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Our briefing for Thursday September 10, 2020:
Sep 10, 2020 4:11:43 PM
- The United States will end coronavirus screening for airline passengers arriving from such places as China, Iran, most of Europe and Brazil. The decision was made by America’s Centers for Disease Control and Prevention (CDC) and the new policy will go into effect on Monday for those arriving at 15 designated airports. “We now have a better understanding of COVID-19 transmission that indicates symptom-based screening has limited effectiveness because people with COVID-19 may have no symptoms or fever at the time of screening, or only mild symptoms,” said the CDC in a statement. According to the Bureau of Transportation Statistics there were just 1.1 million travellers on international flights in July, down a whopping 90% from the same month last year.
- In Canada, the province of Quebec unveiled a new colour-coded regional alert system for COVID-19. The system is intended to help people understand the current level of risk, along with what actions need to be taken in the event of serious outbreaks. The four levels range from green (lowest) to the red (highest). Currently there are four regions in the yellow tier, which is the second tier of the four, while the rest of the province, including its largest city, Montreal remain in the green. Premier Francois Legault says police will start handing out fines to anyone who isn’t wearing a mask when required according to public health guidelines, especially to those classified to be in the “yellow” regions.
- In the United Kingdom, as of Thursday two companies will launch paid saliva-based tests for COVID-19 as more and more people are either returning to schools, or back to their offices. British tech company iAbra has developed a test that uses a mouth swab and delivers results within 20 seconds. The test has been trialed at London’s Heathrow airport as the company tries to line up more customers. The other firm is Halo, which says its saliva test provides results in 24 hours, has Exeter University as its first customer and are in talks with an unnamed hedge fund and a major international airline.
- France is choosing to prolong temporary virus-related unemployment benefits until next summer in order to protect further job losses from the pandemic. The country’s Labour Minister said the government would continue paying up to 84% of salaries for employees in struggling companies. Prior to the announcement, the job scheme in place to help the most exposed sectors such as hotels, cafes and event-related work was to expire at the end of the year. France has already spent £30 million on its temporary unemployment system since the country imposed a strict lockdown back in the spring, which put many out of work.
- With the United Kingdom’s AstraZeneca suffering a setback in its phase three COVID-19 vaccine trials, China has picked up the ball and tried to press ahead as the new front runner. China National Biotec Group Co. has said none of its recipients of its two coronavirus shots so far have reported an adverse reaction or infection. The vaccine developer, a subsidiary of a state-owned drugmaker Sinopharm Group Co. touted the results on its official WeChat account stating hundreds of thousands of people have received the COVID-19 treatment so far. The potential vaccine is also being tested in countries in the Middle East and South America and may be available to the public by the end of the year, if all continues to go well.
- The United Nations is calling on the world’s countries to contribute $35 billion US more, including $15 billion US over the next three months to the World Health Organization’s (WHO) program to back vaccines, treatments and diagnostics against COVID-19. Only three billion has been contributed so far as countries or governments from the European Union, Japan and the United States reach bilateral deals for vaccines. “There is real urgency in these numbers. Without an infusion of $15 billion over the next three months, beginning immediately, we will lose the window of opportunity,” said UN Secretary General Antonio Guterres.
Covid-19 – Due Diligence And Asset Management
The Pandemic is Making Risks of Slavery in Global Supply Chains
Brief: The coronavirus pandemic is complicating the task of rooting out modern slavery by making it impossible for companies or investors to visit factory floors in many countries, adding to the challenges of addressing supply-chain risks. The economic shock caused by the coronavirus outbreak is also making people more vulnerable to exploitation, further compounding the problem, Mans Carlsson, the Sydney-based head of ESG research at Ausbil Investment Management, told the Bloomberg Inside Track webinar on Thursday. Australia has gone further than the U.K. and California with laws requiring companies and investors to have a detailed plan on how they will assess and tackle the risk of modern slavery in their supply chains. With more than 40 million people working in slave-like conditions even before the pandemic, more than any time in human history, it’s a complex issue to address, Carlsson says. The global nature of supply chains can make the issue overwhelming, said fellow panelist Danielle Welsh-Rose, ESG investment director for the Asia Pacific at Aberdeen Standard Investments.
Hedge Funds Bought the Dip as Nasdaq Tumbled into a Correction
Brief: Hedge funds stepped up buying of technology shares during the Nasdaq 100’s first correction since March, once again warming up to the industry after trimming stakes. Professional managers that make both bullish and bearish equity bets scooped up internet and software companies on Friday and Tuesday at the fastest rate in five months, according to data compiled by Goldman Sachs Group Inc.’s prime-brokerage unit. Meanwhile, hedge-fund clients at Morgan Stanley increased their exposure to growth and momentum stocks, styles dominated by tech companies, the firm’s data showed. Having taken a more neutral stance on tech as retail traders piled into the FAANG names and stay-at-home darlings like Zoom Video Communications Inc. and Peloton Interactive Inc., hedge funds took advantage of the Nasdaq 100’s three-day, 11% slump that chopped valuations from levels last seen 20 years ago. “They’re just riding the wave and believe that with interest rates low and inflation non-existent and with the Fed saying, ‘We’ll let it run a little hot,’ there’s more room to run,” said Chris Gaffney, president of world markets at TIAA Bank. “Is it a bubble and do we continue to inflate that bubble? I think that it can continue to inflate.”
New York Office Glut Signals Market Downturn as COVID Bites
Brief: New York is facing a glut of workspace as fear of COVID-19 has reduced the daily usage of office buildings to almost nothing, a devastating sign for a city already reeling from the highest unemployment rate among the largest U.S. cities. Manhattan’s density and sea of skyscrapers together hamper a return to the office on the island and that is unlikely to change until a vaccine allows the subway and elevators in office towers to run at full capacity. Just 8% of employees have returned to Manhattan offices as of mid-August, the Partnership for New York City, a non-profit of nearly 300 chief executives, found in a survey of major city employers. The real estate industry is the most aggressive in returning, with 53% already back, the partnership said. “The economy and people’s sense of their health go in lock step,” said Michael Cohen, president of the tri-state area at brokerage Colliers International Group Inc (CIGI.TO). “Until people feel safe enough to go back to the office, you can stand on one leg and spit nickels – they’re not going to revive this economy,” he said.
‘Exceptionally Challenging’: How Top CEOs Are Confronting Covid-19
Brief: It’s been a tough year for executives across Europe, the Middle East, and Asia — especially for those in the healthcare sector. “To be completely honest, throughout the past six months most decisions have been exceptionally challenging,” said Dr. Ahmed Ezzeldin Mahmoud Abdelaal, chief executive of Cleopatra Hospitals Group, which operates six hospitals in the Cairo area in Egypt. In May, Dr. Ezzeldin was at the helm when the group converted two of its facilities into Covid-19 treatment and isolation centers. “The transition had to take place in a very short time frame and there was no room for error,” said Dr. Ezzeldin, who has been voted the No. 2 healthcare CEO in Institutional Investor’s 2020 Emerging EMEA Executive Team. First place in the healthcare sector went to MLP Care chief executive Muharrem Usta, who leads Turkey’s largest healthcare provider. Usta said the safety of his staff was a top priority at MLP, which has 30 hospitals in 16 Turkish cities and has been involved in the treatment and diagnosis of patients with Covid-19, as well as public health messaging.
Goldman Sachs Sees Double-Digit Returns in Emerging Junk Market
Brief: Analysts at Goldman Sachs have forecast double-digit returns on high yield - also known as junk - emerging market bonds over next 12 months if the world gets over its coronavirus worries. “We continue to think EM HY sovereigns offer the best risk-adjusted total return opportunity: our 12m target of ~600bp for EM HY spreads (from ~730bp currently) implies double-digit total return potential,” Goldman said in a note on Thursday. The investment bank also forecast emerging market governments would issue at least $150 billion of dollar-denominated debt this year as they look to tackle the crisis, though it could be even higher.
JPMorgan Dismisses Employees for Misuse of COVID-19 Relief Funds
Brief: JPMorgan Chase & Co (JPM.N) on Wednesday dismissed several employees who allegedly misused funds that were supposed to help businesses dealing with the COVID-19 pandemic, the Financial Times reported, citing a person familiar with the situation. Individuals who fraudulently obtained loans under the Economic Injury Disaster Loan (EIDL) program had not been acting as JPMorgan employees, the person said. However, breaking the law was a violation of the bank’s code of conduct and some people were fired as a result of their improper EIDL applications, the person added. The lender found that some of its own staff had deposited suspicious EIDL funds in their Chase checking accounts, according to the report. Those cases accounted for a “very small” percentage of the total suspicious activity uncovered by JPMorgan, the person said. Reuters reported on Tuesday that the lender was probing employees who may have been involved in the misuse of funds intended for COVID-19 relief, citing an internal memo.
