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Our briefing for Thursday April 1, 2021:
Apr 1, 2021 3:21:08 PM
- In the United States, the Treasury Department is working with the International Monetary Fund (IMF) to provide up to $650 billion in financial aid to the countries hit hardest by COVID-19. An announcement from the Treasury on Thursday stated they were working with IMF on Special Drawing Rights, which are reserve assets that countries can use to suppliant their foreign exchange assets, such as gold and U.S. dollars. Global demand for American currency has been an ongoing issue throughout the pandemic and has resulted in the Federal Reserve also to engage in a dollar-swap program around the world. “Addressing the long-term global need for reserve assets would help support the global recovery from the COVID-19 crisis. A strong global recovery would also increase demand for U.S. exports of goods and services – creating U.S. jobs and supporting U.S. firms,” said the Treasury department in a statement.
- In Canada, after more than a week of new COVID-19 cases going over the 2,000 mark, Ontario is introducing a province-wide emergency brake. The measure will come into effect as of April 3rd and will last at least four weeks. “I know pulling the emergency brake will be difficult on many people across this province, but we must try and prevent more people from getting infected and overwhelming our hospitals,” said Premier Doug Ford. The restrictions will not be as tight as the province-wide lockdown that was imposed in December. For instance, non-essential retail will be permitted to be open, but at 25% occupancy with essential retail outlets, like grocery stores, capped at 50%.
- United Kingdom Prime Minister Boris Johnson gave a strong hint on Thursday that vaccine passports will be used once international travel resumes. During a trip to Middlesbrough on Thursday, reporters asked the prime minister if vaccine passports were un-British and this was his response: “On the issue of vaccine certification, there’s definitely going to be a world in which international travel will use vaccine passports. You can see already that other countries, the aviation industry, are interested in those and there’s a logic to that.” Prime Minister Johnson’s comments come after opposition leaders from the Labour Party and Liberal Democrats warned against the introduction of such certificates on the grounds they could be “divisive and discriminatory”.
- In a televised address Wednesday evening, French President Emmanuel Macron announced a nationwide four-week lockdown set to begin on Saturday. In the address, President Macron implored the nation to make the extra effort as the lockdown comes into effect with restrictions being flexible this weekend during the Easter holidays to allow people to relocate within regions. The nationwide lockdown represents a policy shift for the French leader who favoured a localized approach when dealing with the pandemic. However, similar to the UK, that plan proved unproductive. The people of France also seem to be on board with a snap Harris International poll showing 71% approve of the decision to extend restrictions, which include the closing of schools and businesses.
- The Italian government has made a potentially controversial move requiring all health workers in the country to take a coronavirus vaccine inoculation. According to media reports, Italy has an entrenched anti-vaccination movement, but a recent discovery of clusters in hospitals after staff refused to be vaccinated has led to a public outcry. In a decree approved by Prime Minister Mario Draghi’s cabinet, all health workers and pharmacists must undergo vaccination and those who refuse, could be suspended without pay for the rest of the year. More than 109,000 people have died in Italy due to the coronavirus.
- Israel continues to be one of the country’s leading the way in their vaccination campaign. The latest numbers on Wednesday show the active coronavirus cases in the country have dipped to their lowest level since June 2020 and serious infections have hit a three-month low. Israel so far has vaccinated 4.7 million people or 51.2% of its population with two coronavirus shots. Those numbers are even better when it comes to Israel’s most vulnerable populations. Over 80% of all Israeli residents over 50 are fully inoculated and 90% for those over the age of 70. The country started to emerge from its third lockdown back in February with travel inside the country now mostly free of coronavirus restrictions, especially for the vaccinated.
Covid-19 – Due Diligence And Asset Management
Bridgewater to Offer Flexible Return to Work, Prince says
Brief : Bridgewater Associates LP plans to offer employees flexibility as they return to work for the first time since the Covid-19 pandemic began, according to Co-Chief Investment Officer Bob Prince. The firm expects to move toward a blended approach with some staff spending fewer days in the office and offering opportunities for employees to exercise more flexibility, Prince said Thursday in an interview on Bloomberg TV. The Westport, Connecticut-based hedge fund’s current plan is to have everyone in the office one day a week and smaller groups a second day, according to Deputy Chief Executive Officer Nir Bar Dea. The plan will start after Labor Day. The decision is a departure for the firm, which is known for an unorthodox culture that prizes employees working intensely together. Founder Ray Dalio runs the industry giant following a set of about 200 principles, the most central of which is “radical transparency” -- a demand that employees be brutally honest with one another. All meetings are taped and archived for future study and discussion. Prince said having staff work from home has been mixed. “Ironically, in some ways, we’ve been more productive in the last year than we ever were, in other ways less,” he said. “Obviously the culture of a community is very hard to build when you’re not actually seeing each other.”
Brookfield to Take Property Arm Private in US$6.5B Deal
Brief: Brookfield Asset Management Inc. said it reached a US$6.5 billion agreement to acquire the shares of Brookfield Property Partners LP it doesn’t already own, boosting its offer to take private its real estate arm. The Canadian alternative-asset manager said Thursday it plans to acquire the minority stake for US$18.17 per unit. That would mark a 10 per cent increase to the US$16.50 a unit Brookfield Asset offered in January, and a 26 per cent premium over where the shares traded prior to that earlier proposal. Brookfield Property’s board has unanimously approved the deal, according to the statement by the companies. Brookfield Property dropped 0.8 per cent to US$17.66 as of 10:44 a.m. in New York. Brookfield Property Partners owns, operates and develops one of the largest portfolios of real estate in the world. At the end of December it had about US$88 billion in total assets, including developments such as London’s Canary Wharf and Brookfield Place in New York. In 2018, Brookfield Property acquired GGP Inc., the second-largest mall operator in the U.S., for about US$15 billion. The pandemic has taken a toll on the company as widespread stay-at-home orders kept workers from offices and shoppers from malls. Brookfield Property Partners reported a US$2 billion loss and its shares fell 21 per cent last year.
Global M&A Sets First-Quarter Record as Dealmakers Shape Post-COVID World
Brief: Mergers and acquisitions (M&A) activity surged globally in the first quarter of 2021 to a year-to-date record, as companies and investment firms rushed to get ahead of changes in how people work, shop, trade and receive healthcare during the COVID-19 pandemic. While the number of deals was up only 6% from a year ago, the total value of pending and completed deals rose 93% to $1.3 trillion, the second-biggest quarter on record, according to data provider Refinitiv. Dealmakers said a boom in the stock market and low borrowing costs - driven by the Federal Reserve’s loose monetary policies - emboldened companies, private equity funds and blank-check acquisition firms to pursue their dream deals. This is despite the global economy’s failure to have fully recovered as yet from the virus’ financial fallout. “This is as robust and broad-based an M&A market as I have witnessed in the last 20 years,” said Colin Ryan, co-head of Americas M&A at Goldman Sachs Group Inc. “We are in an environment where assets are scarcer than the available capital right now.”
“Cautiously Optimistic”: New Industry Finds Hedge Funds Buoyant in 2021 After Overcoming Covid Challenges
Brief: Hedge funds are “cautiously optimistic” on their growth prospects for the coming year, according to a new deep-dive industry study jointly published by the Alternative Investment Management Association, Simmons & Simmons and Seward & Kissel. ‘The Global Hedge Fund Benchmark Survey: Beyond the Horizon’ probed manager performance, investor sentiment, future challenges, and alignment of interests, among other things. The wide-ranging study is part of an ongoing research series into the health of the hedge fund industry conducted by AIMA, the global trade body for the hedge fund and alternative asset management industry, together with law firms Simmons & Simmons and Seward & Kissel. Its key findings suggest 2021 will see a further acceleration of trends, with the industry becomingly increasingly digitalised and more social conscious, and hedge fund firms playing an integral role in the global economic recovery from the Covid-19 pandemic.
Covid Kickstarts India’s Reforming Economy
Brief: India seems to have recovered quickly from Covid, and most citizens have been able to go back to their normal lives free from lockdown restrictions, says Jupiter's Avinash Vazirani. The country has reported just 12 deaths per 100,000 population, a much lower figure than, for example, the UK's 189 per 100,000. More than 30 million people in India have been vaccinated so far, with the government hoping to cover the most vulnerable 250 million by the end of July. India is especially well-placed for Covid vaccinations, as the country manufactures around 60% of the world's supply of vaccines. We think that India's world class healthcare and pharmaceutical industry will be a beneficiary of long-term trends for the treatment of and vaccination against Covid. Our outlook is also positive for India's economic growth in general. Economic activity has been trending above pre-Covid levels since January, with Goods & Services Tax (GST) takings up 8% in January, on a year-on-year basis, to a record high. According to the Federation of Indian Chambers of Commerce & Industry (FICCI) business confidence in March is at a decadal high, with companies not only seeing a recovery in demand, but also the potential for higher investment over the coming quarters.
After a Year of Remote Work, Institutional Investors are Worried About Employee Burnout
Brief: Over a year into the pandemic, institutional investors are worried about the mental health of their employees. Managing stress and curbing burnout among employees who are working remotely were cited as top concerns in Nuveen’s inaugural global survey of institutional investors, which was released Wednesday. Nuveen, the investment manager of TIAA, has $1.2 trillion in assets under management and operates in 27 countries, according to a press release on the survey results. The asset manager surveyed 700 global investors and consultants including decision-makers at corporate and public pensions, insurance companies, endowments and foundations, superannuation funds, sovereign wealth funds, central banks, and consultants. The organizations represented in the survey held assets ranging from more than $10 billion to no less than $500 million, Nuveen said. When the Covid-19 pandemic changed the nature of work and shifted the investing world to the home office, institutional investors took the change in stride.
