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Our briefing for Thursday April 8, 2021:
Apr 8, 2021 4:24:27 PM
- In the United States, Treasury Secretary Janet Yellen urged major economies on Thursday to inject significant new fiscal support to secure a robust recovery. Yellen made the statement to the steering committees of the International Monetary Fund and the World Bank, and also made the point that major economies need to continue supporting developing countries as they struggle with the COVID-19 pandemic, climate change and high debt burdens. The United States are trying to lead the way in that regard, pledging $4 billion USD to the COVAX global vaccine distribution initiative and signalling America could provide excess doses of COVID-19 vaccines to other countries in the future.
- In Canada, Quebec recorded more than 1,600 cases on Thursday – the most since January 23rd. The rise in cases has Premier Francois Legault and his government considering keeping strict restrictions in place in the hardest-hit cities of Quebec City, Levis and Gatineau. For instance, public health officials have linked 419 cases in recent days to an outbreak at a gym. Schools, restaurant dining rooms, gyms, hair salons and other non-essential businesses have been closed in the three cities mentioned since April 1st. Elsewhere in the country, 16 MLAs of the leading Alberta provincial government have signed a letter speaking out against their own party over its decision to adopt more stringent public health restrictions over a surge in COVID-19 cases. On Wednesday, Alberta recorded 1,351 new cases of COVID-19 – the most since December 31st, 2020.
- The United Kingdom is set to reach herd immunity against COVID-19 within days, according to scientists. The University College London have used real-time modelling to suggest the UK should pass the critical threshold where the proportion of people who have protection against the virus either through vaccination, previous infection or natural immunity will hit 73.4% by Monday, April 12th. Professor Karl Friston of the University College London though has warned against the notion of speeding up the easing of lockdown restrictions in response to reaching herd immunity, noting: “if we let up, that threshold will go up again and we will find ourselves below the threshold, and it will explode again.”
- France is set to meet its target of 10 million COVID-19 inoculations a week earlier than projected. French Prime Minister Jean Castex made the proclamation during a visit to a vaccination center near Paris. The government’s next goals are to have 20 million doses injected by mid-May and 30 million doses delivered by mid-June. France is in the middle of its third lockdown due to the coronavirus and French Prime Minister Emmanuel Macron noted last week he hopes the country will be able to reopen museums and restaurant terraces by mid-May.
- Australia, the Philippines, and the African Union are the latest to deal blows to AstraZeneca as all three countries/regions made moves in recent days. Australia have recommended people under the age of 50 should get the Pfizer COVID-19 vaccine in preference to AstraZeneca – a policy shift that government officials have warned would hold up its inoculation campaign. The Philippines have suspended their use of AstraZeneca shots for those under the age of 60 after Europe’s regulator said on Wednesday it found rare cases of blood clots among some adult recipients. The African Union made the most drastic move of all – dropping plans to buy AstraZeneca’s vaccine from India’s Serum Institute and instead will explore options with Johnson & Johnson.
- The Japanese government was busy doing damage control on Thursday, denying media reports that they were considering prioritizing COVID-19 vaccines for Olympic athletes ahead of the projected Games later this summer. The report was first made by the Kyodo news agency and met with outrage on social media with many noting the original government plans were to give vaccine priority to medical workers, elderly people, and those with chronic conditions. The chief cabinet secretary, Katsunobu Kato said the government has no plans on giving priority to Olympic athletes. Japan’s vaccination drive is far behind most major economies with only one vaccine approved for use and roughly one million people having received a first dose since February.
Covid-19 – Due Diligence And Asset Management
Powell Vows to Restore ‘Great’ Economy, Plays Down Inflation
Brief : Jerome Powell pledged to get the U.S. back to a “great economy” and invoked a homeless encampment in downtown Washington to make the point that the recovery remains incomplete. Playing down the risk that inflation could get out of control as the pandemic recedes, the Federal Reserve chair told a virtual panel Thursday that his commute home takes him past a “substantial tent city,” and that he thought of the millions of Americans who are still trying to get back to work. “So we just need to keep reminding ourselves that even though some parts of the economy are just doing great, there’s a very large group of people who are not,” he said during the International Monetary Fund panel. “I really want to finish the job and get back to a great economy.” Fed officials have repeatedly stressed that the U.S. economy continues to need aggressive monetary policy support as it recovers from the pandemic, even as the outlook brightens amid widening vaccinations
UK Investors Flood to Equity Funds in March
Brief: UK investors added record levels of capital to equity funds in March as they bet on the post-Covid economic recovery, according to the latest data from funds transaction network Calastone. In total, UK investors committed a net £2.96 billion (€3.42 billion) to equity funds surpassing the previous record seen in the post-crash bounce of April 2020 by over a tenth, the firm said. UK-focused equity funds saw a net £610 million added to holdings marking a "startling" turnaround for the asset class, while global equity funds took in £1.84 billion. Meanwhile, global ESG equity funds attracted new capital to the tune of £1.15 billion. Edward Glyn, head of global markets at Calastone highlighted that equity fund managers have enjoyed their best ISA (Individual Savings Accounts) season in years. “New capital has flooded in from investors keen to capitalise on the post-Covid economic recovery,” he said. Active funds took in the lion’s share of investment, attracting over three quarters of overall net inflows (£2.32 billion). It was their best monthly performance since July 2015.
Pandemic Impact may Weigh on Commercial Real Estate Recovery
Brief: The distribution of COVID-19 vaccines is fueling optimism that Americans will increasingly return to the ways they used to shop, travel and work before the pandemic. That would be a welcome change for companies that own office buildings and hotels, or those that lease space to restaurants, bars, department stores and other retailers. These have been the hardest-hit areas of commercial real estate over the past year as the pandemic forced many businesses to shut down temporarily or operate on a limited basis. But even as the U.S. economy appears set to roar back to life this year, as many economists now predict, demand trends for commercial real estate could take longer to recover as businesses reassess their post-pandemic needs. This means higher vacancy rates and declining rents this year, especially for retail and office property owners, said Thomas LaSalvia, senior economist with Moody’s Analytics.
Jersey Finance Supports Research Exploring Post-Pandemic Fund Domiciliation Trends
Brief: The rise of sustainable finance, the impact of Brexit, EU regulation and the fallout of the pandemic all have the potential to shape considerations around alternative fund domicile selection, according to new research published this month by IFI Global and supported by Jersey Finance. Based on the views of alternative managers, law firms and advisors from across North America, Europe and Australasia, including some of the world’s largest investors in alternatives, the research for this new report – entitled ‘The Future of International Fund Domiciliation 2021’ – was carried out between October 2020 and February 2021. Building on the first IFI Global report in this series, published in April 2020, which found that investors and managers want stability when it comes to fund domiciliation, this new report explores how investor and manager attitudes have changed in light of some key developments in the investment space landscape over the past twelve months, including ESG acceleration, Brexit and regulation. Overall, the survey found that investors continue to be the key driver behind domiciliation decisions, and they want to allocate to funds that are domiciled in well-known jurisdictions that have a good reputation.
RBC’s McKay Gives Staff a Day off with Workers More ‘Exhausted’ than Ever
Brief: Royal Bank of Canada is giving employees an extra paid day off this year, and its top executive acknowledged that staff are more burned out now than at any time during the COVID-19 pandemic. Chief Executive Officer Dave McKay said in companywide memo on Thursday that many employees have said they’re exhausted and that the bank needs to “eliminate the stigma associated with asking for time to focus, concentrate, and in some cases, log off and recharge.” Burnout has become a more pressing issue for financial firms as the pandemic moves into its second year and some lines of business, including mergers and acquisitions, see a sustained boom in activity. Last month, Goldman Sachs Group Inc. CEO David Solomon said the firm would improve enforcement of a rule designed to ensure junior bankers don’t have to work on Saturdays. His memo came after junior analysts gave managers a presentation showing that some worked 100 hours in a week. RBC, Canada’s largest lender, is also giving its roughly 86,000 employees worldwide a free, one-year subscription to Headspace, a meditation and sleep app. An annual subscription costs US$69.99, according to Headspace’s website.
Fund Managers Urged to Diversify Their Talent Pool
Brief: Former Schroders COO Markus Ruetimann has called on fund managers to use the pandemic to assemble a more diversified workforce with greater emphasis on IT specialists and data scientists. Writing in the latest edition of the FundsTech quarterly report, Ruetimann stated that the move to remote working had shown the need for “new, more inclusive hierarchical structures and communication channels”. “Future talent pools will need diversifying. IT pioneers and data scientists are likely to play a bigger role than fund managers and data administrators going forward,” stated Ruetimann, chief executive of advisory practice Hardy London and also chair of Aprexo, a data management provider. However, while the institutional asset management industry has talked about the need to reinvent itself in view of the ever-expanding digital economy, few firms have replaced their legacy systems with new technology or hired talent from outside the industry to cater for a more tech and data-dominated operating environment.
