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Our briefing for Thursday September 24, 2020:
Sep 24, 2020 4:13:19 PM
- Two days after hitting 200,000 deaths from the COVID-19 pandemic the United States is seeing major upticks in cases in more than 20 states. The University of Washington's Institute for Health Metrics and Evaluation (IHME) newest calculations suggest that the country could lose another 150,000 people to the virus in the next three months as flu season quickly approaches. Midwestern states are seeing the majority of increases while infection numbers have gone down in only 7 states over the past week. Dr. Robert Redfield, director of the Centers for Disease Control and Prevention said that “the preliminary results on the first-round show that a majority of our nation – more than 90% of the population – remains susceptible.” Although the vaccine created by Johnson & Johnson is in Phase 3 trials, experts suggest that it likely won’t be available to the public until spring 2021 at the earliest.
- The government in the Canadian province of Ontario is in the process of unveiling their fall pandemic preparedness plan to avoid forcing another lockdown if cases in the province skyrocket in the coming months. The documents suggest that the province is looking to isolate individual areas as opposed to going through with a large-scale lockdown similar to that seen at the beginning of the pandemic in March. With 386 new cases on Wednesday, Ontario is seeing its highest number of new cases in four months, causing lawmakers to rethink their reopening plans. According to the preparedness documents, individual businesses, high-traffic area’s or high-risk events will be targeted, while environments deemed safe will continue to operate. The plan is scheduled to cost roughly $2.2billion with most of the funds being allocated to increased testing, contact tracing and health care operations.
- The UK Department for Business, Energy, and Industrial Strategy (BEIS) is exploring the possibility of deliberately infecting volunteers with the novel coronavirus COVID-19 in order to better understand the effectiveness of a vaccine. In the aptly named “challenge trials,” volunteers would be given a vaccine and then exposed to the virus to document whether the vaccine proves effective in combating illness. The World Health Organization has said that these challenge trials prove to be much quicker than conventional testing and have seen positive results in previous attempts to cure smallpox, malaria and other infectious diseases. Despite ethical concerns, the subjects in the trials would only be able to participate under specific conditions. The study would only select “young and healthy adults as participants, starting with low doses, ensuring public engagement, and providing high-quality care and close monitoring.”
- Spanish Prime Minister Pedro Sanchez has refused to return the country to a nation-wide lockdown. His decision has drawn the attention of a leading Spanish epidemiologist and former director of public health for Madrid, Juan Martinez. Martinez says that country “deserves” to put back in a strict lockdown and that the measures would “probably” be the only way to slow the recent surge of infections the country is currently experiencing. The city of Madrid and the island of Ibiza are two of the hardest-hit areas in Spain and remain primarily in a lockdown state. Residents are only allowed to leave their houses for emergencies or essentials with the army now being brought in to enforce regulations. In an interview on national television, Martinez said that a national lockdown should be a logical decision and “what should concern us is the number of people who are seriously ill and dying.”
- The Japanese government will greatly increase the number of people allowed to enter the country come October. Starting in early September a small number of Japanese citizens were allowed to re-enter the country after closing the borders earlier in the year. Businesspeople and students from abroad have been able to return home as the country is becoming increasingly desperate to kickstart the economy. The borders will remain closed to tourists but may make exceptions for foreign students without government grants, people from low-risk countries and those coming for cultural activities, without giving specifics on what events may be given priority. The government has ramped up its testing at major Japanese airports in Tokyo and Osaka and intends to roll out more vigorous testing at all airports as the border reopens.
Covid-19 – Due Diligence And Asset Management
Early Pandemic Bets Paid Off Big for Handful of Asia Hedge Funds
Brief: A few Asia-based hedge funds benefited from early insight into the pandemic’s impact to post outsized gains this year, while regional peers are on track to outperform global funds for the eighth time in 12 years. Funds overseen by Anatole Investment Management Ltd., Aspex Management (HK) Ltd., CloudAlpha Capital Management Ltd. and Franchise Capital returned more than 50% this year to the end of August, making money on bets ranging from electric cars to e-commerce, while some shorted hard-hit tourism sectors. Anatole’s $2 billion flagship fund returned more than 60% in the first eight months, said a person with knowledge of the matter. Aspex, which oversees more than $3 billion, gained 54%, said another person. CloudAlpha’s global technology fund surged 135% in the same period, and Franchise’s $1 billion fund jumped 133%, according to investor newsletters seen by Bloomberg News.
COVID-19 Private Sector Global Facility announced at SDG Business Forum
Brief: The United Nations Development Programme (UNDP), the United Nations Global Compact (UN Global Compact) and the International Chamber of Commerce (ICC) have established the COVID-19 Private Sector Global Facility, a global initiative and collaboration bringing together public and private sector partners to help local communities recover better from the pandemic. Deutsche Post DHL Group, Microsoft Corp. and the PwC network (“PwC”) have already joined the COVID-19 Private Sector Global Facility, and the initiative is open for other like-minded private sector organizations that want to contribute. The Global Facility is a response to corporate calls to action for private sector leaders and governments to work together to address the negative impacts of the coronavirus pandemic. The initiative has been established to better coordinate their responses, helping to ensure that immediate stimulus efforts flow into the real economy. The Global Facility will operate at both the global and national levels. It aims to co-create solutions that are tailored to the phase of the COVID-19 pandemic in a given area and the specificities of the local private sector and government context.
HSBC, Goldman Sachs and PwC delay return to offices in England
Brief: HSBC, Goldman Sachs and PwC have postponed plans to bring staff back to their offices in England after the government’s U-turn on its back-to-work drive. A memo sent to staff at HSBC informed them that the investment bank, based in London’s Canary Wharf financial district, was pausing its planned return of “phase one” teams to the office. The bank said its staff working in branches and those supporting customers in call centres would continue to go into work, although the majority of office-based staff would work from home. Goldman Sachs, which brought about a third of its 6,000 UK workers back into its London building from mid-June, also postponed plans to expand its back-to-work operation, which involved bringing back staff on a rotating basis.
Insurers' hedge fund investments may face chop after dismal pandemic performance
Brief: Having complained for years about hedge funds’ high fees and lacklustre performance, insurance firms may be preparing to cut allocations to the sector after its poor performance during recent market upheaval left many of them nursing losses. That would be a problem for hedge funds, as insurance companies are huge investors, managing around $20 trillion of assets globally. It would also be a challenge for insurers, which have been hoping hedge funds would deliver market-beating returns to help them meet billions of dollars in pandemic-related payouts. One of the primary objectives of hedge funds is to preserve clients’ capital during market downturns. But the industry mostly failed to do that in the first six months of 2020, losing an average of 3.5%, according to Hedge Fund Research (HFR).
The world’s largest hedge fund is operating out of tents in a Connecticut forest
Brief: Dozens of employees at the world’s largest hedge fund have been working from tents in the Connecticut woods for months, Fortune magazine reports. Bridgewater Associates, which manages roughly $140 billion in assets, attempted to reopen its offices this spring but found that constant mask-wearing and other safety protocols added a new layer of stress. So roughly 50 employees moved outdoors, setting up shop in a rustic pine grove outside the firm’s Westport, Conn., headquarters. The open-sided tents were equipped with fast WiFi, furniture spaced at socially distanced intervals and noise-canceling software that drowns out the sound of birds during video calls, according to Fortune. Employees were given weather-resistant computer screens and webcams after nature began taking a toll on their electronics, and access to kayaks for occasional breaks. The makeshift outdoor office had to briefly shut down in August when a hurricane approached New England and will probably be packed away by the end of October, when sitting outside in coats and hats ceases to be comfortable.
Investors are returning to hedge funds, as industry enjoys positive capital flows for second month in a row
Brief: Investors continued to add more money to hedge funds last month – after pouring more than USD9 billion into the industry in July – as the sector recovers from a bruising four-month run of withdrawals and allocators drift back to the sector, new industry data shows. Altogether, hedge funds attracted some USD7.36 billion of positive inflows in August, according to eVestment, whose latest flows report highlighted an “impressive” breadth of allocations despite a reduced volume of asset movement compared to recent months. But it also warned of a “rocky” outlook, with investor sentiment hinging on how successfully hedge fund strategies of all stripes can seize on what it calls the “large” opportunity set ahead.
