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Our briefing for Thursday November 5, 2020:
Nov 5, 2020 3:14:01 PM
- In the United States, the country recorded 102,831 new cases of COVID-19 on Wednesday – the first time America has topped 100,000 on a single day. Due to these increasing numbers, the US Centers for Disease Control and Prevention (CDC) director says this is a good time to develop a strategy to better detect asymptomatic cases. The CDC estimates 40% of people with COVID-19 show no symptoms.
- In Canada, the CBC is reporting the Public Health Agency of Canada (PHAC) quietly revised its guidelines on how COVID-19 spreads to include the risk of aerosol transmission. The PHAC updated its guidance without notice this week to say the following: “SARS-CoV-2, the virus that causes COVID-19, spreads from an infected person to others through respiratory droplets and aerosols created when an infected person coughs, sneezes, sings, shouts, or talks.” The update comes weeks after other countries and international health organizations made similar changes. For instance, the CDC in the United States updated its guidelines in early October and the World Health Organization amended its guidelines to acknowledge the possibility of aerosol transmission back in the summer.
- The United Kingdom government has extended the furlough scheme until the end of March. The furlough program, which pays 80% of wages for the hours that workers are unable to work because of the effects of the pandemic, had been scheduled to end on December 2nd. The move is considered to be a stunning reversal from Chancellor of the Exchequer Rishi Sunak who originally wanted the program to end on October 31st and now will have the government on the hook for workers’ wages for 13 months.
- In another move by France to bend the curve of the pandemic, the city of Paris will ban all food delivery and takeouts, as well as the sale of alcohol and outdoor consumption between 10 PM and 6 AM. The new restrictions will come into effect as of Friday. Paris police said the measures are being enforced to prevent groups of people from gathering outside restaurants, eateries and stores that sell alcohol – meetings that are in violation of France’s health measures. Earlier this week, the WHO said France accounted for the third highest number of new cases globally, with more than 275,000 cases in the last week.
- China has barred non-Chinese travellers from Britain, France, Belgium, the Philippines and India. The restrictions cover those with valid visas, residence permits and take effect in conjunction with more restrictive testing for arrivals from several other countries. Starting Friday, all passengers from the United States, France, Germany and Thailand bound for mainland China must take a nucleic acid test and a blood test for antibodies against the coronavirus no more than 48 hours before boarding. China, ground zero for COVID-19 now has some of the most stringent entry curbs of any country in the world.
- While China is tightening control on their boarders, Singapore seems to be taking a different approach. The country intends on using a plan involving ratios and testing to open its borders to as many international visitors as possible, based on their home country of risk. Singapore is a small island nation that is dependent on international tourism and trade and would also like to set itself up as a viable plan B for the asset management industry with the situation between Hong Kong and China continuing to evolve. Singapore’s Minister for Trade and Industry has said the country is working on travel bubbles with other countries and is urging them not to “wait for the conditions to be right” before discussions start.
Covid-19 – Due Diligence And Asset Management
Future Market for Covid Vaccines ‘Could Be Worth More than $10bn a Year’
Brief: The future market for Covid-19 vaccines could be worth more than $10bn (£7.6bn) in annual revenues for pharmaceutical companies, according to industry experts, even though some drugmakers have pledged to provide their vaccines on a not-for-profit basis during this pandemic. The calculations by analysts at Morgan Stanley and Credit Suisse assume people will need to be vaccinated every year, similar to the traditional flu jab, with an average price of $20 for a Covid-19 vaccine dose. Prices range from $3 a dose to $37. Matthew Harrison, an analyst at Morgan Stanley, estimates that even if only those who receive an annual flu jab take a Covid-19 shot, this would generate $10bn a year in revenues for the pharmaceutical industry in the US, Europe and other developed countries. He put the cost of producing a vaccine at $5-$10 a dose. The size of the market depends on whether people need to take the vaccine every year, or less frequently, as well as vaccination rates, and could be worth up to $25bn a year globally, he said. Evan Seigerman, an analyst at Credit Suisse, said the US market alone could be worth $10bn, based on Pfizer’s vaccine pricing of $19.50 a dose, and assuming that 330 million citizens receive two doses each.
StanChart Moves to Permanent Flexible Working
Brief: Standard Chartered will make permanent the flexible working arrangements for most employees that were put in place during the coronavirus pandemic, it said on Thursday. The Asia, Africa and Middle East-focused bank said it aims for around 50% of its markets, comprising around 70% or 60,000 of its employees, to be able to adopt hybrid working patterns by the end of 2021. That would mean those staff can choose to work entirely at home, entirely in offices or a mix of both. The bank said it aims for 90% of its staff to be offered flexible working by 2023, albeit some will have to work full-time in offices given the nature of their roles. The move by StanChart to formalise flexible working habits is one of the most concrete signs yet from a major bank of how lenders are moving swiftly to adopt new ways of working forced on them by the pandemic.
Modi Vows to do All it Takes to Make India Investor Friendly
Brief: Prime Minister Narendra Modi invited global funds and businesses to invest in India, pitching the nation as a safe and stable destination. Demand with democracy and stability with sustainability are things that India offers, Modi said Thursday in a virtual address to global investors including British Columbia Investment Management Corp., GIC Pte, and Korea Investment Corp. It is also a place that provides growth with a green approach, he said. “A strong and vibrant India can contribute to stabilization of the world economic order,” Modi said, pledging to “do whatever it takes to make India the engine of global growth resurgence. There is an exciting period of progress ahead. I invite you to be a part of it.” Modi’s meeting with the world’s largest pension and sovereign wealth funds, which have about $6 trillion of assets under management, follows his government’s measures in the recent past to make India more investor-friendly. That includes offering incentives to some manufacturers, amending labor laws and lowering tax on companies to among the lowest in Asia. Still, India has had marginal success in attracting investments with businesses preferring Vietnam and other South East Asian nations in their quest to reduce reliance on China, and matters have been made worse by rising coronavirus infections.
Lone Star said to Weigh Options for $3 Billion Stark Group
Brief: Lone Star Funds is exploring options for its building-materials retailer Stark Group A/S, which could fetch about 2.5 billion euros ($3 billion), according to people familiar with the matter. The U.S. private equity firm is working with Lazard Ltd. to consider a potential sale or initial public offering of Stark, the people said, asking not to be identified discussing confidential information. Deliberations are ongoing and no final decisions have been made, the people said. Representatives for Lone Star and Stark declined to comment. A representative for Lazard didn’t immediately respond to request for comment… Lone Star bought Stark three years ago for 1 billion euros from U.K.-listed plumbing and heating group Ferguson Plc. A sale would add to $2.6 billion of transactions targeting building-materials companies in Europe this year, according to data compiled by Bloomberg. While the coronavirus lockdowns of 2020 have hit construction companies by halting projects, the sector is expected to play an important role in post-pandemic recoveries.
BoE Stimulus Package Sparks Concerns Over UK Economy
Brief: The Bank of England (BoE) has extended its quantitative easing measures at a much higher level than anticipated, highlighting concerns about the welfare of the UK’s economy as the country enters a second lockdown. On Thursday morning, the Bank announced it would extend its gilt asset purchases by £150 billion (€165.9 billion), bringing the total to £875 billion. Extending the stimulus package came as a surprise to analysts, with many forecasting that further measures would be around £100 billion. As the economic fallout of Covid-19 lockdowns continues to make itself known, BoE’s announcement is a cause for concern. The Bank reported a “softening” of consumer conditions and warned that growth in the fourth quarter would likely contract, possibly by 2.5%. Derrick Dunne, chief executive of UK-based Beaufort Investment, said: “Desperate times might call for desperate measures, but the Bank doesn’t think we’re ready for negative rates quite yet.” He called the stimulus - £50 billion more than was forecast - a “bold move” that shows the Bank’s concern over the financial state of the country.
Amid Election Turmoil, Institutional Investors Stay Focused on the Pandemic
Brief: While much of the United States is zeroed in on the outcome of the 2020 election, institutional investors are more focused on other issues — at least when it comes to investment decision-making. According to industry insiders, the coronavirus pandemic and central banks’ actions are seen as outweighing the significance of the contentious election for institutional portfolios. “The truth is for markets, it’s not just terribly important,” Michael Rosen, founder of Angeles Investment Advisors, said of the election. “It's important for a lot of reasons. For our country, society, our children, their children. But not the markets.” Although the markets popped on Wednesday as votes were being tallied, Rosen and his peers in the industry do not believe the effects are long-lasting. “We think that there may be noise in the short term,” said Scott Freemon, head of strategy and risk at Secor Asset Management. He added that the attractiveness of one asset class over another will not change based on the election’s results. “The primary issue for the market remains recovering from Covid-19 and the speed of that recovery,” he said. Institutional consulting firm North Pier Search Consulting echoed this sentiment in a report published ahead of the election. “At the end of the day, it will likely come down to the trajectory of the virus,” the search firm said.
