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Coronavirus Diligence Briefing

Our briefing for Monday May 10, 2021:

May 10, 2021 4:41:08 PM

  • In the United States, the latest data from Johns Hopkins University show the country is facing its lowest COVID-19 case count since September. The rate of average daily cases in the United States fell below 41,000, down 30% from two weeks ago; with not a single state reporting an increase in the last week, compared to the previous week. According to the Associated Press, some states have asked the federal government to scale back their vaccine shipments of allocated doses, a far cry from just a few months ago. As of May 9th, the Centers for Disease Control and Prevention (CDC) reported 45.8% of the population have at least received one dose of a COVID-19 vaccine, with 34.4% of the population being fully vaccinated against the coronavirus.

  • In Canada, Ontario’s health minister has been advised to “stay the course” with the province’s pandemic restrictions until COVID-19 cases experience a significant decline, which means stay-at-home orders could be extended into June. The advice from provincial health advisors is in lockstep with local medical officers of health who sent a letter to Premier Doug Ford and his government on Friday, asking for an extension in the emergency measures to curb the spread of COVID-19 variants. Elsewhere in the country, Quebec reported 662 new COVID-19 infections on Monday. Anyone 30 years of age or older is eligible for a COVID-19 vaccination with the age limit requirement set to keep dropping throughout the week, according to Health Minister Christian Dube.

  • In the United Kingdom, Prime Minister Boris Johnson said he and his government are pressing ahead with its “road map” for lifting lockdown requirements. What this means is people can meet at indoor pubs, restaurants and cinemas as of May 17th. “Today we are announcing the single biggest step on our road map and it will allow us to do many of the things we’ve yearned to do for a long time. So, let’s protect these gains by continuing to exercise caution and common sense,” said Prime Minister Johnson. While pubs and restaurants will reopen, social distancing rules will remain in place and those that can still work from home, are being asked to continue to do so. 

  • The World Health Organization (WHO) said on Monday the coronavirus variant first found in India is now classified as a variant of global concern. The B.1617 variant is the fourth variant to be designated as being of global concern by the WHO after preliminary studies have shown it spreads more easily. The variant has already spread to other countries and many nations have moved to cut or restrict movements from India in recent weeks. The country of close to 1.4 billion is still dealing with case counts and deaths due to the coronavirus close to record daily highs on Monday and increasing calls on Indian Prime Minister Narendra Modi to lockdown the world’s second most populous country. 

  • The United Arab Emirates (UAE) and Bahrain have established a “safe travel corridor” for those who have been fully vaccinated against COVID-19. The joint statement between the two nations means citizens will be free to travel as of the Muslim festival of Eid al-Fitr, by the end of the week, without having to quarantine on arrival but applying other precautionary measures adopted in the destination. Citizens and residents looking to take advantage of the exemption must show they have received a final dose of the COVID-19 vaccine.

  • Media in Australia are poking an already angry bear in China, citing a document written by Chinese scientists and public health officials in 2015 discussing the weaponization of the SARS coronavirus. Released five years before the start of the COVID-19 pandemic, it describes SARS coronaviruses as a “new era of genetic weapons” that can be “artificially manipulated into an emerging human disease virus, then weaponized and unleashed in a way never seen before.” Peter Jennings, the executive director of the Australian Strategic Policy Institute told news.com.au that the document is close to a “smoking gun” as we’ve got. Investigations by the WHO back in January and released in March concluded the virus was most likely of animal origin and crossed over to humans from bats. While China has yet to issue a statement on the matter, the state-run Global Times lashed out at the report, calling it “an embarrassing article that smears China over the origins of COVID-19.”

Covid-19 – Due Diligence And Asset Management

EU Recovery Fund Success Could Pave the Way for a Repeat

Brief : The European Union’s huge post-pandemic recovery fund could become a more permanent feature if it is successful in firing up growth and fostering a greener and more digital economy, the European Commission’s top economic officials said on Monday. The 27 EU nations made an unprecedented agreement last year to jointly borrow 750 billion euros for a fund to help fight the economic slump caused by COVID-19 and address the challenges of climate change. To overcome the opposition of the EU’s frugal northern states, which have long opposed joint borrowing for fear of financing less strict fiscal policy in the south, the scheme was clearly described as an extraordinary, one-off measure. But many economists seen it as a foot in the door for more regular joint debt issuance by the AAA-rated EU in future and top Commission officials echoed that view before the European Parliament’s economic and monetary affairs committee. “The more successful we are in the implementation of this facility the more scope there will be for discussions on having a permanent instrument, probably of a similar nature,” Commission Vice President Valdis Dombrovskis said.

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Hedge Funds are on a Roll with Strongest Jan-to-April Returns in 20 Years

Brief: Hedge funds are on a roll this year, with the industry recording its best January-to-April performance in more than 20 years, as managers profited from tech gains, commodities moves, strong earnings, and renewed optimism over the reopening US economy.Overall, hedge funds added 2.74 per cent in April, and have returned 8.68 per cent in the four months since the start of 2021, as measured by Hedge Fund Research’s Fund Weighted Composite Index, a global equal-weighted benchmark of some 1400 single-manager hedge funds. That was strongest year-to-date return through April since 1999, when it rose 8.56 per cent. April’s gain was also the index’s seventh consecutive monthly advance, with all but one hedge fund sub-strategy finishing the month in positive territory. Technology, quantitative directional equities, and commodities-focused macro funds were among the strategies that posted the biggest gains. HFR president Kenneth Heinz said: “Through the seven consecutive months of gains, hedge funds have navigated multiple market cycles (both positive and negative), including a new US political administration, unprecedented fiscal stimulus initiatives, additional virus mutations/variants, and a sharp increase in heavily-shorted, deep value equities driven by retail trading platforms.” The industry is now in its longest period of consecutive monthly gains since the HFR’s FWC index produced 15 consecutive months up to January 2018.

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PE Firms Acquire Hospitals with High Operating Margins, Boosting Them Further

Brief: Hospitals acquired by PE firms tend to have higher operating margins than those that are not acquired — and that gap widens over time, a new study shows. But it is too early to say whether these glowing financial figures equate to better support for clinical care. Hospitals that were acquired by private equity companies had operating margins that were 5.6 percentage points higher than nonacquired hospitals in 2003, and that gap widened to 8.6 percentage points by 2017, according to the study published in Health Affairs. However, it is unclear whether private equity firms’ varied promises, like improved efficiency, have resulted in better support for clinical care. The study — which aims to describe the hospitals acquired by private equity firms and their finances — compared facilities that had been acquired to those that were never acquired between 2003 and 2017, said Dr. Marcelo Cerullo, a study author and general surgery resident at Duke University Medical Center, in an email. In total, researchers examined 42 private equity deals, involving 282 hospitals across 36 states. Of the 282 hospitals studied, data for 233 was available from the Healthcare Cost Report Information System and American Hospital Association. In general, the researchers found that hospitals acquired by private equity firms tended to be better off and larger than average across several measures than those that were not, Cerullo said. Acquired hospitals were significantly larger than nonacquired hospitals in terms of number of beds and discharges in both 2003 and 2007.

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Covid 19 Coronavirus: Tom Pizzey Identified as Sydney’s ‘BBQ Man’

Brief: The Sydney Covid-19 patient dubbed "BBQ Man" after he visited an extensive list of BBQ stores while infectious has been named, finally providing an explanation for his curious shopping spree. Investment company Apollo Global Management managing director Tom Pizzey has been identified by the Australian Financial Review as the man linked to Sydney's latest Covid-19 scare. Pizzey contracted the virus earlier this month, with his wife later testing positive for Covid-19 as well. AFR understands Pizzey is still suffering coronavirus symptoms, with Apollo confirming it is assisting NSW Health in relation to a positive virus case. "The employee has not travelled outside Australia this year," an Apollo spokesperson told the publication. Pizzey, who is one of Apollo's only two full-time employees in Australia, is understood to be the mystery Covid-19 case who visited multiple venues on May 1 while unknowingly infectious, including several BBQ stores. Two of those trips were to different Barbeques Galore stores in Casula and Annandale. The chain is in its early stages of auction and, while Pizzey was searching for a new BBQ, AFR reports he was also checking out the stores for Apollo, with reports the company is considering acquiring the chain. In the same day, Pizzey also visited Joe's Barbeques & Heating in Silverwater, Tucker Barbecues in Silverwater and The Meat Store in Bondi Junction.

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Asset Managers Face ‘Fierce’ Competition as Passive Boom Outlives the Pandemic

Brief: The popularity of passive strategies hasn’t died down during the pandemic — meaning European asset managers, like their U.S. counterparts, will need to brace for more pressure on their operating margins this year. According to a new report from Fitch in London, the asset managers that the group rates, including Amundi, Azimut Holding, Man Group, and Schroders, among others, are in a position to weather the challenges, in part because they have strong brands, enough assets under management to be able to continue to invest in the business, and have used only a moderate amount of leverage. Still, Fitch said they and other traditional managers around the world face pressure on margins “in 2021 and beyond due to fee compression driven by fierce competition.” Fitch expects investors to continue to prefer low-cost index funds over active strategies. In aggregate, active managers have failed to prove their worth to investors by outperforming common benchmarks in 2020. For years, active managers have argued they would shine when volatility spiked, as their passive peers simply reflected the market’s fluctuations. But that didn’t happen last year, in part because the downturn was short-lived. The markets fell dramatically in March and early April, but then roared back when governments and central banks stepped in with trillions of dollars in stimulus. 

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Topics:Coronaviruscovid-19