archegos are likely to be immaterial, a person familiar with the matter said.
Real Estate Investors Desperate to Spend $250 Billion Hoard
Brief: Investors with a record hoard of money to finance distressed commercial real estate are finding themselves in a tough spot: There’s nowhere to spend it. The massive wave of defaults expected after the coronavirus shuttered offices, hotels and stores last year has so far failed to materialize. Now, as the U.S. economy swings from pandemic lows to a vaccine- and stimulus-induced rebound, the window of opportunity for discounted deals is closing before it ever really opened. That may sound like positive news to most Americans, but to a select group of investors who anticipated raking in big profits from the misfortunes of others, it’s a problem. Troubled properties aren’t coming to market because owners have little pressure to sell. Commercial real estate prices have held up -- or even risen -- because so much money is chasing so few deals. “We’re starting to see frustration rolling over into desperation,” said Will Sledge, senior managing director in the capital markets unit of brokerage Jones Lang LaSalle Inc. Investors are “willing to push prices up and their yields down in order to simply deploy capital.”
Pandemic Forces Asset Managers to Recalibrate Their Expansion Efforts, says PwC
Brief: PwC Luxembourg has announced the release of the 21st edition of their annual Global Fund Distribution (GFD) poster showcasing the growth of cross border funds and distribution in 2020. The research covers all border markets globally and provides a unique and global view of the health of the industry. The top five asset management companies for cross-border distribution funds, based on the number of countries in which they distribute worldwide, are Franklin Templeton, Fidelity Investments, HSBC, Schroders, and BlackRock, with three of them based in the US, and two based in the UK. A total of 14,128 cross-border investment funds accounted for 128,520 registrations globally as of end-2020, a 0.7 per cent increase in the number of funds and a 5.8 per cent increase in the number of registrations compared to 2019. The number of cross-border ETFs decreased by 6.2 per cent to 4,482 in 2020. A record 297 ETFs closed during the year. This was primarily driven by increased competition, mergers and acquisitions and the failure to attract assets.
Institutional Investors Increase Focus on Ethnic and Gender Diversity in Wake of 2020
Brief: More than half of US institutional investors report that the events of 2020, including the protests over George Floyd’s death at police hands, have influenced their thinking on diversity and inclusion in their investments. A survey of 100 institutional investors by Aon found that 58 per cent have become more attuned to issues of gender and ethnic diversity in their investment approach and thinking. Investors may also be responding to a shifting climate in the industry, with stakeholders and shareholder activist groups upping their focus on diversity. Aon’s survey found that 11 per cent of investors say they have felt greater pressure from stakeholders to take concrete action by investing with diverse managers in the last year. Another 18 per cent reported that constituents, boards and beneficiaries are now asking for statistics on diversity within their portfolio, while 13 per cent of investors felt more pressure to engage with diverse investment firms.
Funds Bet on a Consumer Boom to Rival ‘Roaring Twenties’
Brief: Some of the world’s top money managers are betting on a post-pandemic spending boom that will boost real-world companies as economies reopen and people go back to their normal lives. Investors from Aberdeen Standard Investments Inc. and GAM Investments to UBS Asset Management are increasingly pouring money into companies where face-to-face interaction is the norm -- things like travel companies, restaurants, off-line shopping and “consumer experiences.” “A lot of people are estimating this is really going to lead to a new ‘roaring 20s’ theme,” said Swetha Ramachandran, the manager of GAM’s Luxury Brands Equity fund, referring to growing views that post-pandemic spending will hark back to the excesses of the 1920s. That’s when euphoric consumers piled into a wave of spending after the first World War and the 1918 flu pandemic. “There will be a lot of peacocking” as people start socializing, she said. Investors began piling into cyclical stocks that benefit from an economic rebound late last year following good news on the vaccine front, while pulling back from high-valued technology stocks. The rotation accelerated as Treasury yields rose in mid-February.
Investment Fraud Reports 32% Leap as Criminals Exploit Covid-19
Brief: Investment scam reports surged by almost a third (32%) during 2020, with losses to these scams increasing 42% to £135.1m, according to a report by trade body UK Finance. So called ‘authorised' fraud losses increased 5% in 2020 to £479m as scammers ramped up online activity during the pandemic, its latest Fraud the Facts report stated. Unauthorised fraud losses dropped 5% as lockdown restrictions forced criminals to switch tactics, but were still very high at £784m, the latest Fraud the Facts report also revealed. Impersonation scam cases almost doubled to nearly 40,000 cases during the year. The shocking figures show why tackling scam activity, particularly online, needs to be prioritised across Government, UK Finance argued in the report. UK Finance is specifically calling for fraud to be included in the scope of the government's Online Safety Bill to better protect consumers from these scams. This would ensure that online platforms such as social media firms, search engines and dating websites take action to address vulnerabilities in their systems that are being exploited by criminals to commit fraud.
