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Brief: Rising frustration from the public and financial institutions is pushing a review of pandemic control measures in Hong Kong, where a suite of stark containment measures have been in place since January to fight the city’s worst-ever Covid outbreak. Chief Executive Carrie Lam pointed to the strain on residents and damage to the reputation of the once vibrant Asian financial hub for the revision, asking for a few more days before she unveils what could be sweeping changes to the city’s approach next week. “I have a very strong feeling that people’s tolerance is fading,” Lam told reporters at a briefing on Thursday. “I have a very good feeling that some of our financial institutions are losing patience about this isolated status of Hong Kong,” she said. “Nobody attaches as much importance as myself to Hong Kong’s international status.” Lam signaled a possible reduction in the amount of time new arrivals from abroad must spend in hotel quarantine and said virtually every area of her government’s approach is being scrutinized.
Brief: Allocators’ interest in hedge funds may be waning. At least that’s what they told Preqin before Russia invaded Ukraine, a bloody war that has upended the country and global markets. According to research and data firm Preqin, only about 10 percent of allocators said they were “more aggressively” investing in hedge funds and accumulating assets as a result of their outlook for equity markets. In November 2020, double the proportion of investors, about 20 percent, were doing the same, up from less than 10 percent the year before. Returns may be partly to blame. The performance of the average hedge fund has declined from its peak of 18.9 percent in 2020, to 13.7 percent in 2021, according to Preqin’s latest investor outlook report. Only 49 percent of investors classified the performance of their hedge funds as acceptable last year; 28 percent said returns fell short of their expectations, according to the research firm. PivotalPath’s hedge fund composite index returned 7.9 percent in 2021.
Brief: The head of a U.S. markets regulator said on Wednesday that while U.S. markets are responding well to the ongoing tragedy in the Ukraine, the situation has resulted in ‘extreme volatility’ and record global markets trading volume. Inflation surges to 5.7%, adding pressure on Bank of Canada to accelerate rate hikes. Rostin Benham, chair of the Commodity Futures Trading Commission (CFTC), told an audience at the International Futures Industry Conference that he has tasked the agency’s surveillance unit to remain ‘surgically focused’ on analyzing trading for manipulative, inappropriate or disruptive conduct. “At my direction, CFTC staff are using every tool the agency has to ensure that commodity markets continue to fairly and transparently serve the intended price discovery and risk management function,” said Benham, adding that “markets are reacting and operating as well as anticipated given the challenging situation.”
Brief: Jefferies Financial Group Inc. expects Wall Street’s fierce battle for talent to continue even as the red-hot streak in global dealmaking begins to cool. “There is still tremendous demand for good talent in investment banking,” Dominic Lester, European head of investment banking at Jefferies, said in an interview. “This year’s market slowdown hasn’t had a material impact on that.” Deal values are down 10% in 2022, having fallen below year-ago levels in the week that Russia began its war in Ukraine, data compiled by Bloomberg show. Even before the invasion, the prospect of rising interest rates was threatening to derail a $5 trillion-plus run-in mergers and acquisitions that fueled more than a year of bumper fees and bonuses at the world’s biggest banks. That saw Wall Street lenders elevate pay for junior and senior dealmakers to new highs as they sought to poach stars from rivals and keep their best talent from leaving to join free-spending private equity firms. At Jefferies, which has been recruiting from the likes of Credit Suisse Group AG, Barclays Plc and Deutsche Bank AG, pay for some of the best performers has surpassed $25 million, Bloomberg reported last month. Lester said the fight to hire and retain the best bankers came down to more than money. “Of course, it’s important but you have to provide a good, dynamic culture, challenges, development and an interesting work environment to retain your team,” he said.
Brief: The pandemic slammed proptech investment, which fell abruptly in 2020, but also changed the proptech landscape, mainly by boosting the popularity of safety tech related to the health issues. Tech innovations, impact investing and corporate social responsibility pair seamlessly with the need to increase energy efficiency, promote carbon neutrality and raise climate resilience. “Proptech is changing building and monitoring systems by creating technologies that increase efficiencies and track anomalies and waste. Beyond just ensuring buildings are run, heated and cooled more efficiently and effectively, proptech is also greening construction, while literally capturing carbon in the creation of concrete,” Dave Harris Kolada, managing partner at Greensoil PropTech Ventures, told Commercial Property Executive. “When it comes to making offices safer and complying with the litany of new laws or raising revenue from increased efficiencies, we see profits and public service as intricately intertwined, not mutually exclusive,” he added. Harris Kolada discussed the state of the proptech industry following what has been (we hope) the worst of the health crisis’ impact.
Brief: An ex-Credit Agricole trader, fired for not flagging major volatility in the gold market, accused the bank of failing to set up proper working from home arrangements early in the coronavirus pandemic. Samuel Yang, who joined the bank’s precious metal desk in 2011, sued the lender in London under whistle blowing and race discrimination rules. He said he was “scapegoated” by Credit Agricole after it didn’t give clear guidance on how to manage risk while working remotely and accused it of “side-stepping” regulatory scrutiny, according to documents prepared for a London employment tribunal. The case is one of the first U.K. working from home in the pandemic employment tribunal to make it into the public domain.
Brief: China blasted foreign media organizations’ use of Chinese staff to report on issues such as Covid-19 and Xinjiang, in an apparent escalation of Beijing’s efforts to restrict critical coverage of the world’s second-largest economy. The official Xinhua News Agency criticized “Western media” for recruiting Chinese nationals “as pawns to propagate their China-bashing rhetoric” in a commentary Tuesday, without naming the media outlets or providing specific examples. The piece cited their involvement in coverage on the origins of the first known Covid-19 outbreak in Wuhan and criticism of Beijing’s rigid “Covid Zero” policies. “Manipulating these journalists to misrepresent China and stir up ideological bias against the country has once again revealed that so-called ‘press freedom’ touted by the Western media is just a handy tool to advance a narrow political agenda,” the commentary said.
Brief: The coronavirus pandemic obliterated 9.3 million jobs in Southeast Asia as lockdowns hit the region’s traditional engines of growth such as hospitality and tourism, according to the Asian Development Bank. This pushed 4.7 million people to extreme poverty last year, measured as living on less that $1.90 a day, the ADB said in a report Wednesday. Inequality also widened as movement restrictions hit hardest the retail and informal sectors, where women, young people and unskilled workers are typically employed. “The pandemic’s impact on poverty and unemployment will likely persist as inactive workers become de-skilled and poor people’s access to opportunities further deteriorates,” the ADB said. “When this happens, the deterioration in inequality could transfer across generations.” Green shoots are emerging though, with close to 60% of Southeast Asia’s population vaccinated and public mobility rebounding.
Brief: HSBC is to shut a further 69 branches, on top of the 82 it axed last year, claiming the pandemic has accelerated the shift to digital banking. It is the latest in a line of banks to announce it is reducing its network in response to changing customer habits. Consumer organisation Which? said the number of closures during the last few years was “alarming” and that millions of people were not yet ready or able to go fully digital. Early last year HSBC had 593 branches, but the latest round of closures – scheduled to take place between mid-July and early October – will take that down to 441, of which 96 are described as “full service” outlets offering a comprehensive range of services.The 69 branches that are closing are spread across the UK, from Inverness in the Scottish Highlands to Falmouth in Cornwall.
Brief: U.S. middle-market private equity firms experienced a year of strong dealmaking and exit activity in 2021. The road ahead may not be quite as smooth, however. Last year, middle-market PE firms closed 4,121 deals, accounting for a combined total of $602.6 billion — an all-time high for the sector, according to PitchBook’s PE middle-market annual report, released on Monday. The previous record for dealmaking activity in PE middle markets came in 2019, when total deal count reached 2,775 for a combined total value of $400.4 billion. PitchBook defines a middle-market deal as one in which a U.S.-based company is acquired through a buyout transaction valued between $25 million and $1 billion, with a fund size of $100 million to $5 billion. It doesn’t include growth equity deals.
Brief: Even as the events in Ukraine has dominated headlines and stokes fresh uncertainty, Canada and the world are facing economic challenges that go far beyond the conflicts in the region. According to a new commentary from RBC Economics, the Russian invasion will undoubtedly aggravate already-existing pressures. “Even before the escalation in geopolitical risk, production capacity limits—including acute labour shortages and rising input costs—were emerging as more significant concerns for businesses than any shortfall in orders,” said RBC economists Craig Wright and Dawn Desjardins, along with analyst Nathan Janzen. The invasion of Ukraine has jolted financial markets, pushed commodity prices higher, and posed a threat to already strained global supply lines. While improving labor markets, growing earnings, and savings acquired during the pandemic are expected to support household purchasing power, they cited strong demand and businesses’ ability to ramp up production as factors for broadening inflation. That has created a strong motivation for central banks to stay on their paths toward rate hikes.
Brief: Most investors now expect global equities to slump into a bear market this year as the growth outlook has tumbled to the lowest level since the 2008 financial crisis amid fears over the impact from the war in Ukraine. This is the takeaway of the latest Bank of America Corp. monthly global fund manager survey conducted in the week through March 10. While cash levels surged to the highest since April 2020, the early days of the Covid-19 pandemic, allocation to commodities jumped to a record and exposure to equities fell to the lowest in nearly two years. “Economic growth and profit expectations are recessionary,” BofA strategists led by Michael Hartnett wrote in a note to clients. Persistently high inflation readings, concerns that central banks will tighten policy more aggressively than previously anticipated, and Russia’s invasion of Ukraine have triggered a rout in global stock markets this year, with major indexes now deep into correction territory. This flurry of headwinds, which now also includes a flare-up in coronavirus infections from China to Germany, is raising fears that a downturn in equities will continue.
Brief: The global economy -- already struggling with war in Ukraine and the stagflation risks it’s fanning -- is bracing for greater disruption as China scrambles to contain its worst outbreak of COVID-19 since the pandemic began. Since Wuhan two years ago, China has had relative success in minimizing disruption by bringing virus cases quickly under control. Now, the geographic spread of infections and higher transmissibility of the omicron variant is challenging the country’s hawkish pandemic strategy of aggressive testing and locking down whole cities or provinces. If China fails to contain omicron’s spread, further movement restrictions would derail the economy’s promising start to the year, weakening a key pillar of global growth. As manufacturer to the world, any disruptions to exports resulting in shortages could also drive up inflation internationally, just as central banks begin hiking interest rates, like the Federal Reserve is expected to do on Wednesday.
Brief: After the COVID-19 pandemic, corporate players have introduced changes in their operations by enabling flexible work schedules, allowing remote working, and enhancing the employee experience. The hybrid work models are defined as a more flexible, digital, and rewarding future for their employees. According to an article published by GENESIS INTEGRATION, 55% of the US workers want a work pattern that allows the mix of working from home and office. The article data also reveals that more than 2 in 5 working adults (42%) are willing to give up some percentage of their salary for higher flexibility at work. Further, 74% of newer generation would prefer either working from home or splitting work time between home and work, as per the article published by GENESIS INTEGRATION. The rising adoption of a potentially permanent hybrid workforce has led to an increase in operational risk management solutions due to the rise in cybersecurity attacks with remote working. Further, businesses also need to address the increasing risk of internal fraud. According to the article by Risk Management Intelligence in October 2021, employee fraud cases in Asia Pacific region have increased over the past year in the COVID-19 pandemic.
Brief: Private equity set a new standard for itself in 2021 as buyout deal value reached an all-time high of $1.1 trillion, doubling 2020’s total of $577 billion, said global consultancy Bain & Company in a new report. The number of deals greater than $1 billion roughly doubled in 2021, with the average deal size reaching $1.1 billion, increasing 57% to pierce through the $1 billion mark for the first time, according to the company’s 13th annual Global Private Equity Report. One reason for the sharp increase in deal value last year is the sheer volume of capital in the market. After 10 years of steady growth, dry powder set yet another record in 2021, rising to $3.4 trillion globally, with approximately $1 trillion of that sitting in buyout funds. The opportunity to put large amounts of capital to work produced a sudden and sharp increase in public-to-private (P2P) deals, especially in North America and the Asia-Pacific region. These take-private transactions soaked up $469 billion in capital globally, a 57% one-year increase, and were largely responsible for 2021’s record-setting value total.
Brief: Britain’s over 50s were most likely to leave the workforce in the pandemic, suggesting most of the more than half million employees who fell out of the jobs market won’t come back. A surge in economic inactivity where people are out of work and not looking for a job is part of what’s tightened the U.K. jobs market, pushing up wages and fanning inflation. The government and Bank of England are looking for ways to loosen that pressure and halt the rise in prices across the economy that’s coming from higher wages. Findings published by the Office for National Statistics on Monday showed about 493,000 of the people that joined the rolls of the inactive since the start of 2020 were over 50, making 94.4% of the total, the ONS in a series of reports based on the labor force survey.Early in the pandemic, it was young people who fell out of the jobs market, with 229,000 becoming inactive from the fourth quarter of 2019 to the first quarter of 2021. Since then, their inactivity rate has fallen back to pre-pandemic levels while the rate for the over 50s has grown.
Brief: In what now seem the simpler days of December, when there was only a pandemic to worry about, Federal Reserve officials rallied around the view they could tame inflation with modest interest rate hikes while the economy and labor market thrived. A war in Europe has now been layered on top of the health crisis, and when U.S. central bank policymakers meet this week they will have to decide just how much damage has been done to that rosy outlook, and whether their hopes for an economic "soft landing" have been diminished or dashed altogether. The Fed is almost certain to raise its benchmark overnight interest rate by a quarter of a percentage point at the end of its two-day policy meeting on Wednesday. More important will be projections showing just how far policymakers think rates will need to rise this year and in 2023 and 2024 to tame inflation that has blasted past their expectations.
Brief: Shares in Asia-Pacific were mixed on Monday as investors monitored a Covid wave in China. Meanwhile, oil prices continued to be volatile amid the Russia-Ukraine war. Hong Kong’s Hang Seng index dropped 4.97% on the day to 19,531.66, leading losses among the region’s major markets as Chinese tech stocks took a beating: Tencent fell 9.79%, Alibaba slipped 10.9% and Meituan plunged 16.84%. The Hang Seng Tech index tumbled 11.03% to 3,778.60. Mainland Chinese stocks closed lower, with the Shanghai composite down 2.6% to 3,223.53 while the Shenzhen component shed 3.083% to 12,063.63. China is currently undergoing a wave of Covid infections — its worst outbreak since the country clamped down on the pandemic in 2020, and major cities including Shenzhen are rushing to limit business activity. Across Shenzhen’s border, the special administrative region of Hong Kong has also been battling a resurgence in Covid cases in recent weeks.
Brief: Change has been among the only constant for investors during the past two years of the COVID-19 pandemic.Today marks the second anniversary of the World Health Organization declaring COVID-19 pandemic. The lockdown of businesses and economies around the world soon followed. Economic growth ground to a halt. The U.S. economy subsequently entered a recession in February 2020 that lasted until April of that year, according to the National Bureau of Economic Research. Stock markets globally took it on the chin, hard. The Dow Jones Industrial Average tanked nearly 35% from mid-February to March 16 as COVID-19 infections and deaths spread. Even an often teflon stock such as Apple wasn't spared — it plunged 30% from mid-February to mid-March of 2020.In total, there have been 452 million cases of COVID-19 worldwide and more than 6 million deaths, according to WHO.
Brief: Canada's labour market showed signs last month of finally shaking off the shock COVID-19 delivered two years ago, with the share of workers with a job and the unemployment rate besting levels seen just prior to the pandemic. A gain of 337,000 jobs in February more than offset the loss of 200,000 jobs in January and dropped the unemployment rate to 5.5 per cent, falling below the 5.7 per cent level where it was at in February 2020. Statistics Canada said Friday the unemployment rate would have been 7.4 per cent last month had it included in calculations people who wanted a job but did not look for one. The majority of the decline in the ranks of Canada's unemployed came from people called back to work in February after a temporary layoff one month earlier as provinces tightened restrictions to slow the spread of the Omicron variant.
Brief: With the effects of the pandemic receding and a flood of information sources about world events aiding investment managers in thier risk assessment, there shouldn’t be any reason to take copious amounts of risk off the table according to a panel of researchers at the Professional Planner Researcher Forum in Sydney Monday morning. While acknowledging the complications caused by recent geopolitical events including the war in Ukraine, Scott Haslem, chief investment officer at leading wholesale advice group Crestone, said there are enough information channels for managers to incorporate the risks into their investment process. “Geopolitical risk is pretty hard, it’s often a difficult area,” Haslem said. “But I certainly would say that it’s no longer an acceptable answer to say ‘it’s too hard, it’s too binomial, I can’t factor that in’.” “There’s enough research going on around how [Russian President Vladimir] Putin and [Chinese Communist Party leader] Xi Jinping get on and what the implications of the Iranian oil deal is for China, and how that impacts their interaction with North Korea,” Haslem continued.
Brief: Technology industries hold out the potential for decentralized economic vitality. However, for decades, tech has remained highly concentrated in a short list of coastal “superstar” cities—places such as San Francisco, Seattle, and New York. More recently, though, the rise of remote work during the COVID-19 pandemic has spawned new hopes for the spread of tech jobs into the U.S. heartland. Given that possibility, this report probes the latest trends in the geography of tech over the past decade and through the pandemic. Specifically, the analysis examines detailed employment data as well as location-specific job postings to assess local and national hiring trends. Data on firm starts is also examined. Growth in key tech industries has been rapid and resilient in the last decade, including through the pandemic. Software publishing and other information services have led the way. The tech sector has until recently been concentrating, not decentralizing. Prior to the pandemic, tech was adding jobs across much of America, but it wasn’t really “spreading out” in terms of more cities increasing their shares of the sector’s jobs. Instead, coastal “superstars” like the Bay Area and Seattle predominated.
Brief: eFront, a financial software and solutions provider dedicated to private markets, and a part of BlackRock, has released its latest Quarterly Private Equity Performance Overview, covering the period to the end of Q2 2021. The report shows that the second quarter of 2021 was a particularly good one for the global LBO market, delivering a quarterly return of almost 12 per cent. This growth was mostly driven by the European and North American regions. The strongest progression was recorded for the youngest vintage years of 2017-2019. Growth in the VC market, meanwhile, slowed modestly, but this sub-strategy is still delivering a double-digit return for investors. On industry sectors, it was the private equity deals in the Industrials and Financials sectors that accelerated performance most intensively. After the initial shock brought on by the Covid-19 pandemic, the private equity market has bounced back to multi-year highs. Q2 2021 saw a quarterly return of 11.16 per cent for buyout funds globally, while venture capital stood at 11.87 per cent).
Brief: After an unrelenting year of fighting off cyber threats, the financial services sector should expect more of the same or even worse, as nation-state hacking campaigns are expected to mirror geopolitical tensions and ransomware gangs retool to dodge increased scrutiny, according to an industry group report. The Financial Services Information Sharing and Analysis Center, known as FS-ISAC, said in its annual report on cyber threats that global tensions could fuel further attacks by state-backed hackers and patriotic hacktivists. In addition, after a series of devastating breaches on the software supply chain, the group warned that its members need to be wary of potential nation-state meddling in products and services being used. “We expect current trends to continue and possibly worsen over the next year,” according the report, which was released on Thursday. Saying that cybersecurity is “no longer just a back-office cost,” the group warned that cyber threats pose critical business risks, including operational disruption, lawsuits and credit downgrades. FS-ISAC, which shares cyber intelligence among financial institutions around the world, published the report at a time when Russia’s invasion of Ukraine has kept organizations in the U.S. and elsewhere on alert for possible retaliatory attacks. So far, those fears appear largely unrealized, and cyberattacks have played a smaller role in the conflict than many predicted.
Brief: Rising inflation globally is forcing asset managers to reallocate their capital into commodities and real estate, according to new research from Clearwater Analytics (CWAN). A poll of over 100 firms representing more than USD5 trillion in AUM shows that the majority of asset managers favour commodities (58 per cent) and real estate (55 per cent) as their preferred asset classes to combat rising inflation. Interestingly, 42 per cent also see listed equities as part of their asset mix. The research follows the US inflation report last month which showed prices rising at their fastest pace in four decades. While in the UK, prices have also risen sharply in recent months, with the rate of inflation predicted to reach around 7 per cent by spring 2022, according to the Bank of England (BofE).
Brief: The COVID-19 pandemic set off nearly unprecedented churn in the U.S. labor market. Widespread job losses in the early months of the pandemic gave way to tight labor markets in 2021, driven in part by what’s come to be known as the Great Resignation. The nation’s “quit rate” reached a 20-year high last November. A new Pew Research Center survey finds that low pay, a lack of opportunities for advancement and feeling disrespected at work are the top reasons why Americans quit their jobs last year. The survey also finds that those who quit and are now employed elsewhere are more likely than not to say their current job has better pay, more opportunities for advancement and more work-life balance and flexibility.Majorities of workers who quit a job in 2021 say low pay (63%), no opportunities for advancement (63%) and feeling disrespected at work (57%) were reasons why they quit, according to the Feb. 7-13 survey. At least a third say each of these were major reasons why they left.
Brief: Canadian insurer Manulife Financial Corporation said on Wednesday fully vaccinated employees can return to its offices in select locations on a voluntary basis from March 14 as COVID-19 cases in the country ease. “With a decline in average daily COVID-19 cases and hospitalization rates, we are making our Halifax, Montreal, Toronto and Waterloo offices available,” the company said in an emailed statement to Reuters. The country’s biggest insurer had delayed its return-to-office plans for staffers in North America in December due to the fast-spreading Omicron variant driving a surge in cases. Several financial firms across Canada and the United States that had postponed their back-to-office plans late last year as governments reimposed curbs to contain the virus surge, are now looking to reopen offices and issue new guidelines for employees.
Brief: The number and value of acquisitions made by private equity-backed businesses across the UK in 2021 significantly exceeded levels seen in 2019 and 2020, according to Rickitt Mitchell’s Buy and Build Barometer. The latest analysis from the corporate finance firm, conducted in partnership with Experian Market iQ, reveals 578 deals were completed across the UK in 2021, up more than 56 per cent on 2020 (370) and more than double that of 2019 (276). The South East (58) saw the highest number of acquisitions out of any region, followed jointly by East of England and London (47). Elsewhere, Yorkshire (37) was the highest performing Northern region, ahead of North West (24) and North East (14). The UK’s devolved regions were amongst the least active, with Wales (16) ahead of both Scotland (14) and Northern Ireland (5).
Brief: Of around 200 employers surveyed in the San Francisco Bay Area, 71% have either brought non-essential workers back to the office or plan to do so by mid-March, according to a poll released Tuesday by the Bay Area Council, a business advocacy group. Most of the companies surveyed monthly since last year said they expect their workers to come into the office three days or fewer a week, with those days most likely being Tuesday through Thursday, the group said. This “new normal” mode of operations will be in place by June for about 67% of respondents, while 82% see it occurring by August or September. This bodes well for San Francisco, which is struggling with the nation’s weakest office occupancies, stubbornly low transit ridership and one of the country’s slowest job recoveries as remote work leaves downtown streets empty.
Brief: Institutional investors are offloading equities to retail buyers in a traumatized market. While similarities between now and the bottom of the coronavirus crash may end there, memories of how that episode played out are proving hard to shake. Despite breakneck volatility and harrowing images of war, retail traders just plowed money into the equity market for a ninth straight week, according to Bank of America Corp. client data. That’s a stark contrast to the firm’s hedge fund clients, which last week sold US$4 billion of stocks, the most on record. Same thing on Morgan Stanley’s trading desk, where professional speculators have been cutting equity exposure, alongside relentless buying from amateurs. Who exactly constitutes the smart money on post-pandemic Wall Street is a point of debate after mom and pop day traders dove into stocks as they were bottoming two years ago.
Brief: Since the outbreak of the pandemic, mass affluent women in Asia have increased their investment activities to build or expand their investment portfolio, and have been quite successful so far, HSBC finds. HSBC analysed the investment behaviour of mass affluent women in Asia, including Hong Kong, mainland China and Singapore, between 2019 and 2021. Here are the highlights of changes identified in their investment behaviour since the outbreak of COVID: A 14% increase in the number of mass affluent female investors compared to pre-COVID period. Female investors in the study have on average shown a double-digit increase in their trading activities, mainly driven by an increase in stock trading. Over 50% of female investors have increased their investment in different asset classes or added different market exposure within the same asset class compared to pre-COVID to further diversify their portfolios.
Brief: The Great Resignation is turning into a great myth for one Wall Street bank. Morgan Stanley chief James Gorman says the firm has seen relatively few departures in the wake of the pandemic, and certainly nothing like the trend that’s seen U.S. workers quitting their jobs in record numbers. In contrast, he says the bank received about 500,000 job applications last year. Together with a tightening economy that will make job-hopping even harder, that’s further emboldened him to champion a return to regular office life. “At the end of the day, people have to work somewhere,” Gorman said at the Australian Financial Review Business Summit in Sydney on Tuesday. “If the economy turns south a little bit, I think you’ll see much less job mobility than in the last 12 months.” Gorman said that anyone going to a restaurant should also be showing up to the office, reiterating comments that he made last year. They mirror those of his counterparts at Goldman Sachs Group Inc. and JPMorgan Chase & Co., who’ve made banking one of the most aggressive among white-collar industries in driving a return to the office.
Brief: Timed to the two-year anniversary of the COVID-19 pandemic, the Capital One Insights Center has released new research that shows the gap between lower and higher earners continues to widen against new affordability pressures. As part of the Center's ongoing Marketplace Index survey, this latest release dives into the disproportionate impact of the pandemic across income groups against the backdrop of rising inflation. The Marketplace Index is one of the longest-running surveys on the social and economic effects of COVID-19 to date by a private sector enterprise, having run surveys of 2,000-10,000 Americans every four to eight weeks since April 2020. Ahead of the forthcoming Federal Reserve's interest rate decision (3/15), the study addresses consumer sentiment on topics impacting Americans' financial health today. "Americans believe their financial health has declined to levels not seen since early in the pandemic," says Melissa Bearden, Head of Consumer Intelligence at Capital One.
Brief: Two years on, the consequences of the Covid-19 pandemic on workers’ health and well-being are staggering. In addition to lost income and unemployment, the stresses of working or looking for work during the worst public health crisis in generations have taken a punishing toll. Remote work, while literally a life-saver and certainly a job-saver for those to whom it’s been available, has come with costs. Younger workers have struggled to establish critical workplace relationships. The ability to work at any time has turned into working all the time. Parents and caregivers have been stretched past the breaking point. Remote workers who live alone have endured grueling isolation during lockdowns. Meanwhile, workers whose jobs can’t be done remotely have faced the direct threat of the coronavirus, as well as angry and anxious customers and clients, whose outbursts further exacerbate the stress of working through a pandemic.
Brief: Preqin's new Women in Alternatives 2022 report shows that although the alternatives industry has not seen a major drop in the proportion of female employees during the Covid-19 pandemic, there is more work to be done to rectify the marked gender imbalance, especially in senior positions. Gender balance has improved, albeit slowly, across the alternative assets industry as a whole. According to Deloitte, one woman in the C-suite leads to three promotions of women into senior management roles; simply put, the lack of women in leadership positions can negatively affect the prosperity of women in the industry as a whole. Preqin data shows that an eighth (12.9 per cent) of senior positions in the alternatives industry are held by women. As of January 2022, 20.9 per cent of the alternative assets workforce is female – and when looking at investors alone this rises to 24.2 per cent (up from 20.3 per cent and 24.0 per cent respectively a year earlier).
Brief: It’s great to be able to work from home, but even better if you’re a man. That’s according to a New Zealand study, which found that while both sexes mostly liked working from home during the pandemic, women still did the lion’s share of the housework and childcare. “Our study makes it clear that although flexible working has many benefits, it also highlights the difference between what men and women are expected to do around the home,” said Vittoria Shortt, chief executive at ASB Bank, which commissioned the survey. “With women still taking on responsibility for the bulk of domestic chores, the risk is that they are being disadvantaged both at work and in the home.” New Zealand was already adopting more flexible working arrangements before the pandemic, including discussions about shorter working weeks, but the strict nationwide lockdown in 2020 accelerated the trend toward working from home.
Brief: More than 6 million people worldwide have died from Covid-19 two years after the novel pathogen started spreading globally, despite the distribution of vaccines that slashed fatality rates across the globe. The latest 1 million recorded deaths came more slowly than the previous intervals. It took about 125 days to go from 5 million deaths to 6 million, compared to 117 days to hit the 5-million mark and less than 90 days each to reach the 3- and 4-million ones. The pace has returned to what was seen during the first year of the pandemic, when the virus was still taking hold. Covid continues to kill thousands of people every day. Billions more remain unvaccinated, either because they lack access to the shots or are unwilling to receive them, leaving them exposed to the infection and the world vulnerable to new variants.
Brief: More than half of U.K. managers expect to dial back their pandemic-era embrace of remote work and flexible arrangements once Covid-19 recedes, dampening hopes among employees that many of the changes will endure. A survey of U.K. managers and human resources leaders, carried out for workplace management firm GoodShape by Ipsos, showed that more than two-thirds of respondents describe many initiatives currently in place -- from working practices to mental-health provision -- as “much needed.” This is in sharp contrast to what they think will happen. Some 34% managers and HR professionals believe that remote working initiatives will be rolled back after the pandemic, the survey of more than 750 people showed, even though 66% support current policies. Respondents also expect initiatives addressing poor mental health among employees to be rolled back, even though that was the leading cause of work absenteeism in the U.K. in 2021.
Brief: As COVID-19 cases began to fall after the winter Omicron variant surge, governors across the country are beginning to ditch mask and vaccine mandates — presenting a conundrum for business owners who aren't entirely certain if they want to follow suit. Places like Florida and Texas have long abandoned indoor masking requirements, but major coastal cities are finally rolling back COVID-related restrictions. Monday will mark the official end of New York City's vaccine passport system, with the Big Apple already having loosened mask mandates. In California, Los Angeles County will no longer require masks for both vaccinated and unvaccinated people in most indoor places – a key milestone for the Golden State. The change aligns L.A. County with California state rules, which on Tuesday stopped mandating indoor masking for unvaccinated people.
Brief: The UK jobs market hit a two-year high in February as the British economy emerged from the coronavirus pandemic and final restrictions were lifted. According to the latest edition of accountancy and tax consultancy network BDO’s business trends report, the employment index rose for a fourth consecutive month to 110.75, representing a monthly gain of 0.77 points. This was the first time the labour market had returned to pre-pandemic levels, the accountancy firm said, since February 2020 when it came in at 112.86. The index now sits above the 95 level which indicates growth. The easing of restrictions provided a large boost to business optimism in February. As businesses fully re-opened and resumed normal operations, they have also been looking to hire more staff to cope with increased demand.
Brief: JPMorgan Chase & Co., the first Wall Street bank to offer a quarantine subsidy in Hong Kong, is now handing out HK$1,800 ($230) to each of its employees as the city grapples with its largest outbreak of infections during the pandemic. The cash payment will allow staff to treat themselves and their families to a meal once the current restrictions are lifted, a Hong Kong-based spokeswoman said. She wouldn’t provide the bank’s total headcount in the city. The city has closed schools, bars and evening dining, and is planning a mass testing drive coupled with a lockdown to gain control of an outbreak that has overwhelmed its health-care system even as most of the world returns to normal. Banks are now facing a potential exodus of expatriate staff who are fed up with the city’s draconian measures, which also include a two-week quarantine for incoming travelers and a potential isolation in government run facilities.
Brief: A coalition of more than 75 climate change-focused nonprofits want the biggest names in banking and fund management to “stop propping up Putin’s illegal war on Ukraine” by severing all financial ties with Russian energy companies. The organizations, which include Sierra Club and Rainforest Action Network, have requested 100 financial institutions — a group it’s calling the “Putin 100” — put an end to the financing, investing and insuring of companies in Russia's coal, oil and gas industries, and to divest from existing holdings. The letter was sent to firms including JPMorgan Chase & Co., BlackRock Inc and Citigroup Inc.Financial firms are scrambling to respond to Vladimir Putin’s invasion of Ukraine, the worst military conflict on the European continent since World War II, as sanctions pile up and a growing number of companies walk away or distance themselves from Russia.
Brief: The £1bn Janus Henderson UK Property fund may be facing closure as Nuveen has reportedly hired CBRE to independently value the assets in the fund. The fund, which launched in June 1999, is currently co-managed by Marcus Langlands Pearse and Ainslie McLennan. The fund was suspended in March 2020 as the pandemic hit the UK, before lifting ten months later as the economy returned to normal. Since the suspension was lifted, £1bn has been withdrawn from the fund. The fund is a Property Authorised Investment Fund (PAIF) and considers location, tenant strength, lease length and structure, building quality and sustainability considerations when investing. Oli Creasey, property research analyst at Quilter Cheviot, said that if the fund was wound up, "it would come as something of a surprise, as the fund has made it through the difficult period in 2020 when it was forced to close by new FCA rules and has since produced good returns."
Brief: February was the worst month for equity funds since July 2020, as capital flowed out of products in response to Russia’s invasion of Ukraine, according to the latest Calastone survey. Investors abandoned the region, while there was a slight increase in sellers, and inflows fell to £42m over the month, 96% lower than the average monthly inflow over the last year, representing a 79% month-on-month drop compared to January. According to Calastone, funds had inflows of £646m up until 23 February, though as Russia invaded, investors withdrew £604m during the last three days of trading. Head of global markets at Calastone, Edward Glyn, said: "Investors have a lot to worry them at present. Stock markets have certainly fallen since the Russian army invaded Ukraine, but the falls have not indicated a rout."
Brief: Pfizer and Moderna expect $51 billion in combined vaccine sales in the coming year, even as the omicron wave dramatically subsides in many parts of the world and both companies believe the pandemic is shifting into an endemic phase where the virus will be less disruptive to society. Pfizer expects $32 billion in Covid vaccine sales for 2022, while Moderna is forecasting at least $19 billion in sales, the companies said in their fourth-quarter earnings statements released last month. Those are minimum sales, reflecting contracts that have already been signed by nations across the world anticipating their need for the year. But they could be far higher, depending on the trajectory of the virus. Pfizer just raised its 2022 Covid vaccine sales guidance by $1 billion from its previous forecast given to investors in the third quarter while Moderna upped its guidance by $2 billion. The companies’ 2022 expectations come after booking bumper revenues during the the first full year of the Covid vaccine rollout.
Brief: WisdomTree has unveiled four sector-focused thematic ETPs that will seek opportunities in the post-Covid recovery, as well as the energy transition. The ETPs consist of two leveraged and two short/inverse exposure funds to STOXX Europe 600 sector indices, including Travel & Leisure, Automobiles & Parts, and Oil & Gas. Pierre Debru, head of quantitative research and multi asset solutions, Europe, for WisdomTree, said: "Our new launches give investors an even wider suite of products to choose from to express their investment views on the post-Covid economic recovery and the inevitable energy transition megatrend." The funds listed on the London Stock Exchange, Borsa Italiana and Borse Xetra today (2 March), and have management expense ratios of between 0.80% and 0.85%. According to WisdomTree's head of Europe, the launches are designed to complement the firm's existing range of tactical products and are "specifically designed to help investors navigate dynamic financial markets and challenging economic climates".
Brief: CFOs who work alongside their procurement officers can dramatically improve their EBITDA through procurement-related optimization, mitigate risk through supplier resiliency and achieve a competitive advantage in the marketplace. Thanks to inflation, labor shortages and supply chain woes, corporate CFOs are grasping for strategies to enhance revenue and mitigate risks. And, like the virus, the financial situation stemming from the pandemic is lingering longer than many expected. To strike back, CFOs are taking a page from the private equity playbook and turning to procurement as major lever for EBITDA improvement. Instead of viewing procurement as a back-office function, CFOs are embracing many of the same complex procurement strategies PE firms have relied on for years to make quick improvements in a portfolio company’s finances. Now, leaders see what good looks like, and more companies are starting to catch on and adopt this fool-proof cost optimization method.
Brief: While last year was a record-breaker in terms of venture capital doled out to startups, this year is trending to be a much different story. Geopolitical tensions, inflation, expected interest rate hikes, and a seemingly never-ending pandemic are starting to affect the private markets, venture capitalists say. While the effects on the public market are obvious—the Dow Jones Industrial Average is down about 7.5 percent and the Nasdaq Composite, a good indicator of tech prices, is down about 13.5 percent since the start of the year—getting a gauge on the private markets is more difficult. However, those in the industry say although deals are being made, valuations are coming off the highs of last year, and some companies are reevaluating their fundraising efforts. “If you are a special company, you are still getting the valuation you want,” said Mark Sherman, managing director at Telstra Ventures. “But I would say the more ‘meat and potato’ companies are probably down 20 percent in January-February in relation to November-December—some more, some less.”
Brief: Virtual underwriting has become a permanent fixture in private equity fundraising according to a new survey of global LPs, conducted by placement agent Capstone Partners. The survey, which seeks to explore how current underwriting trends impact LP’s ability to make commitments to private equity funds, shows that virtual underwriting has been fully adopted by LPs, with the vast majority virtually underwriting re-ups in 2021, and a comfortable majority virtually backing managers they know well or had met pre-Covid. Just 9 per cent of the 130 global investors said that they had not used virtual processes to underwrite re-ups in 2021. Moreover, the survey highlights how virtual underwriting is now also a valid option for backing new GP relationships, with just 14 per cent of global investors expressing reluctance to use it. North American and European LPs are the most comfortable, with just 3 per cent and 12 per cent respectively unwilling to use virtual processes in new relationships.
Brief: The upending of markets by shifting central bank policy, war and the pandemic is convincing professional investors the time is ripe to put their often-maligned stock-picking skills to work. Hedge funds that make both bullish and bearish equity bets became big buyers of shares in individual companies in February for the first time in four months, prime broker data compiled by Goldman Sachs Group Inc. show. The amount of net purchases in single stocks reached the highest level in the past year. The strategy is far from without its risks in a market being whipped around as violently as this one by war in Europe and anxiety about inflation. As often happens when big, world-changing headlines are moving indexes minute-to-minute, correlations among individual stocks have risen substantially recently.
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