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Our briefing for Tuesday November 10, 2020:
Nov 10, 2020 3:23:05 PM
- In the United States, the initial news of the apparent effectiveness of Pfizer’s COVID-19 vaccine was well received throughout the country, but according to a report from CNN, some state health officials are worried about the prospect of the inoculation becoming widely available soon. The report acknowledges the vaccine’s handling requirements are stringent – it has to be stored at minus-75 degrees Celsius (minus-103 Fahrenheit), more than 50 degrees Celsius lower than any other vaccine currently available on the American market. Health officials admit the required conditions for the potential Pfizer vaccine are far colder than any freezers currently kept in doctors’ offices, pharmacies and public health clinics. “It would be hard to with a straight face say, ‘Oh, we’re all set’. This equals a challenge I don’t think we’ve ever seen before,” said Christine Finley, Vermont’s immunization program manager.
- Speaking at a news conference on Tuesday and seeing COVID-19 spikes across Canada, Prime Minister Justin Trudeau called on the country’s premiers and mayors to “do the right thing” and impose restrictions where needed. Ontario, which recently eased restrictions in some areas through their new colour coding system reported a record 1,388 new cases on Tuesday. On Monday, a group of physicians in Alberta sent Premier Jason Kenney and his chief medical officer of health a letter imploring for more to be done to halt the curve of the virus. Manitoba made their move as starting this Thursday the entire province will move into the red zone, or critical level, which means a ban of social gatherings of any kind and the closure of non-essential businesses.
- In a ministerial statement to the House of Commons on Tuesday, United Kingdom Health Secretary Matt Hancock said the country is “one step closer” to a mass COVID-19 vaccine roll out. Hancock said he has given word to the country’s National Health Service (NHS) to be tasked with being ready from any date starting December 1st. Earlier in the day, Hancock appeared on the BBC and said it was his “central expectation” that as long as the Pfizer BioNTech vaccine passes all its regulatory checks, Britons could expect to receive vaccinations in the first part of 2021.
- In Russia, the mayor of the capital city of Moscow has introduced tighter quarantine measures as COVID-19 cases continue to rise in the region. Starting this Friday and lasting until mid-January, bars, restaurants and cafes will be subject to a 11 PM curfew, while colleges and universities will work remotely. Theatres and cinemas will be limited to 25% capacity and all spectator events are to be suspended. Not wanting to be outdone on the vaccine front, Russian President Vladimir Putin also announced that the country would be registering its third COVID-19 vaccine. According to Russian news agencies via President Putin, “all” Russian vaccines were effective, although the leader failed to give further details about the latest vaccine or its registration.
- Citing an “adverse, serious event”, Brazil has halted the clinical trials of a potential Chinese vaccine called CoronaVac. Beijing based Sinovac was carrying out the phase three trial jointly with Sao Paulo’s Butantan Institute, a biomedical research centre. The National Health Surveillance Agency or ANVISA, a Brazilian regulatory agency made the statement on Monday, much to the surprise of the parties producing the vaccine. Sao Paulo’s government said in a statement it “regrets being informed by the press and not directly by Anvisa, as normally occurs in clinical trials of this nature.” Over the last several weeks, Brazilian President Jair Bolsonaro has made it well known he wasn’t a fan of potentially paying for a Chinese-based vaccine.
- The World Health Organization (WHO) has been criticized by the United States for its current terms on the inquiry into COVID-19’s origins. Garrett Grigsby, a member of the U.S. Department of Health and Human Services told the WHO’s assembly that member states had been informed of the investigation’s terms of reference only a few days ago and stressed the need for it to be “transparent and inclusive”. The United States and the Trump administration have long criticized the WHO for being too China centric and not tough enough on the country where the outbreak first began.
Covid-19 – Due Diligence And Asset Management
Fed’s Kaplan Says Virus Surge Threatens Next Two Quarters
Brief: The U.S. economy is likely to have a strong recovery from the pandemic-induced slump in the second half of the 2021 though the resurgence of Covid-19 jeopardizes the next two quarters, Federal Reserve Bank of Dallas President Robert Kaplan said. “We have a couple of very difficult quarters in front of us,” Kaplan said Tuesday in a virtual interview with Michael McKee at Bloomberg’s Future of Finance 2020 event. Citing business contacts, Kaplan said, “Over the horizon, the future looks bright and we’ll have a strong year next year but we have got to get through the next couple of quarters.” Kaplan, echoing comments from Fed Chair Jerome Powell, said additional fiscal policy support would be helpful, especially for unemployed workers and small businesses that need support to survive the next few months. The Federal Open Market Committee last week kept interest rates near zero and discussed potential changes in its asset purchase program, Powell told reporters after the meeting. “If we don’t renew it, we will see a drop-off at some point in household income and consumer spending,” Kaplan said, referring to fiscal aid for the unemployed and small businesses. “It will hurt the entire economy because it will weaken consumer spending.”
Nearly $2 Trillion Traded on COVID-19 Vaccine News
Brief: News of a breakthrough in the race to find a COVID-19 vaccine sparked one of the heaviest trading days since the height of the pandemic crisis, according to early data analysed by Reuters, with nearly $2 trillion changing hands on Monday. Traders stampeded to the riskier plays in equities, foreign exchange and bond markets after Pfizer Inc PFE.N released positive data on its vaccine trial, while rotating out of safe havens such as technology stocks, Japanese yen JPY= and top-rated bonds. “Volumes (are) also surging as programmes and baskets go to work to either correct portfolio balances or address margin calls,” said Mark Taylor, sales trader at Mirabaud Securities, highlighting a jump in volumes in the airlines and banking sectors. In the United States, nearly $500 billion worth of trades went through stock markets on Monday, one of the busiest days since March, when coronavirus lockdown fears rattled financial markets. Europe saw $120 billion traded, according to Refinitiv data. Value stocks, typically companies that are more sensitive to economic cycles, notched their best one-day performance against their growth-focused peers ever in the United States after Monday’s news of an effective vaccine against the coronavirus.
Hedge Fund Allocations Start to Revive as Covid-19 Crisis Proves Industry’s Worth to Investors
Brief: Investor allocations to hedge funds have fallen for the third consecutive year – but the industry’s ability to weather economic turbulence and market volatility through active management will continue to attract investor attention, according to two new industry studies. EY’s 14th annual ‘Global Alternative Fund Survey’ quizzed alternative investment managers and investors on a range of topics, including portfolio performance, allocation plans, and the impact of the coronavirus pandemic, as well as ESG and other investment trends. It found that although hedge fund strategies have shrunk as a proportion of investor portfolios, their impressive outperformance during 2020’s Covid-19 crisis has not gone unnoticed. Preqin’s ‘Future of Alternatives 2025’ study meanwhile suggests that despite outflows, hedge fund AUM will surge over the next few years, driven by actively-managed strategies overcoming higher volatility environments. EY’s annual study shows allocations to hedge funds now make up just under a quarter (23 per cent) of portfolios’ total allocations in 2020, a 10 per cent tumble from 2019, and sharp slide from the 40 per cent recorded in 2018. Investor capital has been drawing away from hedge funds and towards other alternatives – such as private equity/venture capital, real estate and credit, which have seen positive inflows – while hedge fund flows have been net flat.
Schroders Affiliate Debuts EM Covid Support Fund
Brief: BlueOrchard, an impact investment manager connected to Schroders, has launched a fund designed to provide financial support to medium and small businesses (MSME) in emerging markets hit by Covid-19. The BlueOrchard Covid-19 Emerging and Frontier Markets MSME Support Fund has so far gathered $140 million along with the backing of Schroders and development finance bodies in the UK, US and Japan. BlueOrchard said other backer including the German Federal Ministry of Economic Cooperation and Development (BMZ) are expected to join after due diligence. The fund, which qualifies under the ‘2x Challenge’ criteria devised by the development agencies of the G7, is targeting total investment of $350 million. with which it intends to finance 20 institutions and three million micro-entrepreneurs while saving 60 million jobs per $100 million in capital. According to the fund, while government support has been apparent in developed economies via various stimulus packages and employment furlough schemes, there has been an absence of support in emerging and frontier markets.
Hedge Fund Selling Was Not ‘Primary Driver’ of Treasury Market Turmoil, Fed Study Says
Brief: Hedge funds were not the primary villains of the turmoil in the Treasury market as the grip of the coronavirus intensified in March, according to a Federal Reserve report released Monday. While hedge funds selling of Treasury’s did play a role in the dysfunction of the market, “so far, the evidence that large-scale deleveraging of hedge fund Treasury positions was the primary driver of the turmoil remains weak,” the Fed said. The conclusion was contained in the Fed’s twice-per-year report on financial market stability. “Conversations about the crisis always mention hedge funds. Everyone acknowledges they were key contributors,” said Jeremy Kress, a former Fed staffer and now a professor at the University of Michigan’s Ross School of Business. Banks have been under tighter control in the wake of the Dodd-Frank reforms put in place after the financial crisis. The Fed report suggests hedge funds won’t be singled out and other firms like mortgage REITs, and electronic trading firms may all come under scrutiny as market extremes are reviewed.
COVID-19 is Accelerating Asset Manager’s Use of Social Media
Brief: The coronavirus pandemic has been a catalyst for social media activity across the European asset management industry in 2020 and the focus on this form of marketing is set to intensify, according to the latest issue of The Cerulli Edge―Global Edition. “The importance of a strong online presence has been underlined by the COVID-19 lockdown measures,” says Fabrizio Zumbo, associate director of European asset and wealth management research at Cerulli. Around 12% of the asset managers Cerulli surveyed in Europe last year did not have a dedicated digital and social media marketing team, but this figure dropped to only 2% in the 2020 survey. The firm’s research shows that managers plan to bolster their digital presence in the coming 12 to 24 months. In addition, some 44% of the managers surveyed expect their social and digital media activities to consume a greater proportion of their marketing budgets over the next two years. Despite the progress managers have made this year in terms of increasing their social media activities, fewer than half of the managers surveyed are satisfied with their level of activity. However, more respondents to this year’s survey believe they have a satisfactory social media presence across Europe. Cerulli’s research shows that, overall, business-focused LinkedIn is still the social media channel most frequently used by asset managers in Europe, ahead of Twitter and Facebook. However, with appetite for engaging video content increasing, managers are likely to use YouTube more. Some 73% of managers expect to create and share more video content via social media channels over the next 12 to 24 months.
