.png?width=200&height=78&name=CH%20Diligence%20(thicker%20line).png "CH Diligence (thicker line).png")
Our briefing for Wednesday February 24, 2021:
Feb 24, 2021 3:25:53 PM
- In the United States, more than 150 New York chief executives urged Congress to pass President Joe Biden’s $1.9 trillion COVID-19 stimulus package in a letter on Wednesday. Notable signatures on that letter from the asset management world included BlackRock’s Larry Fink, Goldman Sachs’ David Solomon and Blackstone’s Steve Schwartzman – who previously backed former President Donald Trump. The letter stated: “Previous federal relief measures have been essential, but more must be done to put the country on a trajectory for a strong, durable recovery. The country’s business community is prepared to work with you to achieve these critical objectives.”
- With United Kingdom’s Prime Minster Boris Johnson outlining the country’s potential track to freedom from lockdowns earlier in the week, Canada’s chief public health officer says the timing of their reopening isn’t solely dependent on achieving mass vaccination. Dr. Theresa Tam said while vaccinations play a “key role” other factors such as Canada’s epidemic curve’s movement, the rate of serious outcomes and the ability of local authorities to have testing and contact tracing to all be in place. “You can’t put an absolute date on one of these things but having everybody get the vaccine is a massive step towards returning to a more normal life,” said Dr. Tam.
- A few days after the United Kingdom government released their four-phase strategy out of the current lockdown, a new advertising blitz has been launched with the Health Secretary and Chief Medical Officer urging Britons to ‘stay local’. “I know it’s been a long year, but we can’t let up now. Everything we’re doing is bringing us one step closer to beating the virus,” said Health Minister Matt Hancock. Chief Medical Health Officer Professor Chris Whitty added: “Vaccines give clear hope for the future, but for now we must continue to play our part in protecting the NHS and saving lives.” The UK’s stay-at-home order remains in place until at least March 29th.
- Bloomberg is reporting France is resurrecting a financial instrument first used in the 1970s to try and find ways to bring back the economy to some sense of normality. The idea is participative loans – first used by the country in 1978. The loans have never been used on such a large scale but would offer investors a blend of equity and debt. They are similar to equity in that they are subordinated to all other debts and often come with a share of the profits. However, like loans, they have a fixed interest rate and afford the creditor no voting rights. French Finance Minister Bruno Le Maire wants the loans to have a duration of at least eight years and as long as a decade for some projects, with repayments beginning after four years. Final details of the plan are expected in the last week of March.
- India announced an expansion of their COVID-19 vaccination programme Wednesday and a warning that breaches of coronavirus protocols could worsen infection. Nearly a month ago, India’s health minister declared that COVID-19 had been contained – that was likely a mistake – as now some states such as Maharashtra in the west and Kerala in the south have reported a spike in cases and a reluctance to wear masks or maintain social distancing. In the past week, a third of India’s 36 states and union territories have reported an average of more than 100 new COVID-19 cases each day. Maharashtra and Kerala are reporting more than 4,000 new cases daily. Maharashtra state is home to Mumbai – India’s financial capital.
- The World Health Organization’s (WHO) COVAX programme – their attempt at a global vaccine-sharing scheme – delivered their first COVID-19 vaccines on Wednesday to the African nation of Ghana. The delivery was in the form of 600,000 doses of the AstraZeneca COVID-19 vaccine produced by the Serum Institute of India. The arrival of vaccines comes almost a year after the WHO first described the coronavirus as a pandemic and eight months after the launch of the COVAX initiative. The delivery was made to Ghana’s capital city of Accra with a vaccination drive expected to begin on March 2nd, which will prioritize front-line health workers and others at high risk.
Covid-19 – Due Diligence And Asset Management
Goldman CEO Warns Remote Work is Aberration, Not the New Normal
Brief : David Solomon wants to make sure you don’t get too attached to your Rona Rigs. The Goldman Sachs Group Inc. chief executive officer on Wednesday repeated his desire to see the firm’s offices fill up again. “This is not ideal for us and it’s not a new normal,” Solomon said at a Credit Suisse Group AG conference. “It’s an aberration that we are going to correct as quickly as possible.” The 59-year-old CEO has been one of the more vocal business leaders pushing government officials to move faster in making changes needed to bring employees back to work. He’s urged them to use private-sector support to speed up the process. Wall Street firms were preparing to welcome a larger cohort into their emptied-out skyscrapers last year, only to see that effort fizzle with a new surge of coronavirus cases. Some have been further frustrated by what they perceive as a botched vaccine rollout that delayed a return to pre-Covid normalcy. “The vaccine distribution and the process of recovery has been a little bit slower in the first quarter than some of us had hoped,” Solomon said. But additional government stimulus and the potential for an infrastructure bill after that will provide a “very, very strong tailwind” for economic recovery, he said.
Institutional Investors Call for Fair and Equitable Global Fight Against Coronavirus
Brief: A group of institutional investors worth USD13 trillion, including Aviva Investors, AXA Investment Managers, and Fidelity International, has pledged to support fair and equal global access to vaccines and healthcare in the fight against coronavirus. Last week, the United Nations secretary general António Guterres labelled the global vaccination effort “wildly uneven and unfair” in a security council meeting. Three quarters of all vaccinations have so far been administered by just 10 countries, while 130 countries have not yet received a single dose. Led by the Access to Medicine Foundation, the investor partnership aims to improve financing and co-operation on worldwide vaccination efforts. The investors say they are concerned about limited funding for the World Health Organisation’s ACT Accelerator global healthcare access scheme, which includes vaccination wing Covax, and the effect this will have on the “trajectory of the pandemic and global economic activity in the coming years”.
Global Airline Body IATA Plans COVID Travel Pass for end of March
Brief: Global airline industry body IATA said it would launch a COVID-19 travel pass at the end of March, bringing into use a digital system for test results and vaccine certificates which will help facilitate international travel. IATA said on Wednesday that it was essential that governments start issuing their citizens with digital vaccination certificates which can then feed into its travel pass.
Barclays Investor Poll Predicts Rush of New Capital in “Breakout Year” for Hedge Funds
Brief: Hedge funds could be set for a rush of new capital pouring into the industry this year – potentially reaching up to USD30 billion – as investor appetite grows following strong 2020 performances, Barclays said on Wednesday. The bank’s ‘2021 Global Hedge Fund Industry Outlook and Trends’ report found that allocator sentiment towards hedge funds is the strongest it’s been since 2014, with 41 per cent of all investors planning to increase their hedge fund exposure this year. The annual hedge fund investor survey quizzed 240 firms representing USD5 trillion in assets, including USD725 billion of hedge fund investments - roughly 22 per cent of total industry capital. The bank’s Strategic Consulting team, which ran the poll, said hedge funds could draw between USD10 billion and USD30 billion of projected net inflows from investors, and around USD450 billion in gross allocations, in what could prove “a breakout year” for managers.
Treasury ‘Tantrum’ Erases $14 Billion ETF’s Pandemic Rally
Brief: A breakneck selloff in the bond market left one of the biggest Treasury exchange-traded funds bleeding. The $14 billion iShares 20+ Year Treasury Bond ETF (ticker TLT) has plunged 11% this year as long-dated Treasury yields climbed, fueled by building wagers on a rebound in inflation. Investors have yanked over $3.2 billion from the fund so far in 2021, whittling TLT’s total assets to the lowest level since mid-2019, according to data compiled by Bloomberg. Covid-19 vaccine rollouts combined with the prospect of further fiscal aid from the Biden administration has forced a reckoning of sorts for the Treasury market, where long-dated yields were hovering near historic lows entering 2021. Breakeven inflation rates have soared to multi-year highs, dragging benchmark 10-year yields to the highest in over a year, as the economic outlook brightens. That point was reinforced by Federal Reserve Chairman Jerome Powell this week as he said the recent run-up in bond yields is “a statement of confidence” in the economy, while downplaying the risk of a sustained pickup in price pressures.
These Covid Billionaire Fortunes are Fading with the Vaccine Rollout
Brief: In the health-care industry, the coronavirus pandemic led to big fortunes, fast. Now some of them are evaporating just as quickly. Take Seegene Inc., a maker of Covid-19 test kits, and Alteogen Inc., a biotech with subcutaneous-injection technology. Their founders became billionaires as the shares surged last year. Fast forward a few months to the vaccine rollout, and they’ve lost their title after both stocks sank more than 40%, according to the Bloomberg Billionaires Index. It’s a similar story for glovemakers in Malaysia, which counted at least five industry billionaires by August as the worsening health crisis increased demand for the protective gear. Despite a brief rebound amid last month’s frenzy in retail trading, their shares are down by more than a third since hitting highs, wiping more than $9 billion from their founders’ net worths. While the billionaires created by the Pfizer Inc.-BioNTech SE and Moderna Inc. vaccines have maintained much of their wealth, many others have seen a falling off. The moves show how fleeting fortunes can be with a market so wild that some stocks have had days with fluctuations of more than 20%. Some of the founders took advantage of the volatility to book profits, just as others increased their control by buying more shares as prices fell.
