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Our briefing for Tuesday January 12, 2021:
Jan 12, 2021 3:51:18 PM
- In the United States, the federal government is changing their approach in the way they allocate coronavirus vaccine doses. According to Health and Human Services Secretary Alex Azar it will now be based on how quickly states can administer shots and the size of their elderly population. States will be given two weeks to prepare for the change and should have enough time to improve their data reporting to the government and ensure all vaccinations are being “properly” documented, according to Azar. The health secretary also pointed blame to the states saying they aren’t reporting vaccinations in a timely manner and adding vaccine doses are sitting in freezers in hospitals. The timing of this change in approach is also notable with the Biden administration set to take office in just over a week.
- Canada’s most populous province has issued a stay-at-home order in another attempt to get their latest COVID-19 outbreak under control. Citing a health care system on the verge of being overwhelmed, Ontario Premier Doug Ford made the move on Tuesday, which will come into effect as of Thursday at 12:01 AM. The stay-at-home order will require everyone in the province to remain at home with exceptions for essential purposes, such as going to the grocery store or pharmacy, accessing health care services, exercise, or essential work. “Our province is in crisis. The system is on the brink of collapse. It’s on the brink of being overwhelmed,” said Ford.
- In the United Kingdom, Prime Minister Boris Johnson left some of his government ministers scrambling for answers over a bike ride on the weekend. The Evening Standard first reported Prime Minister Johnson riding his bike, along with his security officers at the Olympic Park in East London – 7 miles away from his official residence. Government guidelines said outdoor exercise should be limited and people should stay in their local area. With Prime Minister Johnson’s team unable to supply a statement explaining his trip, Health Minister Matt Hancock had to go into damage control saying a 7 mile outing for some exercise is allowed. “It is OK to go for a long walk or cycle ride, but stay local,” said Hancock.
- In Japan, the President of the Tokyo Olympic organizing committee says it is “absolutely impossible” to postpone the Games again after doing so last summer. Organizers and the International Olympic Committee previously stated event plans would be detailed in the spring. Polls in the last few days show Japanese citizens clearly don’t share the President of the organizing committee’s eagerness to see the Games through. Just over 80% of people surveyed believe the Olympics should be canceled, postponed, or believe they won’t take place as COVID-19 cases continue to surge. The President of the organizing committee’s “absolutely impossible” comment stems from the fact that many officials who have a played a key role in the preparations are loaned from other organizations.
- Bloomberg is reporting China’s Sinovac Biotech vaccine is showing dueling data from trials performed in Brazil, Turkey and Indonesia. The main issue is that trials performed in Indonesia and Turkey were too small for any meaningful data. For instance, Indonesia’s data showed a 65% efficacy while Turkey showed 91.25% in its local trial for the same vaccine. Brazil, where Sinovac had it largest trial with more than 13,000 people, also showed dueling efficacy rates. The Butantan Institute, the company’s local partner said last week trials showed the vaccine was 78% effective in preventing mild cases of COVID-19 and 100% effective against moderate and severe infections. All of this news though isn’t stopping Indonesia who plan to be the most aggressive of the three countries mentioned with issuing the vaccine – having their President roll up his sleeve on Wednesday to receive his first dose.
- New Zealand will be issuing new border crackdowns in the coming days to the limit the exposure of new COVID-19 cases, especially the variant strains that have surfaced in recent weeks. New Zealanders will need to show a negative COVID-19 test 72 hours before boarding a plane to the country. This is partnered with previously announced rules that as of Saturday arrivals from the United States and United Kingdom would also need a pre-departure negative test. Finally, as of Monday, once arriving in New Zealand people will need to take an extra COVID-19 test within 24 hours of landing. The existing Day 3 and Day 12 tests will continue as normal.
Covid-19 – Due Diligence And Asset Management
Private Equity in 2020: Not as Bad as You Thought
Brief: U.S. private equity firms raised “healthy” amounts of money from investors after the pandemic began last year, particularly for technology deals, even as most firms also poured cash into struggling portfolio companies, according to PitchBook’s 2020 review of the industry. Private equity firms quickly figured out how to negotiate the extremes of 2020, cannily shifting from the frozen leveraged buyout business to buying minority stakes and putting money to work in public companies, according to the report, expected to be released Tuesday. After an initial downturn early in the year, exits also rebounded as private equity firms turned to special purpose acquisition companies (SPACs), traditional listings, and other sponsors to take holdings off their hands, reported PitchBook. “What a rollercoaster 2020 was,” said Wylie Fernyhough, lead private equity analyst at PitchBook, in an interview with Institutional Investor. “Whether it was LPs having to pause allocations, or figuring out how to do due diligence online. Private equity really showed its resilience in 2020 with all these headwinds thrown at it.”
Chris Rokos’s Macro Hedge Fund Surges 44% in Best Year Ever
Brief: Chris Rokos’s hedge fund racked up its best year since the billionaire investor started his own macro trading firm more than five years ago, joining a string of peers who posted record gains in 2020. His $14.5 billion macro fund soared 44% as the pandemic upended markets, according to people with knowledge of the matter who asked not to be identified because the information is private. The London-based fund’s previous best year was in 2016, when it rose 20%. Macro hedge funds, which trade across asset classes to capitalize on broad economic trends, ended last year up 7% on average, according to data compiled by Bloomberg. Rokos’s returns coincide with a structural overhaul at his firm in late 2019, which allowed for bigger bets as portfolios previously run by individual traders were merged into a single pool of money. A spokesman for London-based Rokos Capital Management, which started in 2015, declined to comment. Rokos joins a slew of macro fund managers that posted double-digit gains last year as market turbulence created opportunities for the firms. Brevan Howard Asset Management, Rokos’s former employer, made 27% in its master fund, the best year since 2003, while its U.S. Rates Opportunities Fund soared nearly 99%. EDL Capital and Glen Point Capital gained 23% and 14%, respectively.
Google Launches $3 Million Fund to Fight Vaccine Misinformation
Brief: The Google News Initiative on Tuesday launched a global open fund to fight misinformation about COVID-19 vaccines, worth up to $3 million. The “COVID-19 Vaccine Counter Misinformation Open Fund” aims to support journalistic efforts to effectively fact-check misinformation about the COVID-19 immunisation process, the initiative belonging to Alphabet’s Google said in a blog post. “While the COVID-19 infodemic has been global in nature, misinformation has also been used to target specific populations,” it added. “Some of the available research also suggests that the audiences coming across misinformation and those seeking fact checks don’t necessarily overlap.” The fund will accept projects looking to expand the audience of fact-checks, particularly to groups disproportionately hit by misinformation. Applications will be reviewed by team of 14 jurors from across the academic, media, medical and non-profit sectors, as well as representatives from the World Health Organisation. In December, the Google News Initiative pledged $1.5 million to fund a COVID-19 vaccine media hub to support fact-checking research.
San Francisco Office Vacancy Rate Eclipses Financial-Crisis High
Brief: San Francisco’s office market is being hit so hard by the pandemic that, by some measures, it’s worse than the global financial crisis or dot-com collapse. The city’s office-vacancy rate reached 16.7% at the end of 2020, up 11 percentage points from a year prior, according to a report from commercial real estate brokerage Cushman & Wakefield. That’s a higher level than in the aftermath of the 2008 recession. The vacancy rate is being driven by a record amount of sublease space, which has surpassed the worst of the dot-com bust two decades ago, said Robert Sammons, senior director of research at Cushman in San Francisco. In addition, new leasing has effectively been on pause and hit the lowest annual level in 2020 since at least the early 1990s. Companies have been reevaluating their office needs after months of pandemic lockdowns showed them that it was possible to function with employees working from home. That’s caused a spike in vacancies, especially in cities like New York and San Francisco, where the cost of renting space is higher. The technology companies that dominate the Bay Area, in particular, have embraced remote work. Pinterest Inc. last year paid almost $90 million to cancel a large San Francisco office lease, saying it is rethinking where employees are based.
For Many, COVID-19 has Changed the World of Work for Good
Brief: The upheaval in global labour markets triggered by the coronavirus pandemic will transform the working lives of millions of employees for good, policymakers and business leaders told a Reuters virtual forum on Tuesday. Nearly a year after governments first imposed lockdowns to contain the virus, there is a growing consensus that more staff will in future be hired remotely, work from home and have an entirely different set of expectations of their managers. Yet such changes are also likely to be the preserve of white-collar workers, with new labour market entrants and the less well-educated set to face post-COVID-19 economies where most jobs growth is in low-wage sectors. “I think it would be a fallacy to think we will go back to where we were before,” Philippines central bank Governor Benjamin Diokno told the Reuters Next forum. “We were already geared towards the digital, contactless, industries ... That will define the new normal.” The pandemic, which according to a Reuters tally has so far infected at least 90.5 million people and killed around 1.9 million worldwide, has up-ended industries and workers across the globe.
How European Fund Managers Avoided a Disastrous 2020
Brief: It could have been a disastrous year for the European fund management industry, but policymakers rode to its rescue. Huge fiscal and monetary stimulus packages supported markets and continued to push investors away from cash. In the end, the industry ended the year close to where it began, but this headline figure masked considerable variation underneath. The European fund industry had €10.03trn (£9trn), excluding money market funds, as at 30 November 2020 according to Morningstar data, an organic growth rate of 3.2%. In aggregate, fixed income saw the strongest inflows, at €110bn, in spite of continued low yields. Equity funds saw inflows of €91.7bn, while allocation funds saw inflows of €34.8bn. The notable weak spot was in alternatives, which saw €35.5bn exit the sector – a combination of the weakness of the property sector and a growing disillusionment with the poor performance and high fees from hedge fund strategies. Commodities had a good year, drawing in an extra net €1.6bn of assets. However, this overall picture masked huge shifts in the popularity of different asset classes through the year as economic news and investor sentiment ebbed and flowed. In November, for example, equity funds were firmly in the ascendancy as vaccine news emerged and some stability returned to US politics.
