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Our briefing for Monday October 19, 2020:
Oct 19, 2020 3:36:53 PM
- In a phone call with his campaign staff, United States President Donald Trump referred to health officials, including infectious disease expert Dr. Anthony Fauci as “idiots” and said the country is ready to move on from the coronavirus. President Trump seemed to focus mostly on Dr. Fauci claiming while he was a “nice guy”, he’s been a disaster with the pandemic, working in his role for far too long, and if it was up to Dr. Fauci, more than 500,000 would be dead from the virus by now in America. Ironically enough, while President Trump was letting his feelings be known, Dr. Fauci was being awarded the National Academy for Medicine’s first ever Presidential Citation for Exemplary Leadership. Elsewhere in America, in an attempt to ratchet up pressure on Republicans, House Speaker and Democrat Nancy Pelosi issued a 48-hour timeline on a stimulus package if it is to pass before the election.
- In Canada, the country’s public safety minister announced in a tweet on Monday that the land border with the United States will remain closed until November 21st. “Our decisions will continue to be based on the best public health advice available to keep Canadians safe,” said Bill Blair. Prime Minister Justin Trudeau indicated in an interview last week that he would like to keep the border closed until the coronavirus is under control. Canada is closing in on 200,000 confirmed COVID-19 cases with provinces such as Ontario and Manitoba taking more measures to bring the latest surge under control.
- In the United Kingdom, the impasse between the central government and local authorities in Greater Manchester continues. In an attempt to end days of deadlock, Chancellor Rishi Sunak said he would be willing to release tens of millions of dollars in order to get the Greater Manchester region through its tough times if it agrees to enter the government’s highest level of COVID-19 lockdown. Manchester Mayor Andy Burnham, staying along his Labour party political message, is in favour of a short national “circuit breaker” lockdown instead of focusing specifically on his area.
- Italy is following other European nations, opting for new restrictive measures, but trying to steer clear of a full-scale lockdown. As of Monday, Prime Minister Giuseppe Conte has granted powers to local mayors to close public areas, such as streets and squares by 9 PM in order to limit public gatherings. Bars and restaurants are allowed to be open until midnight (unless local leaders deem otherwise) if there is table service but must close by 6 PM if not. In a national televised address, Prime Minister Conte said: “we mustn’t waste time. The country can’t allow another lockdown that would severely compromise the entire economy.”
- In winning the biggest share of the vote in more than 70 years, New Zealand Prime Minister Jacinda Ardern will use her second term mandate to rebuild an economy battered by the coronavirus and tackle social inequality. Prime Minister Ardern’s Labour party secured the first outright majority in parliament since the introduction of proportional representation back in 1996. Ardern’s one-two punch of empathy and crisis management has been needed as the country battles the coronavirus and tries to end its domestic spread for a second time in the nation of over five million.
- Brazil’s Butantan Institute, one of the country’s leading biomedical research centers, offered China’s Sinovac Biotech some good news on Monday. Preliminary Phase 3 tests of Sinovac’s potential COVID-19 vaccine called Coronavac has proven to be safe after two doses were applied to 9,000 volunteers. Butantan’s director isn’t ready to give their official seal of approval just yet though as data on how effective the vaccine is protecting people against COVID-19 will not be released until it has been tested on all 15,000 volunteers in expanded trials. China’s Sinovac really needed Brazil as a testing ground since their confirmed COVID-19 case load sits at more than 5.2 million people, third most in the world behind the United States and India.
Covid-19 – Due Diligence And Asset Management
Golden Asset Managers Exceed USD100 Trillion as Large Managers Grow Market Share
Brief: Assets under management at the largest global asset managers have piled up to a record USD104.4 trillion, rising almost 15 per cent from the previous year, according to new research from the Thinking Ahead Institute. The money managed by the largest 500 asset managers has risen almost three-fold since 2000, when assets totalled USD35.2 trillion. The market has been consolidating, with the 20 largest asset managers now accounting for 43 per cent of total assets. This has risen from 38 per cent in 2000, and 29 per cent in 1995. The four largest players in the market by amount of assets are US fund managers BlackRock, Vanguard, State Street, and Fidelity, with German insurance fund Allianz coming in fifth. In the last decade, 232 asset manager names have dropped out of the ranking. Meanwhile, there has been news in October of further consolidation to come, with 19th largest fund management firm Morgan Stanley planning to acquire Eaton Vance.
Brookfield to Invest $2 Billion in Biggest Indian Property Deal
Brief: Brookfield Asset Management will buy an Indian developer’s commercial properties for $2 billion, the biggest real estate deal in the South Asian nation. The Canadian asset manager is acquiring 12.5 million square feet of rent-yielding offices and co-working spaces from RMZ Corp., the privately held developer said in a statement on Monday. The Indian firm said it will have zero debt after the transaction and will use the money to expand its portfolio. Large foreign investors are buying into the Indian office market in recent years. Since 2011, the segment has garnered $15.4 billion of equity investments, according to property research firm Knight Frank. Blackstone last week signed a non-binding agreement to buy some assets, a deal Bloomberg News previously reported could be worth $2 billion. RMZ said it plans to expand its real asset portfolio to 85 million square feet over the next six years from 67 million square feet. Some of the clients in RMZ’s technology and business parks include Accenture, Google and HSBC. It is selling properties in the southern Indian cities of Bengaluru and Chennai. A representative for Brookfield confirmed the contents of RMZ’s statement. The alternative asset manager, which says it owns and operates 22 million square feet of office properties in India, has picked banks for an initial public offering of its India real estate investment trust that could raise at least $500 million, Bloomberg reported in July.
Data, Technology Become New Prized Possessions
Brief: Private equity firms are writing a new chapter in their playbook to favor business models incorporating data utilization and technology. The have accelerated trends already in motion. In the new normal, every company — no matter the sector — will collect and use data to its advantage. All companies will replace existing business models with technology-enabled models that own few assets, making these companies higher priced and more nimble, industry executives said. The digital transformation is a huge benefit in the COVID-19 world in which private equity and venture capital firms are trying to sell or take public as many portfolio companies as possible before the potential double whammy of a second wave of the virus and increased market volatility around the U.S. presidential election. "There will not be a reversion to a pre-pandemic economy," said Jason Thomas, Washington-based managing director and head of global research at The Carlyle Group LP.
Institutions See Risks Returning, Seek Protection
Brief: Institutional investors and outsourced CIOs are adopting conservative, cautious stances in portfolios for the final quarter of what has been a difficult year, partly due to fears that supportive policies may be pulled back too quickly. Before the end of the year, investors will also have to deal with political events — the U.S. presidential election and the end of the Brexit transition period — and the potential resurgence of the coronavirus and associated lockdowns in Western economies. These fears are leading some investors to pare back on risk assets, while others are adding protection into portfolios in order to try to eke out gains from equity exposures while also hedging downsides. "We have adopted a conservative stance as we move into the final quarter of the year," said Mirko Cardinale, head of investment strategy and advice for USS Investment Management Ltd. in London. USS IM is the in-house manager for the Universities Superannuation Scheme, London, which had £67.6 billion ($83.8 billion) in assets as of March 31. "This is because, while the markets rebounded relatively quickly after the initial impact in March, there are many clouds on the horizon."
Despite the Pandemic, Europe’s Fund Industry has Enjoyed Net Inflows in 2020
Brief: The European fund industry notched up net inflows of 297.1 billion euros ($347.6 billion) for the first nine months of 2020, according to a new report from Refinitiv Lipper, despite the coronavirus pandemic creating a “tough” environment for the industry. Money market funds — which usually invest in low-risk, liquid assets like short-term bonds — were the best-sellers over the year to date, with inflows of 211.3 billion euros, according to Refinitiv’s European Fund Industry Review. These types of funds yield some income, but are mainly used to park cash in times of high volatility. Meanwhile, funds focused on global equities were the most popular among long-term investors, with the sector seeing inflows of 62.8 billion euros. However, the data and research provider found that total assets under management across the region’s fund industry slipped from 12.3 trillion euros in Dec. 2019 to 12 trillion euros in Sept. 2020, which it attributed in large part to the performance of underlying markets, which saw a 531 billion euro decline. It comes after a volatile year-to-date for markets. After tanking in March when the full impact of the coronavirus started to be realized around the world, stocks have experienced a broad bullish period over recent months as investors bet on stimulus from governments and central banks, and the prospect of a coronavirus vaccine.
How the Coronavirus Crisis Changed Investment Research, According to the All-America Research Team
Brief: To quote one analyst, working in equity research has gotten “a lot more intense.” Top research providers in the U.S. and globally have reported a surge in demand for content and corporate access this year, as investors have tried to make sense of the rapid changes brought by the coronavirus pandemic. These changes have impacted not just the markets but the investment research industry itself. This includes changes in how institutional investors view some of their research providers, as the 2020 All-America Research Team will soon reveal. Ahead of that reveal on Tuesday, Institutional Investor asked a number of sell-side analysts to share how they’ve been required to adapt and evolve during the Covid-19 crisis. There are the obvious changes: One airline analyst noted with irony that he traveled a lot less this year. Some pointed to the ability to spend more time with their families. Almost everyone mentioned the increase in virtual communication with clients, corporates, and colleagues. But’s it’s not just the shift to working from home. This year has also seen an evolution in the kinds and quality of research insights demanded by investors, as numerous analysts pointed out.
