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Our briefing for Tuesday February 23, 2021:
Feb 23, 2021 4:37:19 PM
- In the United States, drug maker Johnson & Johnson told a Congressional hearing on Tuesday that they could provide 20 million doses of its single-shot vaccine to America by the end of March, assuming it gets the green light from federal regulators. U.S. health regulators are still reviewing the safety and effectiveness of the shot with a decision to allow its emergency use expected later this week. Once approved, it would be the first in America to require only a single dose. White House officials cautioned last week that initial supplies of the Johnson & Johnson vaccine would be limited upon its initial rollout, so it is interesting what changed in the matter of a week.
- In Canada, Prime Minister Justin Trudeau and United States President Joe Biden are holding their first face-to-face virtual meeting on Tuesday. The two leaders were expected to discuss and unveil their “partnership roadmap” for the future of the Canadian-U.S. relationship, which will be how the two intend to fight COVID-19 together while rebuilding their economies. Prime Minister Trudeau and President Biden are also expected to discuss joint strategies on climate change, advance diversity, improve national security measures and build international alliances. The land border between the two countries has been closed to non-essential travel due to the pandemic since last March with those regulations still in place until at least March 21st.
- Business leaders from the hospitality and tourism industries in the United Kingdom are accusing Prime Minster Boris Johnson of ignoring the “clear and present danger” to struggling city centers such as London, Manchester and Birmingham. Prime Minister Johnson in the past has predicted the major cities would “bounce back” once the pandemic is over, but Kate Nicholls, chief executive of UK Hospitality, has called for a plan to repair UK’s great cities: “Without this there is a real and present danger that London’s Central Activity Zone will be hollowed out and our economic and social capital diminished. London and our major cities will not simply bounce back.”
- Reuters is reporting COVID-19 drug maker AstraZeneca is expected to deliver less than half the vaccines it was contracted to supply the European Union in the second quarter. An EU official directly involved in talks with AstraZeneca told them during internal meetings it would deliver less than 90 million doses in the second quarter when the contract committed to 180 million doses. The expected shortfall, which was not previously reported, could affect the EU’s ability to meet its target of vaccinating 70% of adults by the summer.
- The United Arab Emirates (UAE) is looking to use the Dubai International Airport as a center of its growing vaccine supply network. The Associated Press is reporting the key transit hub was used previously for the global shipment of pharmaceuticals but has now already delivered millions of coronavirus vaccine doses to Latin America, South Africa and Egypt from major manufacturing hubs in India and elsewhere. The UAE’s push comes as vaccine diplomacy gains popularity around the world with China performing similar work on the vaccine front to developing nations. For instance, UAE, seeking to deepen ties with Egypt, a key Arab allay, has delivered free Sinopharm COVID-19 vaccine shipments.
- Brazil has fully approved the Pfizer/BioNTech coronavirus vaccine on Tuesday. The only problem is through a dispute over a supply deal, the country has no doses to start an immunization program. President Jair Bolsonaro has criticized the terms of the deal proposed by Pfizer, saying it was overly onerous as it exempts the drug maker from potential liability for unforeseen problems. Pfizer’s defence is that numerous other countries, including Brazil’s Latin American neighbours have already agreed to their terms. The Pfizer inoculation was the first coronavirus vaccine to receive full approval in Brazil, regulator Anivsa said. Vaccines developed by AstraZeneca and China’s Sinovac have only been approved for emergency use.
Covid-19 – Due Diligence And Asset Management
Blackstone Seeks About $15 Billion for New Secondaries Funds
Brief : Blackstone Group Inc. is seeking to raise about $15 billion for two new investment funds in the fast-growing private equity secondaries market. Blackstone Strategic Partners, a $38 billion unit focused on investing in existing private equity portfolios, aims to raise $12 billion to $13 billion for a ninth flagship fund, which would be its biggest ever, and a smaller vehicle of at least $2 billion to focus on so-called general partner-led secondary deals, according to people familiar with the plans. The firm’s secondaries business grew roughly eightfold over the past six years and should continue to expand at a “very rapid rate,” Blackstone President Jonathan Gray said on an earnings call last month, when he discussed plans for further secondaries funds without elaborating on fundraising targets. The value of secondaries transactions more than tripled over six years to $88 billion in 2019 and totaled $60 billion last year, data from Greenhill & Co. show, driven by private equity investors seeking to offload their stakes early in otherwise illiquid funds. The structure has evolved in recent decades as a solution for institutional investors to rebalance their portfolios and draw on cash when needed.
Financial Services Firms That Invested in Emerging Technologies Profited in 2020, says new Broadridge Study
Brief: Over half of financial services firms worldwide plan to increase their spending over the next two years on next-generation technologies such as AI, blockchain, the cloud and digital, according to a new study surveying 1,000 global C-suite executives and their direct reports, by Broadridge Financial Solutions. Broadridge’s Next-Gen Technology Adoption Survey indicates that firms also reported a range of strategic benefits from prior investments in emerging technologies, including accelerated time to market, better decision-making and improved risk management. Broadridge developed The ABCDs of Innovation Maturity Framework for the study to categorise firms as either a Beginner, Implementer, Advancer or Leader in next-gen technology adoption. Next-gen technology maturity was based on progress made in implementing these technologies and reported effectiveness in driving business performance. Over the next two years, firms worldwide plan to increase the share of their overall IT budgets spent on next-gen technologies from 11.8 per cent to 15.7 per cent on average, an increase of 33 per cent.
Powell Tempers Wall Street Yield Jitters, Stocks Cut Losses
Brief: The U.S. economic recovery remains “uneven and far from complete” and it will be “some time” before the Federal Reserve considers changing policies it adopted to help the country back to full employment, Fed Chair Jerome Powell said on Tuesday. Powell began is testimony before the Senate Banking Committee as Wall Street looked set for its sixth straight day of declines from last week’s record highs, although losses were pared after the release of his comments. Fears about rising U.S. Treasury yields hit the technology sector particularly hard. The U.S. central bank’s interest rate cuts and purchases of $120 billion in monthly government bonds “have materially eased financial conditions and are providing substantial support to the economy,” Powell said in prepared remarks.
Dividend Outlook Remains “Extremely Uncertain” After Year of Slashed Pay-Outs
Brief: Global dividends fell by 12 per cent in 2020 to USD1.3 trillion in the full year of 2020, after cuts and cancellations reached USD220 billion between April and December. Companies in the UK and Europe made up more than half the value of cuts and cancellations combined, according to a new report from UK-based asset manager Janus Henderson. The UK saw the largest total fall in dividends, with total pay-outs falling by 41 per cent to an annual sum of USD62.5 billion. This compared to falls of 32 per cent in the rest of Europe, 18 per cent in Asia Pacific ex-Japan, and 10 per cent in emerging markets. In 2020, London-listed Royal Dutch Shell cut its dividend for the first time since 1945 due to a collapse in oil prices, and major banks Barclays, HSBC, Lloyds, Royal Bank of Scotland and Standard Chartered all halted payments.
Pandemic Revealed Benefits of Stock-Picking
Brief: Despite the pandemic, 2020 turned out to be a good year for equities. When markets are volatile, there are lots of opportunities to pick up bargains that can enhance returns. Manulife Investment Management’s mutual fund family led in investment performance for the year ended Dec. 31, 2020, with 87.9% of long-term assets under management (AUM) held in funds ranked in the first or second quartile by Morningstar Canada. (All companies are Toronto-based unless otherwise noted.) “Our [portfolio] managers deployed some cash in March to buy really good names at discounted prices,” said Sanjiv Juthani, head of product management at Manulife. The firm focuses on bottom-up stock-picking and “even with the potential for short-term market pain, our managers don’t make macroeconomic bets,” Juthani said. When Covid-19 hit, no one knew what the markets would do. “Equities could have gone down by 50%, up by 50% or anywhere in between,” said Paul Moroz, chief investment officer at Calgary-based Mawer Investment Management Ltd., which had 80.4% of its AUM in funds with above-average returns.
World Bank’s Pandemic Fight to Bring New ESG Issuance Record
Brief: International Finance Corp. is on track to sell a record amount of environmental and social bonds as part of its global response to the pandemic. The World Bank Group’s arm for the private sector expects its sustainable bond sales this year will likely surpass the previous high of $2.3 billion it set in 2017, according to John Gandolfo, vice president and treasurer at IFC. Issuance will come in different currencies, and proceeds will go to clients globally, including small businesses, low-income households and poor and fragile nations, he said. “IFC is certainly focused on, first and foremost, its response to the pandemic and saving jobs, lives, livelihoods and also building a path to a resilient recovery,” said Gandolfo in an interview. It raised about $2.2 billion in debt tied to environment, social and governance last year, including a record $1.9 billion in social bonds. One key area of focus this year is vaccine campaigns, especially in emerging markets where distribution has been slow compared to developed nations, he said. IFC said it has already raised $440 million in social bonds across five different currencies in its current fiscal year, which runs July 1 to June 30. That included its first bond swapped from fixed-rate to the new Secured Overnight Financing Rate benchmark interest rate. The organization is also looking to issue social bonds in additional currencies to reach more investors.
