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Our briefing for Tuesday August 11, 2020:
Aug 11, 2020 3:22:59 PM
- A recent report by Kaiser Health News (KHN) service and The Associated Press states that 49 state health officials in the United States have resigned, been fired, or retired since the beginning of the COVID-19 pandemic. Another high-profile ouster was made on Sunday in California as public health director, Dr. Sonia Angell was fired after a technical mishap caused the delay of over a 100,000 test results. In New York, Dr. Oxiris Barbot recently resigned over spats with the New York Police Department and the mayor’s office. Tom Frieden, former director of the Centers for Disease Control and Prevention has said "the overall tone toward public health in the U.S. is so hostile that it has kind of emboldened people to make these attacks.”
- Since April, non-medical masks have been mandatory when boarding a plane in Canada. A federal travel order now states that passengers flying on Canadian airlines must have medical proof that they are unable to wear a mask due to an underlying health condition. There will still be exceptions to the rule for young children and those who are unable to remove their masks without assistance. The change comes as previous flights were allowing passengers to go without a mask if they had “breathing problems unrelated to COVID-19.” The rule now states a mask is considered to be “any non-medical mask or face covering that is made of at least two layers of tightly woven material such as cotton or linen, is large enough to completely cover a person’s nose and mouth without gaping and can be secured to a person’s head with ties or ear loops.” Correction: In yesterday’s briefing an error was made stating that Canada had nearly 200,000 total cases of COVID-19, the actual total number of cases as of Tuesday is 120,000.
- In the United Kingdom, over 700,000 jobs have been lost since the beginning of the COVID-19 pandemic in March. The Office for National Statistics said Tuesday that workers most effected by the job losses were in the over 65, and under 24 age categories. In numbers not seen since the economic crisis of 2008-09, people receiving unemployment benefits, which includes those who lost the majority of their working hours, skyrocketed to 2.7 million in July. With the U.K. experiencing their worst period of economic growth in almost a century, and fears of Brexit turmoil still weighing on the minds of Britons, the economy will be top priority when separation negotiations are finalized at the end of the year.
- India has recorded at least 50,000 cases of the novel coronavirus since July 30th. This has prompted Prime Minister Narendra Modi to change his course of action. He suggested in a news conference on Tuesday that if India can control the surging virus in the countries 10 most populous states, then they will be able to overcome the virus for the whole of the country. The 10 states have accounted for over 80 per cent of the infections nationwide and over 45,000 deaths. Recently, multiple high-profile Indian politicians have contracted the virus including former President Pranab Mukherjee, who had to be placed on a ventilator after undergoing surgery.
- Russia became the first country to officially approve a coronavirus vaccine on Tuesday. The vaccine affectionately named Sputnik V, a reference to the first satellite launched by the Soviet Union, has come under criticism by scientists world-wide who contend that the process in developing it was rushed and crucial steps had been missed. According to Russian President Valdimir Putin, one of his daughters had already been inoculated with the vaccine and had a rise in temperature but was “feeling well.” The Kremlin and the Russian Direct Investment Fund have suggested that over 20 countries are currently attempting to order the vaccine, along with a handful of American companies.
Covid-19 – Due Diligence And Asset Management
Family office investment and allocation to venture capital on the rise
Brief: SVB Financial Group (NASDAQ: SIVB), the parent company of Silicon Valley Bank, today released the "Family Offices Investing in Venture Capital - Global Trends & Insights Report" in partnership with Campden Wealth Research. The report looks at family offices' investment levels, performance, expectations, barriers toward venture investments, and their expectations for how the market will evolve amid COVID-19. "In the last decade, family offices have emerged as a significant source of capital fueling innovation globally. They are increasingly more open and active in venture, particularly in early-stage companies through direct investments and funds," said John China, President of SVB Capital. "Our research with Campden Wealth shows that family offices are seeing favorable returns in the asset class, and they are acting as strategic advisors and champions to the startups they invest in. We expect to see more family office investors in the venture ecosystem, collaborating and syndicating with like-minded investors and providing a differentiated pool of capital to founders." "We are facing uncertain times due to COVID-19 and an encroaching global recession. In response, family offices are showing their strength as nimble, responsive, and patient investors, often with cash reserves to carry them through turbulent times," said Dr. Rebecca Gooch, Director of Research at Campden Wealth.
Crisis management: Credit hedge fund Palmerston’s Jesse McCormick discusses Covid-19’s impact on business functions
Brief: From the historic stock market sell-off and volatility surge that wreaked havoc on investment portfolios during March to the continued working-from-home practices which have thrown up various operational obstacles spanning technology, cybersecurity and infrastructure, the coronavirus crisis has upended all corners of the hedge fund industry. For hedge fund chief operating officers, the pandemic has brought its own unique set of challenges. Managers of all sizes and strategies implemented extensive business contingency plans for home working in order to continue operations. But as firms slowly begin to return to the office following more than four months of lockdown, the concept of a “new normal” continues to be somewhat vague and undefined.
Global banks lost nearly US$1 trillion in market value in the pandemic's first wave — and there's another one coming
Brief: During the depths of the coronavirus crisis in Europe in late March, Sergio Ermotti remembers sitting in his home study in Lugano, Switzerland, reflecting on the latest financial meltdown to engulf his career as a banker. “If I go through my last eight years, we had a lot of mini-earthquakes, but never of the magnitude of what we are seeing now,” the 60-year-old UBS Group AG chief executive says. “This is a crisis that is driven by fear in a different way…this time it’s not just about people losing their assets or savings, it’s about their life, it’s about their families. It’s so profound, so different.” Switzerland’s largest bank is weathering the crisis relatively well, considering its share price is down only 10 per cent this year, a more modest fall than any other global lender apart from Wall Street’s Morgan Stanley. This is no accident. Both have built wealth management arms that boast more than US$2 trillion of client assets, generating consistent fees from the wealthy and super-rich desperate for advice on how to trade the pandemic.
Private Equity in the aftermath of Covid-19
Brief: While the amount raised and invested by private equity funds capped six years of unprecedented growth in 2019, the health and financial crisis brought about by Covid-19 has put paid to the idea that the good times might continue into the new decade. Certain trends – such as increasingly picky LPs and the incorporation of ESG, P2P, buy and build and extension of share ownership – should intensify in the aftermath of the pandemic, while others – the surge in the value of multiples, jumbo funds, increase in leverage – are likely to fade or disappear completely. It might seem like an age ago, but back before the coronavirus – and its attendant consequences for the world of investment – hit, the PE industry seemed to be in decent shape. But while capital amassed remained at a high level, a plateau had, in fact, been reached and the industry was almost certainly entering the end of a cycle.
Healthcare hedge fund Rhenman eyes “intense” Covid-19 vaccine activity
Brief: Rhenman & Partners Asset Management, a Stockholm-based hedge fund firm which invests in global healthcare stocks, is optimistic about a post-US election market bounce, and points to “intense activity” among vaccine developers working on a treatment for Covid-19. The firm’s Rhenman Healthcare Equity Long/Short Fund – which trades a range of small, medium and large pharmaceuticals, biotechnology, medical technology and service company stocks – was down in July. But Henrik Rhenman, founding partner and chief investment officer, believes the traditional uncertainty that typically looms over the healthcare sector ahead of every US presidential election will give way to a strong uptick in November and December. Rhenman Healthcare Equity Long/Short slipped 3.7 per cent in July in its euro-denominated class and is down roughly 0.5 per cent for the year so far, while its dollar share class was up 1.1 per cent last month.
Countries beating the coronavirus are getting ‘rewarded’ in the stock market, ETF analysts say
Brief: Trading the Covid-19 curve can prove challenging. With global case counts still rising, investors should consider buying into countries that have gotten a better handle on the virus than others, ETF Trends CEO Tom Lydon told CNBC’s “ETF Edge” on Monday. “Take Europe,” Lydon said. “Areas like Italy are not doing well with the coronavirus and their markets aren’t doing well. [In] contrast, northern Europe, the Nordic regions, are actually doing really well.” The iShares MSCI Denmark ETF (EDEN), for one, is up nearly 18% year to date. That fund is heavily weighted toward health-care and industrial stocks, with pharmaceutical play Novo Nordisk accounting for more than 18% of the portfolio.
