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Our briefing for Wednesday February 3, 2021:
Feb 3, 2021 3:58:06 PM
- In the United States a new survey has shown almost half of Americans have taken at least one trip since last March even though the Centers for Disease Control (CDC) has said to avoid travel during the pandemic. The survey classified a “trip” as travelling several hours by car, plane, train or other mode of transportation. Forty-five percent of those who responded had taken at least one trip with close to 20% taking more than three trips. One-third of survey respondents said they have a trip planned for 2021. According to the U.S. Travel Association, spending on trips dropped 42% in 2020 costing the industries associated with the travel economy $492 billion.
- In Canada, CTV News is reporting the European Commission says it has authorized a COVID-19 vaccine delivery to Canada and doesn’t plan to block exportation of most doses produced on the continent. An EU spokesperson said the following on Wednesday: “Canada is aware that the EU has the duty to ensure that our citizens are vaccinated as soon as possible. At the same time, we do not want to deprive other countries from their own much needed vaccines, in particular these countries who do not have their own manufacturing capacity.” Earlier in the week, Canada’s Public Services and Procurement Minister Anita Anand told the House of Commons a shipment of the Pfizer/BioNTech vaccine was on its way from Europe, but only accounted for one-fifth the size of previously planned shipments.
- Reuters is reporting the United Kingdom will chair a meeting of finance chiefs from the group of G7 nations on February 12th as they try to figure a way out of the global economic crisis created by the coronavirus pandemic. UK Chancellor Rishi Sunak, along with Bank of England Governor Andrew Bailey will co-host the online meeting with the United States, Japan, Germany, France, Italy, Canada, as well as the European Central Bank. “Recognizing that a global crisis needs global solutions, the Chancellor will work with his counterparts to address the shared economic challenges facing our domestic and global economies and seek to achieve a strong and sustainable economic recovery from coronavirus,” the ministry said.
- Italy is turning to former European Central Bank chief Mario Draghi to try and form a non-political government through the coronavirus pandemic. Italian President Sergio Mattarella met with Draghi and gave him the mandate of trying to form a new government to replace Prime Minister Giuseppe Conte’s coalition of the 5-Star Movement and Democratic Party after last ditch negotiations fell through. Draghi’s work at the European Central Bank garnered him the nickname “Super Mario” and he will have to be just that to try and guide Italy through a health care crisis, a national vaccination campaign and an economic recession.
- As part of China’s diplomatic effort, the country pledged 10 million coronavirus vaccine doses to developing nations through the global COVAX imitative. China has already pursued deals or donations with more than 30 nations, which has far exceeded the 10 million doses it is providing to COVAX, which is a coordinated effort between the World Health Organization (WHO) and GAVI, the Vaccine Alliance. The deal with COVAX on Wednesday didn’t offer details on which vaccine China was providing.
- Olympic officials on Wednesday unveiled a few of the many COVID-19 rules for the Tokyo Games this summer in Japan. There will be no singing and chanting during events and participants will be mandated to wear masks at “all times” except when eating, sleeping or outdoors. Delegations and staff will be required to appoint a COVID-19 liaison officer, who will be responsible for ensuring that the participants follow the guidelines. Those nations that don’t comply could lead to expulsion from the Games. These rules though will likely do little in winning the favour of the Japanese public who are understandably worried about opening their borders to the world in the middle of a pandemic.
Covid-19 – Due Diligence And Asset Management
World Economic Forum Again Delays Annual Meeting in Singapore
Brief : The World Economic Forum has again pushed back its 2021 annual meeting in Singapore, rescheduling it for August from May given what it called “challenges in containing the pandemic”. The Geneva-based WEF, which last month delayed the event by 12 days in May, said on Wednesday it would now be held from Aug. 17-20. “Although the World Economic Forum and Government of Singapore remain confident of the measures in place to ensure a safe and effective meeting, and local transmission of COVID-19 in Singapore remains at negligible levels, the change to the meeting’s timing reflects the international challenges in containing the pandemic,” it said in a statement. Global travel restrictions have made planning difficult for an in-person meeting in the first half of the year, while differing quarantine and air transport regulations increased the lead time needed to ensure participants can join, it added. Singapore’s ministry of trade and industry said the government understood the challenges the WEF faced and had agreed to reschedule. The annual meeting typically takes place in January in the Swiss ski resort of Davos, but the pandemic made that impossible this year.
Centerbridge Credit Fund Soars 90% on Pandemic Disruption Bets
Brief: A $3 billion credit fund Centerbridge Partners began investing in March returned an annualized 90% in 2020, making it a top performer among vehicles designed to take advantage of pandemic-related price dislocations. As the pandemic took hold in the U.S., Centerbridge deployed $1.8 billion in funds following its special credit strategy, according to people with knowledge of the matter. It continued to invest additional money in beaten-down debt through year-end, the people added. The firm’s Special Credit III Flex Fund, which targeted consumer-facing industries battered by market turmoil, including rental cars, airlines, auto parts and entertainment, returned 121% on a gross basis, said the people, who asked not to be identified discussing private results. A representative for Centerbridge declined to comment. Centerbridge’s $1.3 billion flagship vehicle, the Special Credit III fund, gained a net 8.7% last year, the people said. The $28 billion private investment firm specializes in lending to and buying troubled companies, many of which are going through Chapter 11 restructurings. It recently became the owner of SpeedCast International Ltd. following the satellite communications company’s bankruptcy last year.
All Funds Will Be ESG Funds in Five Years, say Professional Investors
Brief: Three-quarters of UK fund buyers say all funds will soon incorporate ESG as sustainable investing gathers further momentum in the aftermath of Covid-19, new research shows. A CoreData Research study of 200 professional fund buyers around the world found nearly two-thirds (63 per cent) think all investment funds will incorporate ESG in five years. This proportion increases to almost three-quarters of respondents in the UK (73 per cent) and Europe (72 per cent). However, only half of fund selectors in North America (50 per cent) believe such a scenario will play out. The survey, conducted in November and December 2020, also shows that momentum towards ESG has accelerated since the pandemic. Six in 10 (60 per cent) global professional fund investors say they have increased their focus on ESG in the wake of Covid-19. The UK is leading the sustainability charge, with eight in 10 (81 per cent) raising their ESG commitment. But the picture is somewhat different in North America, where less than half (42 per cent) have upped their focus on ESG in light of the pandemic. A key factor driving the heightened ESG focus is a belief that sustainable investments can help deliver superior performance. Half (50 per cent) of global respondents say ESG funds tend to outperform their non-ESG counterparts — a sentiment most pronounced in the UK (65 per cent) and Europe (60 per cent). However, less than a third (31 per cent) of North American respondents share this conviction.
One of World’s Richest Nations Taps Wealth Fund as Cash Dries Up
Brief: Kuwait’s government has transferred the last of its performing assets to the country’s sovereign wealth fund in exchange for cash to plug its budget deficit, after a political dispute over borrowing left one of the world’s richest nations short of cash and prompted Fitch to cut its outlook to negative. Fitch affirmed Kuwait’s AA rating but said “the imminent depletion of liquid assets” and “absence of parliamentary authorization for the government to borrow” was creating uncertainty. Its report follows S&P Global Ratings’ recent warning that it would consider downgrading Kuwait in the next six to 12 months if politicians fail to overcome the impasse. Though it’s a high-income country, years of lower oil prices have forced Kuwait to burn through its reserves. Desperate to generate liquidity, the government began last year swapping its best assets for cash with the $600 billion Future Generations Fund, which is meant to safeguard the Gulf Arab nation’s wealth for a time after oil. With those now gone, it’s not clear how the government will cover its eighth consecutive budget deficit, projected at 12 billion dinars for the fiscal year beginning April. The assets include stakes in Kuwait Finance House and telecoms company Zain, a person familiar with the matter said, asking not to be named because the information is private. State-owned Kuwait Petroleum Corp., which has a nominal value of 2.5 billion dinars ($8.3 billion), was also transferred from the government’s treasury in January, the person said.
Global Pandemic Brings Surge of New and Experienced Retail Investors Into the Stock Market
Brief: In a year when a pandemic gripped the world, beginning and experienced retail investors flocked to the stock market using taxable, non-retirement investment accounts, according to new research by the FINRA Investor Education Foundation (FINRA Foundation) and NORC at the University of Chicago. The study, Investing 2020: New Accounts and the People Who Opened Them, found that market dips that made stocks cheaper to buy and the ability to invest with small amounts were among the top reasons younger and inexperienced investors reported entering the stock market. For respondents who opened new accounts in 2020, investing for retirement was the most frequently cited reason for opening the account, despite the study’s focus on taxable investing. Researchers further found that the majority of new investors—meaning those who opened a non-retirement investment account for the first time during 2020—were under the age of 45 and had lower incomes than investors who already owned taxable investment accounts prior to 2020. New investors were also more likely to be racially or ethnically diverse.
Gates and World’s Rich Win Big on Private-Jet Firm’s 196% Surge
Brief: The coronavirus crisis hasn’t stopped the world’s wealthy from flying -- they’re just increasingly doing it privately, and some are getting outsized returns from it. Bill Gates, Nassef Sawiris, James Packer and Kerry Stokes have accumulated more than $1.2 billion in the world’s largest operator of private-jet bases, according to data compiled by Bloomberg. The company, Signature Aviation Plc, has recently become the focus of a takeover fight involving Blackstone Group Inc., Carlyle Group Inc. and Global Infrastructure Partners, helping its shares almost triple since a low in mid-March. Private flying is one of the few travel categories to have held up during the Covid-19 pandemic, offering the well-heeled the opportunity to jet off while minimizing potentially risky contact with other passengers. As global airline passenger traffic has plunged, private-jet activity has fared better and was at about the same level in the first three weeks of January as at the start of 2020, despite a resurgence of the virus, according to research from aviation data and consultancy company WingX. “Some clients only flew commercial before the pandemic, but Covid-19 has changed all of that,” said Michael S. Harris, director of family office at Verdence Capital Advisors, which oversees about $2.5 billion. “The way we travel may now have changed forever.”
