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Our briefing for Wednesday May 5, 2021:
May 5, 2021 5:30:41 PM
- The United States and President Biden’s administration have backed waiving intellectual property protections for COVID-19 vaccines as developing countries are struggling vaccinating their citizens. “This is a global health crisis, and the extraordinary circumstances of the COVID-19 pandemic call for extraordinary measures. The Administration believes strongly in intellectual property protections, but in service of ending this pandemic, supports the waiver of those protections for COVID-19 vaccines,” United States Trade Representative Katherine Tai wrote in a statement. The wavier, proposed by Africa and India, via the World Trade Organization (WTO), could remove obstacles for ramping up COVID-19 vaccine production in developing countries. WTO decisions are based on consensus, so all 164 members must agree to temporarily ease the rules protecting intellectual properties.
- In Canada, the regulatory health body has given the green light to Pfizer’s COVID-19 vaccination for those over the age of 12 on Wednesday. After reviewing data submitted by Pfizer last month, Health Canada have determined the inoculation was safe to use on 12-to-15 year-olds after the previous recommendation was 16 years of age. Pfizer is the only vaccine in Canada to be authorized on people this young. As of right now, Health Canada has only recommended the AstraZeneca, Johnson & Johnson and Moderna vaccines for those over the age of 18. Shortly after the Health Canada announcement, Alberta Premier Jason Kenney was the first to make a move, saying the province will accelerate their vaccine rollout stating all Albertans aged 12 and above can be vaccinated against COVID-19 as of Monday. As noted earlier in the week in Castle Hall’s COVID-19 diligence briefing, Alberta has the highest number of COVID-19 cases per capita in the country, along with the United States.
- In the United Kingdom, the entire Indian delegation at the G7 Summit being held in London have to self-isolate after two cases of COVID-19 were detected. India, although not part of the G7, were invited as guests. India was on the UK’s “red list” meaning travel from there is banned, but some jobs are exempt including representatives of a foreign country, which was the case here. India’s foreign minister Subrahmanyam Jaishankar had met with Home Secretary Priti Patel in person on Tuesday but has now pulled out of all face-to-face meetings. Elsewhere in the UK, Vaccines Minister Nadhim Zahawi announced the government has provided an extra £29.3 million in funding to help fast-track new vaccines that will help the country’s fight against new coronavirus variants.
- The World Health Organization (WHO) has reported that India accounted for nearly half of the worldwide COVID-19 cases in the past week. In their weekly report, the WHO said India accounted for 46% of the global coronavirus case count and 25% of global deaths. Unfortunately, the death toll is only going to get worse for the country of over 1.3 billion people with some research models forecasting more than double the current levels. A model from the University of Washington suggests India could have over one million deaths due to COVID-19 by the end of July.
- The Singapore-Hong Kong travel bubble is again up in the air. Bloomberg is reporting Singapore’s government is assessing any potential changes to the planned travel bubble, set to start on May 26th after a flareup of COVID-19 infections triggered fresh restrictions in the city-state. Singapore announced on Tuesday a three-week crackdown, which will see social gatherings limited to no more than five people and tightening of borders. The air travel corridor between two of South Asia’s economic hubs has been delayed several times since late 2020 due to infection outbreaks in both regions.
- Australia’s largest state is scrambling and on alert after a man tested positive for COVID-19 on Wednesday. The state of New South Wales (NSW), home to the city of Sydney, said the man in his 50s had not recently returned from overseas, didn’t work in quarantine and had no contacts with the hospital system. On Wednesday evening, NSW Health revealed fragments of the coronavirus had been detected in an inner west sewer network, prompting a call for tens of thousands of Australians to monitor for symptoms. Australia is well known since their large outbreak in Melbourne last summer to implement strict circuit-breaker style lockdowns with only single digit cases in order to stop the spread of the virus.
Covid-19 – Due Diligence And Asset Management
Economic Uncertainties Top of Fund Managers’ Concerns, Finds Funds Europe Survey
Brief : Uncertainty about the speed and sustainability of the economic recovery are at the forefront of industry concerns, Funds Europe research shows. The finding comes at a time when firms are designing strategies for growth and innovation after the Covid-19 pandemic. The research, conducted in association with Caceis, ranges cross many themes in asset management. We found that decision makers also feel challenged by the continuing pressure of adapting to regulations, for example rules to do with ESG. Technology is also a pain point, with managers feeling a need to redesign technology ‘stacks’ and communication interfaces because they want to fulfil the digital needs of the funds industry for current and future generations. The survey had a total of 172 responses from investment fund professionals and was conducted online during February 2021. The report confirms that ESG and climate change is moving to the forefront of the regulatory and policy agenda in Europe. As a component of the European Commission’s Sustainable Finance Action Plan, the Sustainable Finance Disclosure Regulation (SFDR) requires fund managers, financial advisers, and some other categories of regulated firms with activities in the EU, to disclose information on ESG implications of their investment strategies to investors.
FCA Data Breach Reports Down 30 Per Cent Despite UK Cyber Incidents Increasing by 56 Per Cent
Brief: Kroll, a provider of services and digital products related to governance, risk and transparency, has revealed the number of data breaches reported to the FCA fell by 30 per cent between 2019-2020. This is a direct contradiction to Kroll’s own data which, looking at all industries, showed a 56 per cent average rise in incidents over the same timeframe, with the financial services industry being slightly above that average. Freedom of Information data obtained by Kroll from the FCA shows that the number of reportable cyber incidents where company or personal data was potentially compromised or breached dropped 30 per cent to 76 in 2020, compared to 108 during the same time period in 2019. In reality, the number of data breaches is expected to be far higher, with Kroll’s proprietary data showing that during the same period the overall number of incidents impacting UK organisations rose 56 per cent, leading to an increase in consumer notifications of more than 41 per cent when compared to 2019. This disparity between official FCA statistics and the reality of the current cyber threat landscape means the increase in the sophistication and volume of attacks is in danger of going unaddressed, and is likely to be linked with changes to data breach reporting as a result of GDPR.
Small Businesses COVID-19 Relief Program Runs out of Money
Brief: The program, which has run out of cash and refunded by Congress twice before, was scheduled to expire May 31. It’s not yet known if lawmakers will approve another round of funding. The SBA said in a statement it will still fund applications that have been approved. New applications made through Community Financial Institutions, which are financial lenders that serve underserved communities, would also be funded. More than half the loans and nearly a third of the loan money were distributed this year. The average loan size was $46,000, less than half the $101,000 average loan in 2020. That is a sign that smaller companies unable to get loans last year were now getting funding. Companies have been drawn to the loans because they promised forgiveness if the money is used for payroll and other essentials. But, while the PPP helped save many companies devastated by the pandemic, the Biden administration has estimated that more than 400,000 U.S. businesses have permanently closed due to the virus.
Fed’s Evans Says Risk of Upward Inflation Spiral is Remote
Brief: U.S. inflation is unlikely to get out of control despite the unprecedented government spending that’s been authorized in response to the coronavirus pandemic, Federal Reserve Bank of Chicago President Charles Evans said. “I think the risk of this scenario is remote,” Evans said Wednesday in remarks prepared for a virtual speech. The Chicago Fed chief, who has long been one of the central bank’s biggest worriers about inflation being too low, was responding to critics of the Biden administration’s fiscal programs, which include not only Republicans but also some economists associated with the Democratic party. Most of Evans’s colleagues at the Fed, including Chair Jerome Powell, have pushed back forcefully against such criticisms in recent months. Instead, they’ve highlighted the importance of the fiscal support in speeding the labor market back to full employment. “With these developments, my outlook for growth and unemployment is much more positive today than it was just a few months ago,” Evans said, referring to the measures.
After a Lackluster Year, Bridgewater Gains Some Ground
Brief: Bridgewater Associates’ main strategies posted strong gains in April, putting them solidly in the black for the year. The strong monthly performance also capped a double-digit gain for the 12 months following the sharp losses Bridgewater suffered at the beginning of the pandemic. Bridgewater’s flagship Pure Alpha macro strategy, sometimes referred to as PA 18 Percent, was up 5.34 percent in April and 4 percent year-to-date, according to a person familiar with the results as well as a private database. PA 12 Percent, which takes on less risk than the main Pure Alpha strategy, was up 3.5 percent for the month and 2.8 percent for the year. Pure Alpha has now posted a 14.23 percent gain over the past 12 months. All Weather, the firm’s beta strategy, was up 4.38 percent in April and 1.35 percent year-to-date. It was also up 18.81 percent over the past 12 months. Bridgewater, the world’s largest hedge fund firm which is headed by Ray Dalio, generally points out that clients employ Pure Alpha as an overlay strategy, placing it on top of the benchmark of their choosing. For example, in the 12 months through April 30, the S&P 500 was up 47.7 percent, while Pure Alpha was up an additional 14.23 percent.
Worldwide Venture Investments Soared by 94 Per Cent in Q1 2021 to All-Time High of USD125bn
Brief: For the first time in history, global venture investments surpassed USD100 billion in Q1 2021. According to the research data analysed and published by Sijoitusrahastot, worldwide VC funding in Q1 2021 rose by 94 per cent YoY to USD125 billion. During the period, two unicorns on average were created daily, raising the quarterly total to 112. Based on a CNBC report citing Ernst & Young, VC funding in the US during the quarter hit USD64 billion. It was the highest quarterly figure on record, and it was equivalent to 43 per cent of total VC funding raised in 2020. Late-stage funding dominated the global VC market accounting for 68 per cent of the total. The segment, together with technology growth, soared by 122 per cent to USD85.6 billion. Some 79 per cent of the funds went into rounds worth at least USD100 million, up from 63 per cent in Q1 2021. Early-stage funding shot up by 63 per cent YoY to USD35.5 billion. Seed and angel investment held steady at USD4.1 billion while acquisitions rose by 44 per cent YoY to 631 deals worth USD57.1 billion. In Europe, total funding rose by 130 per cent YoY from USD9.3 billion to a record USD21.4 billion. Late-stage and technology funding surged 202 per cent to USD14.3 billion. Early-stage funding rose by 62 per cent YoY to USD5.8 billion. There were a record 54 rounds worth at least USD100 million as well as two billion-dollar rounds by Klarna and Cazoo.
