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Coronavirus Diligence Briefing

Our briefing for Thursday March 19, 2020:

Mar 19, 2020 3:08:37 PM

  •  In the United States, there are now more than 10,500 cases of the coronavirus, a 40% increase in the last 24 hours. However, the White House coronavirus task force coordinator, Dr. Deborah Birx notes this is a signature that everyone is doing their job. “Those with mild symptoms are staying home, self-isolating. Those with serious symptoms are coming forward to get testing,” Birx said.
  • CNN and Politico are reporting the State Department is preparing to raise its travel advisory to worldwide Level 4, which is “Do Not Travel”, the country’s highest designation. Last Wednesday, the US raised their travel advisory to Level 3.

  • In Canada, Prime Minster Justin Trudeau held a news briefing and stated the new travel ban for Canada/US citizens is likely to come into effect Friday night/Saturday morning. The Prime Minister noted more assurances for Canadians struggling with what the pandemic has done to their lives, but warned that “extraordinary” measures such as closures, and social distancing could be in place for weeks or months.

  • In Europe, the grim reality continues to settle in with Italy now confirming more deaths due to the virus than China. Italy’s death toll has reached over 3,400, while China sits at over 3,200, according to the World Health Organization.

  • The United Kingdom government has published the Coronavirus Act, emergency legislation to help battle the epidemic if the situation calls for it. The powers include the ability to shut down airports and ports, and police and immigration officials having the ability to detain those suspected of having the coronavirus. Those individuals can be sent to be tested and put into self-isolation.

  • Calling the coronavirus “hysteria” and “fantasy” previously, Brazil’s President Jair Bolsonaro and his government have closed its land border with neighbouring South American countries. On Wednesday night, hundreds of thousands of Brazilians banged pots and pans from their windows and shouted "Bolsonaro out" in protest against the perceived inaction of their leader.

  • Finally, in China the country has reported no new locally transmitted coronavirus cases. A first, since the pandemic began. At a news conference on Thursday, China announced 34 new cases in the last 24 hours, all imported from overseas.

Coronavirus – Due Diligence And Asset Management

Hedge Fund Manager Apologizes for Wiping Saliva on Hong Kong Metro Rail

Brief: A hedge fund manager in Hong Kong has publicly apologized after a parody video of him licking his finger and wiping it on a hand rail in a metro car went viral, sparking anger in the city which is grappling to contain an outbreak of the new coronavirus… “I made light of the COVID-19 situation in a parody video that was only intended for a handful of friends,” Joel Werner, chief investment officer at Solitude Capital Management said in a public Facebook post. “But I now realize that I shouldn’t have done that. A global pandemic is no laughing matter.”

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Englander’s Millennium to Shut Some ‘Trading Pods’ as Coronavirus Bites

Brief: Millennium Management has closed many of its "pods" run by teams of traders, as violent market swings caused by jitters over the economic fallout of the coronavirus led to losses, the Financial Times reportedhere citing two sources.Millennium, one of the industry’s biggest hedge funds, has closed “trading pods” in double-digit numbers, the report said, adding that job cuts at the firm that runs between 150 and 200 pods are expected.

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Up 3,000%: The Tail Risk Funds that Mastered Coronavirus Market Mayhem

Brief: Boaz Weinstein was waiting for this. The New York hedge fund manager, seasoned by past financial crises and spooked by seemingly endless quarters of ever-higher markets, had for years set up for financial calamity, even if it meant sometimes poor returns. When panic over the coronavirus spread to global financial markets in late February, Weinstein swung into action.

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Activist Investors Throw in Towel as Market Turmoil Rages

Brief: Activist shareholders are giving up on some of their campaigns amid historic market volatility. Elliott Management Corp. dropped its opposition Wednesday to Altran Technologies SA’s $4 billion takeover by Capgemini SE, citing “current market conditions.” The investment firm led by Paul Singer said it will sell its stake in Altran to Capgemini, after arguing for months that the deal undervalued the French technology consulting firm. Robert Tchenguiz, who had been challenging FirstGroup Plc’s management for at least four months, announced Wednesday that he no longer holds a material interest in the transport operator.

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Aberdeen Standard Suspends Property Funds

Brief: Aberdeen Standard Investments (ASI) is the latest to gate property funds as total assets in funds suspended reaches £8bn. The fund manager said dealing was suspended in the £1.7bn Standard Life Investments UK Real Estate fund and £1.1bn Aberdeen UK Property fund. The news follows the suspension of the £2bn Janus Henderson UK Property and the Kames Property Income and Aviva UK property funds as Covid-19 takes its toll. ASI said it would lift the suspension ‘as soon as confidence has returns to the market’.

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Aussie Billionaire Investor Warns of ‘Devastating Economic Collapse’

Brief: The chairman of $100 billion investment house Magellan Financial Group, Hamish Douglass, has warned of a near total shutdown of the world economy over the next two to six months, calling on governments to increase stimulus packages while taking emergency measures to avoid a depression. In a note to clients, Mr. Douglass said the impact of the deadly coronavirus was a "fast-moving and fluid" situation, as theAustralian dollar plummeted to US55¢and the ASX continued to slide, having lost more than $665 billion in value over the past four weeks.

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Contact Castle Hall to discuss due diligence

Castle Hall has a range of due diligence solutions to support asset owners and managers as our industry collectively faces unheralded challenges. This is not a time for "gotcha" due diligence - rather this is a time where investors and asset managers can and should work together to share best practices and protect assets. Please contact us if you'd like to discuss any aspect of how coronavirus may impact your business.

Topics:Coronaviruscovid-19