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Brief: Despite increased market volatility following the news that the Omicron virus variant appears to be spreading, its impact on the economy is likely to be less profound than that of its predecessors, according to J.P. Morgan Asset Management. David Kelly, chief global strategist at J.P. Morgan Asset Management, wrote in his weekly note that the “pandemic waves should have a diminishing impact on the economy” as people adapt to the new normal. He predicted that except for travel and entertainment, which heavily depend on in-person interactions, other sectors would see limited disruption. “Many people have simply mentally moved on from the pandemic and will not accept further restrictions on their activities,” Kelly wrote. “Others have adapted their lifestyles to be very efficient even in pandemic conditions, [by] conducting business over Zoom, buying online, and wearing masks into grocery stores.”
Brief: Long/short equity-focused hedge funds are offloading or short-selling stocks that are most exposed to tighter Covid-19 restrictions, against a backdrop of surging coronavirus infections in Europe and heightening concerns surrounding the new Omicron variant. With Covid-19 cases rising across Europe – and Germany, Denmark and Austria recently reintroducing tighter restrictions – equities-focused managers in the US and Europe have cut both their net and gross exposures in recent weeks, now converging near their long-term lows, Lyxor Asset Management observed in its latest Cross Asset Research commentary. Stock markets fell sharply towards the end of last week following the emergence of the potentially more serious Omicron strain – considered a variant of concern by the World Health Organisation - which has resulted in fresh travel restrictions and renewed restrictions in several countries.
Brief: If the Omicron variant of the coronavirus has you worrying about your investment portfolio, you’re probably not alone. The World Health Organization (WHO) says the new variant, which was first detected in South Africa in November, is likely to spread internationally and poses a “very high” global risk. That could mean future surges of COVID-19, with “severe consequences” in some areas, the WHO said in a brief. As we’ve seen in the past, surging COVID-19 cases can impact the market. When the virus first hit the U.S. in March of 2020, the S&P 500 — a benchmark commonly used to measure the strength of the overall stock market — dropped more than 30% between February and March. Since then, there has been a close relationship between which investments do well across all financial markets and whether virus cases are trending up or down. (For example, “defensive stocks” like water, gas and electric utilities tend to do well when cases are rising, since investors move towards investments with less market volatility during uncertain times.) On Friday, the Dow Jones Industrial Average had its worst day of the year as investors, and the S&P 500 and Nasdaq Composite slipped as investors got spooked by the Omicron variant. While stocks rebounded Monday, there’s no way to say for sure how much the new variant will continue to impact the market.
Brief: North American stock markets partially recovered from Friday's steep plunge as crude oil prices rebounded on hopes that the latest COVID variant won't result in new lockdowns. Markets suffered their worst day in more than a year to end last week with each losing at least two per cent on worries about the Omicron COVID-19 variant. News over the weekend that the first cases seemed to induce only mild infection gave investors a sense of comfort and saw risk appetite revive itself somewhat, said Candice Bangsund, portfolio manager for Fiera Capital. "It's still very preliminary and it's going to take a few weeks for scientists and for the population in general to see the severity and transmissibility of this strain," she said in an interview. "Markets are likely to trade in a choppy and uneven manner in the coming weeks until there's more clarity around this new strain and its impacts on the economy." Last week's selloff was short-lived but Monday's relief rally, while encouraging, was relatively muted because expectations for 2022 were optimistic for the global economy.
Brief: Omicron variant has helped the stock recoup heavy losses, but analysts question whether it can sustain sales momentum. Baillie Gifford’s big bet on Moderna has proved difficult this month, as the Covid vaccine maker has seen weaker sales momentum and competition from Covid pill makers, but could the arrival of the Omicron strain signal better times ahead? The Edinburgh manager is currently the largest institutional shareholder in the biotech firm, owning over 42 million shares or a 10.5% stake at the end of September. Currently eight of its funds and trusts hold Moderna in their top 10 holdings, according to FE Fundinfo. Moderna, which develops mRNA medicines to treat infectious diseases, had been the Edinburgh manager’s MVP during a year in which its funds have been battered by the cyclical recovery from the Covid crisis and the Chinese regulatory crackdown. Earlier this year Moderna’s share price was red hot, jumping 330% from $112 at the start of the year to $485 in early August. However, in early November it saw a third of its value wiped after revealing 2021 sales of its Covid-19 vaccine, known as Spikevax, would be around $3bn-$5bn lower than the $20bn previously forecast.
Brief: Investor Bill Ackman said the new omicron variant of the coronavirus could actually give U.S. stocks a boost if symptoms turn out to be less severe. “While it is too early to have definitive data, early reported data suggest that the Omicron virus causes ‘mild to moderate’ symptoms (less severity) and is more transmissible,” Ackman said in a tweet Sunday evening. “If this turns out to be true, this is bullish not bearish for markets.” The founder and CEO of Pershing Square Capital Management added it would be bullish for the equity market and bearish for the bond market.First detected in South Africa, the new Covid variant has now been found in more than a dozen countries, causing many to restrict travel from southern Africa. The World Health Organization labeled the omicron strain a “variant of concern” on Friday when the Dow Jones Industrial Average dropped 900 points to suffer its worst day since October 2020.
Brief: The fate of global markets now depends at least in part on laboratories around the world probing the omicron Covid-19 strain, potentially leaving investors with weeks of uncertainty in the wait for answers. The variant detected in Africa is described as highly worrying and international travel bans are proliferating. Scientists are analyzing whether it can evade inoculations and the severity of illness it causes. Vaccine maker BioNTech SE expects the first data within two weeks, initial findings that will help determine if a passing scare or bigger hit to global economic reopening looms. Reports of mild omicron cases so far brought some stability to markets Monday after a plunge in stocks and crude oil and a spike in volatility on Friday.
Brief: Goldman Sachs Group Inc. economists set out four scenarios for the potential impact on global economic growth from a new coronavirus variant, while adding that it’s too early to adjust their forecasts given it still isn’t clear which is likely to transpire. Downside Scenario: Omicron transmits faster than predecessor, delta. This results in first-quarter global growth slowing to a 2% quarter-on-quarter annual rate, or roughly 2.5 percentage points below Goldman’s current forecast. For 2022 as a whole, the global economy still expands by 4.2%, or 0.4 percentage points below current forecast, while the inflation outlook is “ambiguous. Severe Downside: Both the disease severity and immunity against hospitalizations are substantially worse than for delta. Global economic growth takes a more substantial hit, while “the inflation impact is again ambiguous”.
Brief: Long/short equity-focused hedge funds are offloading or short-selling stocks that are most exposed to tighter Covid-19 restrictions, against a backdrop of surging coronavirus infections in Europe and heightening concerns surrounding the new Omicron variant. With Covid-19 cases rising across Europe – and Germany, Denmark and Austria recently reintroducing tighter restrictions – equities-focused managers in the US and Europe have cut both their net and gross exposures in recent weeks, now converging near their long-term lows, Lyxor Asset Management observed in its latest Cross Asset Research commentary. Stock markets fell sharply towards the end of last week following the emergence of the potentially more serious Omicron strain – considered a variant of concern by the World Health Organisation - which has resulted in fresh travel restrictions and renewed restrictions in several countries.
Brief: BlackRock Inc is offering to reimburse some employees in Hong Kong and Singapore as much as $2,000 to help defray costs of hotel quarantine stays of as long as three weeks. The reimbursement is available to permanent employees in the two hubs, who are vice presidents and below and have more than 12 months of continuous service, according to an internal memo that was seen by Bloomberg News and confirmed by a spokesperson. The program, which went into effect at the beginning of November, will compensate employees 50% of the cost of hotel quarantine. A growing number of global firms in Hong Kong are helping with expenses related to hotel quarantine. JPMorgan Chase & Co. and Morgan Stanley are offering employees about $5,000 to offset quarantine costs amid growing concerns over staff retention in the financial hub.
Brief: Bank of England Chief Economist Huw Pill said new variants of the coronavirus and the risk of another lockdown are some of the risks that could blow off track the view of policy makers that the U.K. economic recovery is maturing. Speaking Friday as the emergence of the Nu variant of Covid-19 roiled global markets, Pill said the arrival of any new strain could disrupt the BOE’s guidance that rates have to rise in coming months. “If there’s a financial disruption, or if there’s the onset again of a pandemic and a lockdown, those are the type of events which clearly would change our view of the world. We hope those things don’t happen, Pill told business leaders in northern England. “We hope those things don’t happen. We don’t really know what the future holds. It’s those unknown unknowns that the most difficult to manage.”
Brief: Money markets are offloading bets on central bank interest-rate hikes in a hurry, as inflation fears give way to concerns that a new coronavirus strain may spread globally and slow economic growth. Traders have pushed back the timing of a 25-basis-point rate increase by the Federal Reserve to September from June, with only one further hike expected for the remainder of 2022. It’s a similar story in the U.K. where the Bank of England is now expected to tighten policy in February instead of next month. Wagers that the European Central Bank will raise its deposit rate by the end of next year have also been slashed, with only a seven basis-point increase priced in, around half of that seen earlier this week.
Brief: UK entrepreneurs are leading the way out of the Covid-19 crisis with the number of new businesses created up 15 per cent in the last year, according to ECI Partners, a growth-focused mid-market private equity firm. According to figures from the ONS, a total number of 405,555 new businesses were created in the UK in 2020/21, compared to 352,575 in 2019/20. Despite the economic challenges of the pandemic, UK entrepreneurs have shown their resilience and the rise in business creation provides an optimistic outlook for new businesses in the UK. Mark Keeley, Partner at ECI Partners, says: “These figures really demonstrate the UK’s strong entrepreneurial spirit, with business leaders focussing on how to thrive rather than simply survive.”
Brief: Bitcoin fell sharply alongside other assets on Friday, hitting a seven-week low and officially entering bear market territory. The world’s biggest cryptocurrency sank nearly 8% in the last 24 hours to $54,315, according to Coin Metrics data. Bitcoin at one point traded as low as $53,549, its lowest level since early October. Bitcoin is down more than 20% from an all-time high of nearly $69,000 which it hit earlier this month. Bear markets are typically defined by a decline of 20% or more from recent highs. Other cryptocurrencies also plunged Friday. Ether, the second-biggest crypto, fell 10% to $4,062, while XRP slumped 10% to around 95 cents. Digital currencies are falling in tandem with other risk assets amid panic over a new, heavily-mutated variant of the coronavirus first detected in South Africa.
Brief: Airline shares tumbled on Friday after the U.K. instituted a temporary ban on flights from South Africa and Germany prepared to restrict entry along with other European Union members. Israel and Singapore have also curbed access from South Africa and neighboring nations to fight an emerging strain of coronavirus that has alarmed health officials across the world. European Commission President Ursula von der Leyen proposed an “emergency brake” on air travel from South Africa, which allows EU member countries to act quickly to limit the risks from emerging virus variants. British Airways parent IAG SA sank 21%, while Deutsche Lufthansa AG fell 14%. Ryanair Holdings Plc, Air France-KLM and other European airlines registered drops of similar magnitude.
Brief: Nearly 40 per cent of Canadian businesses say they do not expect a return to pre-pandemic profitability levels by the end of next year, as concerns about rising inflation and new waves of COVID-19 weigh on business prospects. That's according to HSBC's most recent Voice of Business survey of more than 7,300 business leaders in 14 countries, including 536 Canadian companies. The survey found that 25 per cent of businesses will reach pre-pandemic levels of profitability by the end of the year, and another 36 per cent expect to hit those levels by the end of 2022. But other companies expect a more prolonged recovery period, with 39 per cent reporting that they will return to pre-pandemic levels of profitability after 2022. The survey also found that Canadian businesses are feeling more pessimistic about their future growth prospects than entrepreneurs in other countries. In Canada, 56 per cent of businesses say they feel more optimistic than they did a year ago – a time that was marked by COVID-19 uncertainty – compared to 72 per cent in the U.S. and 64 per cent globally.
Brief: A new wave of junk downgrades looms over Europe as the region shudders under one of the worst outbreaks of the pandemic. Some 84 bonds worth 46 billion euros ($52 billion) are on the cusp of losing their investment-grade ratings -- marking a reappearance for fallen angels that had all but vanished this year, according to Bloomberg Intelligence analysts. “With European lockdowns back on, fallen angels are a worry,” Mahesh Bhimalingam and Bhumika Gupta wrote in research published Thursday. There was just one fallen-angel downgrade in Europe in the past six months, they wrote. The downgrades are another sign of cracks emerging in the European credit market that’s been buttressed by central bank bond buying for years and even more so during the pandemic. But now that support is set to diminish as soon as March -- and the prospect is pushing up borrowing costs and volatility. The risk premium in euro-denominated corporate bonds, as measured by Bloomberg indexes, just rose above 1% for the first time in more than a year. This comes as spread volatility is rising to multi-month highs from depressed levels.
Brief: Euro-area business activity unexpectedly quickened, though the region’s recovery faces headwinds from a fresh wave of Covid-19 infections and “record inflationary pressures.” IHS Markit’s composite Purchasing Managers’ Index rose to 55.8 in November from 54.2 in October, according to a survey of purchasing managers by IHS Markit published Tuesday. While that defies the median estimate in a survey of analysts that forecast the measure would retreat, it still points to weaker economic growth in the closing quarter of 2021, the report said. That’s partly down to the pandemic’s latest surge across Europe, which looks set to cause renewed disruptions to the economy in December. Any new lockdowns are likely to hit the currently thriving services sector, while manufacturing is already suffering from a global supply squeeze.
Brief: European stocks eked out small gains on Wednesday as traders digested a fresh batch of economic data and monitored the region’s latest Covid surge. The pan-European Stoxx 600 closed up 0.1% after choppy trading earlier in the session. Telecoms shares rose 1.2% to lead the gains while autos stocks sank 1.5%. European investors continue to monitor the acute Covid crisis in the region this week, with more countries considering stricter restrictions and partial lockdowns to curb rising infections. Germany is expected to make a decision on stricter measures on Wednesday amid a surge in cases there, and France recorded more than 30,000 new daily infections on Tuesday for the first time since August. In political news, German parties agreed to form a three-way coalition after almost two months of talks. The deal will see Olaf Scholz, the center-left Social Democratic Party’s candidate, become Germany’s next chancellor, replacing Angela Merkel who has led Germany for 16 years.
Brief: The head of Hong Kong’s securities watchdog categorically defended the government’s restrictive quarantine policy, saying that it will not affect the city’s status as a global finance hub. “There will be no long-term impact on Hong Kong as an international financial centre,” said Ashley Alder, chief executive of Securities and Futures Commission. Alder, who is currently undergoing a 21-day quarantine after returning from the COP26 climate summit in Glasgow, answered media queries from his hotel room as he remotely took part in the SFC Regulatory Forum. Other financial centres like Singapore, London and New York have eased travel restrictions and opted for “living with Covid”. Hong Kong, on the other hand, has adopted a zero-Covid-19 policy and requires travelers to undergo up to 21 days of compulsory quarantine. “The other cities cannot replicate what we are doing,” he said. “Hong Kong has a range of successful cross-border trading schemes with the mainland, including the two Stock Connect schemes, Bond Connect and Wealth Management Connect schemes.”
Brief: The European Central Bank may decide to only put its 1.85 trillion-euro ($2.1 trillion) pandemic bond-buying program on hold rather than abolish it after net purchases are set to end in March, according to Governing Council member Robert Holzmann. The program, which was launched in 2020 to address the pandemic shock and fragmentation on euro-area bond markets, could enter a “waiting room” rather than be terminated as the ECB’s crisis response moves into a new phase, Holzmann said at a news briefing in Vienna. This will be in order to “save the advantages of flexibility in case they become necessary in the event of economic shocks, which are definitely possible, but we do not expect,” he said.At issue is the question whether the ECB should hold on to the versatility of its crisis tools even after it shifts its focus on more conventional instruments.
Brief: German business confidence took another hit in November, with a new wave of Covid-19 infections looming over the economy and rising inflationary pressures threatening to weigh on manufacturing. A gauge compiled by the Munich-based Ifo Institute dropped for a fifth straight month to its lowest since April. Economists had predicted a decline to 96.7. Expectations for the next half year also worsened. The report underscores mounting challenges facing German businesses, which are now facing a resurgent pandemic -- having already struggled with supply disruptions for most of 2021 as demand across the globe rebounds following lockdowns. A separate purchasing managers’ index Tuesday showed “unprecedented inflationary pressures” are threatening to restrain output in the coming months. The Bundesbank warned this week that inflation may approach 6% in November, and could stay elevated for a longer period than originally thought.
Brief: Nordea Bank Abp is urging its employees in Denmark to bring a Covid certificate when working at the office. The biggest Nordic bank isn’t currently checking whether employees have a Covid passport, but said staff are “expected to act responsibly” and follow hygiene protocols. The purpose is to limit the spread of the virus, a Nordea spokesman said in an emailed response to questions. The lender also provides Covid testing at its largest locations in Denmark. Nordea’s move comes at a time when Denmark is working on rushing through legislation that will allow employers to demand workers have a valid Covid passport. And even though those proposals are not yet in place, they do have the backing of a major labor organization.
Brief: As coronavirus ripped through Britain and businesses faced a potentially fatal cash squeeze, a company controlled by one of the U.K.’s richest financiers, John Beckwith, received a taxpayer-backed relief loan for about 3.7 million pounds ($5 million) — even though the firm hasn’t been trading for years. A Bloomberg News review of almost half of the loans granted under the U.K. government’s 26.4 billion-pound Coronavirus Business Interruption Loan Scheme (CBILS) shows that lenders handed out more than 130 million pounds to companies with similarly questionable claims, despite a requirement that borrowers had to be negatively affected by the pandemic. One emergency loan, for 4.7 million pounds, went to a firm founded just two days before it received the funds, corporate records show.
Brief: Zoom Video Communications Inc., the poster child of the so-called “pandemic winners” basket, is losing more of its luster. The video conferencing company slumped 15% to close at the lowest since June 2020. Its latest quarter showed slowing growth as people started socializing in-person -- also a trend that roiled the shares of other lockdown winners Peloton Interactive Inc. and Teladoc Health Inc. Including Tuesday’s losses, Zoom saw about $100 billion wiped out from its market value since its October 2020 peak, which is a decline of 64% for the stock. Despite the pullback, the stock is still up nearly 500% since its 2019 debut. Both Zoom and Peloton have given back the bulk of their gains since the pandemic’s onset, suffering lockdown withdrawal symptoms.
Brief: EY has published the 2021 EY Global Alternative Fund Survey, which offers a comprehensive overview of the perspectives from alternative fund managers and the institutional investors who allocate to these asset classes. The 15th annual survey sheds light on the topics that will be transforming the industry for years to come, including investors' improved perception of alternative funds; the growing importance of ESG and diversity, equity and inclusion (DEI) considerations; and the industry's view on product and strategy expansion into areas such as digital assets and an increased desire for exposure to private markets. "Beyond reflecting on how alternative fund managers and their investors addressed the ongoing challenges posed by COVID-19, this research highlights the resilience of our industry and the key transformations that managers and investors are partnering to affect," saisaysd Natalie Deak Jaros, EY Global Hedge Fund Co-leader and Americas Wealth & Asset Management Co-leader. "2021 was a year in which the industry invested to build significant momentum around various initiatives that will pay dividends for years to come."
Brief: Investment managers expect companies to restrict executive bonuses if government support has not been paid back during the year under review, according to the Investment Association (IA) latest annual pay guidelines. The majority of companies have been sensitive to the experiences of their stakeholders, employees and customers throughout the Covid-19 pandemic when deciding on pay and bonuses. According to the trade body, 13% of the 83 FTSE companies analysed were "colour topped" by the Institutional Voting Information Service (INVIS) for their Covid response during the 2021, AGM season. The colour code, or ‘Top’, helps highlight the severity of issues to be considered. The IA also wrote to the chairs of FTSE 350 Remuneration Committees, which told companies that ESG metrics should also determine executive pay and bonuses. Fund managers want to see that ESG metrics are clearly linked to company strategy. “The rationale and robustness of ESG performance-related targets should also be made clear to investors,” the IA wrote. “Companies with ESG risks and opportunities incorporated into their long-term strategies should have these similarly incorporated into their remuneration structures, and where they haven’t, should explain to investors how they will do this in future years.”
Brief: Euro-area business activity unexpectedly quickened, though the region’s recovery faces headwinds from a fresh wave of Covid-19 infections and “record inflationary pressures.” IHS Markit’s composite Purchasing Managers’ Index rose to 55.8 in November from 54.2 in October, according to a survey of purchasing managers by IHS Markit published Tuesday. While that defies the median estimate in a survey of analysts that forecast the measure would retreat, it still points to weaker economic growth in the closing quarter of 2021, the report said. That’s partly down to the pandemic’s latest surge across Europe, which looks set to cause renewed disruptions to the economy in December. Any new lockdowns are likely to hit the currently thriving services sector, while manufacturing is already suffering from a global supply squeeze.
Brief: For the first time in history, private equity is on track to invest more than USD1 trillion in American businesses over the course of a single calendar year, according to the American Investment Council’s (AIC) 2021 Q3 Investment Trends Report. Through the end of the third quarter, private equity has invested USD788 billion in 4,806 businesses across the United States. The amount invested represents an 86 percent increase from the same period in 2020. “Today’s report confirms that private equity has been a critical partner to help businesses of all shapes and sizes as the American economy recovers from the COVID-19 pandemic,” says AIC President and CEO Drew Maloney. “Private equity is a particularly critical partner for small businesses that need the capital and expertise to survive and grow. The industry’s continued growth is a testament to the strength of these partnerships and private equity’s critical role in powering the American economy.”
Brief: As COVID-19 cases stabilize and Cambodia enters a post pandemic recovery phase, schools have been reopening under the “back to school” campaign. Prudential Cambodia has committed $100,000 in 2021 to support the Ministry of Education, Youth and Sports and other NGO partners in their efforts to provide quality education as well as ensure public safety. The funds will be used to donate high quality thermometers and masks, and other necessary items to encourage students especially those in middle or higher education to return to school. His Excellency Dr. Hang Chuon Naron, Minister of Education, Youth and Sports said, “I would like to thank Prudential Cambodia for their support on our back to school campaign which will enable children to continue their education during this challenging time”. “Prudential is committed to supporting our communities as they recover from the pandemic. Education is critical to an individual’s success in the future and we are happy that we are able to help parents and students in Cambodia continue to access quality education in a safe manner,” said Mr. Sanjay Chakrabarty, Chief Executive Officer, Prudential Cambodia.
Brief: JPMorgan Chase & Co. is offering to reimburse Hong Kong employees up to $5,000 to compensate for their quarantine stay as the financial hub sticks to its zero-Covid policy. All Hong Kong-based employees who are executive directors and below may claim the amount for a single quarantine stay for personal trips undertaken by employees visiting immediate family members, which includes spouses, domestic partners, children, parents and grandparents, according to an internal memo. A Hong Kong-based spokeswoman confirmed the content.“We recognize that the costly quarantine measures in place in Hong Kong associated with COVID-19 have impacted many of you with respect to visiting family and loved ones overseas,” JPMorgan’s Hong Kong chief Harshika Patel said in the memo. The program applies to employees under quarantine between Dec. 1, 2021 and Nov. 30, 2022, the memo said.
Brief: The pan-European Stoxx 600 slipped 0.2% by mid-afternoon, with telecoms climbing 1.3% while travel and leisure stocks fell 1.3%. U.S. stock futures pared earlier gains but were still up marginally in premarket trading on Monday ahead of the holiday-shortened week stateside. U.S. markets will be closed on Thursday on Thanksgiving Day and the stock market closes early at 1 p.m. ET on Friday. Stocks have a track record of posting gains in Thanksgiving week, which will potentially set the stage for a year-end Santa rally. European investors will be keeping an eye on the spread of Covid-19 across the continent after Germany and Austria re-imposed strict containment measures last week. Another big market-moving event this week will be President Joe Biden’s nomination for the next Federal Reserve chief.
Brief: The world economy is approaching the northern hemisphere winter in disarray, unable to shake off the coronavirus crisis amid persisting supply disruptions, soaring prices and resurgent outbreaks. Global surveys of purchasing managers this week are likely to point that way. Among the outcomes anticipated by economists are slowing manufacturing and services activity throughout the euro zone and the U.K., and only modest improvement in the U.S. With parts of Europe confronting renewed restrictions to contain another wave of the virus, China’s rebound fading and rising infections taking hold in America too, much of the global economy is now staring at the threat of a second northern winter of woe, compounded by a cost-of-living squeeze amid surging gas prices and supply bottlenecks.
Brief: Manulife Financial Corp. plans to reopen its Canadian and U.S. offices on Jan. 24, with some employees on hybrid models that will bring them into the workplace three days a week. Many workers will visit the office on Mondays, Wednesdays and one additional flex day per week, Chief Executive Officer Roy Gori and the firm’s executive leadership team said in a memo to staff on Friday. “We have listened to your feedback, heard from medical experts and government officials, and talked with our peers across the market,” the executives said in the memo. “Our goal is to balance the flexibility many of us have enjoyed as a silver lining to the pandemic with our amazing on-campus culture where we can get it done together.” Manulife’s announcement comes two days after Bank of Nova Scotia, Canada’s third-largest lender by assets, set Jan. 17 as the date it would start a phased return to office.
Brief: The outlook is still good for investors, says Luca Paolini, chief strategist at Pictet Asset Management. “Equity prices have reached a record high, up nearly 100 per cent from the pandemic low, much faster than anticipated. Whilst the outlook should seem good for investors, some factors will cap the expected returns for both equity and bonds in 2022. “Record valuation, tighter monetary/fiscal policy and the surge in inflation will keep the pressure on, resulting in single digit return for equities. Bonds, we think have entered a secular bear market, although a significant breakout in yields looks unlikely.” “Next year will be ‘less of the same’, rather than a turning point. We are in the last third of the expansion in what has been the most accelerated market and business cycle in history.”
Brief: The UK and US are driving forward the rapid growth of the global healthtech sector, with latest data from London & Partners and Dealroom.co showing a record USD51.3 billion has been pumped into startups already this year, up 280 per cent on 2016 levels. The findings have been released to coincide with this week’s Silicon Valley Comes to the UK event series, bringing together investors, entrepreneurs and CEOs from the UK and the Bay Area both physically and virtually to discuss the role of technology in building a better future and solving the great challenges of our time. As the world continues to tackle the impacts of coronavirus, the pandemic has acted as a catalyst to an already growing healthtech sector and investment has reached record highs in 2021. The US leads globally with USD31.9 billion in VC investment so far this year, while the UK comes in third with USD3.8bn, close behind China’s USD4.1 billion.
Brief: Resurgent concerns about COVID-19 in the face of looming European lockdowns weighed on a range of sectors Friday, pushing stocks and oil down and boosting the dollar. Wall Street opened the day mixed, with the tech-heavy Nasdaq posting a record open but the blue-chip Dow dipping on fears the economic recovery could stall. The Dow Jones Industrial Average fell 0.7%, the S&P 500 lost 0.08% and the Nasdaq Composite added 0.42%. The MSCI world equity index, which tracks shares in 45 nations, fell 0.16%. European stocks also retreated from record highs as the specter of a fresh COVID-linked lockdown in Germany and other parts of Europe cast a shadow over the global economy. Markets went into a tailspin after news that Austria will become the first Western European state to reimpose a full lockdown to tackle a new wave of coronavirus infections and signs that Germany might do the same.
Brief: The selection of service providers – be they prime brokers, administrators or software systems – is more important than ever before following the seismic upheaval faced by hedge fund firms over the past 18 months. 2020 and 2021 proved to be “a different world” for hedge funds and the financial services industry more broadly, with firms being forced to evolve through working and trading remotely amid the Covid-19 pandemic, said Billy Murray, head of prime at InterTrader, during the service provider-focused panel at this year’s hedgeweekLIVE European Emerging Manager Summit. That, in turn, has thrown the whole business of selecting and managing service provider relationships into ever-sharper focus for start-up hedge funds, which Murray said is “more important than ever before”.
Brief: This year’s hedgeweekLIVE European Emerging Managers Summit examined how start-up funds can best organise their approach to operational due diligence, with attendees hearing how cybersecurity and succession planning have emerged as key considerations as a result of the coronavirus pandemic. Sarah-Jane O’Sullivan, director at Willis Towers Watson, set out a range of corporate governance and front-, middle-, and back-office functions which remain central to the ODD process. Along with IT and HR, there has also been an increased emphasis on controls around cybersecurity as a result of Covid-19 and homeworking, according to O’Sullivan and panel moderator Thomas Deinet, executive director at SBAI. The session heard how the wholesale moves towards cloud-based tech have heralded sweeping changes to the operational due diligence process over the past decade, which had been further accelerated by Covid, in turn bringing added cybersecurity challenges.
Brief: Since buying the Tampa Bay Lightning in 2010, Jeff Vinik has looked to transform downtown Tampa. The NHL team has improved on the ice, winning the 2020 and 2021 Stanley Cups, and he has spearheaded a more than $3.5 billion real estate development. While Vinik told CNBC’s Diani Olick that he is “no commercial real estate expert” during a CNBC Evolve Livestream on Wednesday, the 56-acre development is putting a big bet on office space with more than 1-million-square-feet of new space and the first office tower to be built in Tampa in over 25 years. That comes as the commercial real estate market is still trying to find its footing amid the pandemic as employers and workers embraced hybrid and virtual work arrangements. For example, a recent survey found that only 28% of Manhattan office workers are back at their desks and fewer than half will return by January.
Brief: CEO turnover spiked in the first half of 2021, as companies tapped new talent to navigate the aftermath of the COVID-19 pandemic and stressed-out chief executives sought a career change, a study from recruiting firm Heidrick & Struggles found. The findings illustrate how CEOs are not immune to the exhaustion that has swept hundreds of millions of workers worldwide since the onset of the pandemic and has pushed many to consider a new job or lifestyle in a wave dubbed "The Great Resignation." "Our belief is that it will only accelerate going into next year as people have delayed their retirements," said Jeff Sanders, co-managing partner of Heidrick's global CEO and board practice. There were 103 CEO appointments in the first half of 2021 out of 1,095 companies in 24 regions that Heidrick studied, including the United States, China and some European countries.
Brief: The boss of HSBC Holdings Plc, the biggest bank in Hong Kong, said he won’t do anything that would put the city’s efforts to open up travel to mainland China at risk, even as criticism of the financial hub’s zero-Covid policy grows. In an interview at the Bloomberg New Economy Forum in Singapore, Chief Executive Officer Noel Quinn said he currently has no plans to visit the city, the lender’s biggest market. “It’s important for Hong Kong to establish what they need to establish with China on reopening,” he said in an interview with Francine Lacqua. “I don’t want to do anything that may jeopardize that. I would love to get back to Hong Kong as soon as I can and when the authorities feel it’s right for me to go back, I will.” The finance industry has been ratcheting up pressure on Hong Kong to ease its quarantine rules and abandon its zero-Covid policy amid concern it is becoming increasingly difficult to recruit and retain talent.
Brief: Asset managers need to rethink the way they hire, manage, and keep the best people — and fast. Industry executives agree that the pandemic has fundamentally changed the way people want to work and managers need to take those changes seriously and invest in training and support services to make it all function. On Thursday, Deloitte provided some evidence for the big post-pandemic shift. The so-called workplace talent model will continue to change next year, according to Deloitte’s 2022 investment management outlook report released Thursday. Based on a survey of 400 senior investment management executives from July to August of this year, the consulting firm expects that asset managers will invest what’s needed and strengthen their talent organizations. That includes everything from work-from-home policies, comprehensive training, and infrastructure; diversity equity and inclusion; and strategies to communicate a sense of purpose to employees, among other things.
Brief: The increased use of automated trading is turning asset managers into liquidity makers rather than liquidity takers and has prompted sell-side market makers to call for an overhaul of market rules.This is the finding of a new report into equity and fixed income markets commissioned by the FIA EPTA, the trade association for market-making firms.The report, Turning the Tables on Liquidity Provision, written by Redlap Consulting, found that the greater use of automated trading, driven by the pandemic, has given buy-side firms greater access to a wider range of trading partners and reduced their reliance on traditional sell-side market makers.More than two-thirds (67%) of asset managers now see transparency as a key factor in their selection of liquidity partners while a similar number (70%) said that data and technology play a greater role in deciding where they trade.
Brief: Bank of Nova Scotia plans to start a phased return-to-office plan for headquarters employees who are still working remotely on Jan. 17, marking a major commitment for a broad return from one of Canada’s largest banks. The return will be staggered for different groups, and the majority of head-office employees will be working in a hybrid model, spokesman Clancy Zeifman said in an e-mailed statement Wednesday. All employees at Toronto-based Scotiabank will be required to follow the bank’s mandatory vaccination policy. Canada’s banks have kept the majority of their headquarters employees working remotely as the country has maintained many of its pandemic safety measures into the fall. Scotiabank’s target date for a broad return was selected based on guidance from medical advisers and in consultation with the government, Zeifman said.
Brief: Increasingly stretched prices in property and financial markets, risk-taking by non-banks and elevated borrowing pose a threat to euro-area stability, the European Central Bank warned. While the economic recovery from the coronavirus crisis means near-term risks have dissipated, vulnerabilities are accumulating with potentially grave consequences down the line, according to the Frankfurt-based bank. “Concerns particularly relate to pockets of exuberance in credit, asset and housing markets, as well as higher debt levels in the corporate and public sectors as a legacy of the pandemic,” it said Wednesday in its Financial Stability Review, echoing former Federal Reserve Chairman Alan Greenspan’s description of the dot-com bubble in the 1990s.
Brief: Over two-thirds, or 67%, of private equity firms have cited market conditions over the last year as a key barrier to deploying capital, according to a new market report from Gallagher, although 57% said the out-turn over the period was either better than expected or exactly as expected. The report, which surveyed 150 private equity firms across the US, UK and Asia, also revealed this was significantly down compared to findings in last year's survey, in which 88% of firms said the out-turn was in line with their expectations. Limited capital capability was felt most acutely in the UK, with 72% of firms revealing conditions prevented capital deployment, compared to 62% of firms in Singapore, where it was least acute, possibly reflecting the harsher effects of the pandemic across Europe.
Brief: Greed is outpacing fear in world financial markets as investors respond to the pandemic recovery, Goldman Sachs Chief Executive David Solomon says, adding that such periods of exuberance are usually not long-lived. Solomon told Bloomberg's New Economy Forum in Singapore on Wednesday the global economy was facing a 'complicated time' as activity began to strengthen after the sudden shutdown in many parts of the world in 2020 because of coronavirus. The unprecedented levels of stimulus ordered by governments and central banks, he said, had led to exuberance in certain markets. "I think markets generally when I step back and I think about my 40 year career, there's been periods of time when greed has far outpaced fear. We were in one of those periods of time," Solomon told the Singapore event.
Brief: Corporate executives are signing up for acres of new office space in London as they attempt to lure workers back to their desks. Demand for offices in the U.K. capital has rebounded sharply with businesses committing to 819,000 square feet of new space in the six months through September, British Land Co. said in a statement Wednesday. That’s the equivalent of more than 10 soccer fields and includes a new headquarters for law firm Allen & Overy at the developer’s 1 Broadgate development, which is fully pre-leased ahead of completion, and space to Facebook-owner Meta Platforms Inc. There is a “renewed optimism in London offices with occupiers more confident of committing to space as their employees return to the office,” the landlord said in a statement. “Demand is firmly focused on the very best space, with an emphasis on sustainability, wellness, shared and flexible space and excellent transport connections.”
Brief: Global dividends are expected to hit pre-pandemic levels by the end of the year, according to Janus Henderson, as third quarter figures surge.This is particularly the case for companies in Europe, parts of Asia and emerging markets, the asset management firm said.Dividends jumped 22% year-on-year reaching $403.5 billion, an all-time high for third quarter figures.The majority of companies globally either raised their dividends or held them, while mining dividends were found to drive two thirds of the increase. Recently restored banking dividends also made a significant contribution. Janus Henderson said dividends are now expected to surpass the pre-pandemic peak by the end of December 2021.
Brief: Banks are poised to hand investment bankers and traders their biggest bonuses since the financial crisis, with hopes the cash will stem the high levels of turnover sweeping across Wall Street. Equity and debt underwriters will be the biggest winners, with a jump of as much as 35% from a year earlier, according to a report Tuesday by compensation consultant Johnson Associates Inc. Equity traders and M&A bankers may see a 25% increase. Fixed-income traders could be the lone losers, with their bonuses potentially sinking as much as 5%. “Our clients are going to pay people well” amid concern about employee turnover, Alan Johnson, managing director of Johnson Associates, said in an interview. “The business results are terrific so there’s no holding back.” The Covid-19 pandemic was a boon for Wall Street, first with a trading surge on wild market swings and then a dealmaking boom.
Brief: As economies reopen following months of disruption, economic uncertainty remains. Interest rate rises loom, China's economy slows, and concerns grow about mounting inflation. Headlines also warn of perfect storms, black swans, and bottlenecks. While disruption to global supply-chains is serious, the news stories bely the recovery of sectors worst affected by Covid-19: sports, hospitality, and entertainment. Hotspots within these sectors present attractive opportunities for investors to start positions in solid structural winners during a moment of short-term weakness. The 'empowered consumer' investment theme offers a way to identify these opportunities, as it recognises the influence consumers have on the companies they buy from, the use of data and technology by these companies, and the vertical business models that provide a substantial barrier to entry for competitors.
Brief: JP Morgan’s billionaire leader govt Jamie Dimon used to be allowed to skip Hong Kong’s strict 21-day resort quarantine laws as a result of he runs “an overly large financial institution” with “key industry in Hong Kong”, the territory’s leader govt, Carrie Lam, stated on Tuesday. Dimon flew into Hong Kong on Monday on JP Morgan’s non-public jet, turning into the primary Wall Side road financial institution boss to seek advice from the territory or mainland China for the reason that pandemic started. Wondered about why Dimon used to be allowed to go into the territory with out complying with coronavirus laws, Lam stated: “The justification is said to financial system, as it is a very large financial institution with key industry in Hong Kong. He had to come and paintings for roughly an afternoon in Hong Kong. However there are restrictions, together with restrictions over his itinerary, so the chance is totally manageable.”
Brief: Bugcrowd, the world's first crowdsourced cybersecurity platform for multiple solutions, today released its annual Inside the Mind of a Hacker '21 report, which provides CIOs and CISOs valuable insight on ethical hackers and the economics of security research. New findings indicate a startling shift in the threat landscape with 8 out of 10 ethical hackers recently having identified a vulnerability they had never seen before. This comprehensive annual study offers an in-depth look at ethical hackers to reveal how they reduce risk, which industries leverage their expertise most, and what organizations are doing to attract high-performing security researchers to their programs. It also indicates the growing geographic disparity in crowdsourced cybersecurity investment, with continental Europe allocating 79% less budget to ethical hacking than North America.
Brief: The sweeping changes and far-reaching trade upheaval brought about by Brexit and Covid-19 heralds sizable investment opportunities for hedge fund managers, according to a new study by IG Prime. The report – ‘An Analysis of Post-Brexit Economies’ – examines the impact of Brexit on international trade, gauging potential growth areas in specific sectors, and considers the broader trends unfolding from evolving international trade patterns as a result of the UK’s decision to leave the European Union. Specifically, the report probes the UK’s main exports prior to Brexit – such as precious metals, vehicles, and pharmaceutical products – as well as the main exporters of those same products in the EU and Singapore, in order to determine which countries may be set to increase exports. It also looks at the impact of the Covid-19 impact on trade over the course of 2020.
Brief: OneStream Software, a leader in corporate performance management (CPM) solutions for the world’s leading enterprises, has announced the results of its "Enterprise Financial Decision Makers Outlook - October 2021" survey. The study, conducted by Hanover Research, targeted finance leaders across North America and identified the factors driving their budgets and technology adoption plans for 2022. The COVID-19 pandemic had a long-lasting impact on many companies, but 2021 led to some positive business resurgence. Of the organizations surveyed, four out of ten indicate they have grown since the start of the pandemic. Of those growing, 70 percent are experiencing growth equivalent to pre-pandemic business results.However, 31 percent are still stagnated and another 30 percent have shrunk since March/April 2020. Many financial executives have a renewed focus on the future, exploring people-focused initiatives, technology adoption and new reporting measures for next year.
Brief: US Treasury secretary Janet Yellen has said that the only way to bring inflation back down is to continue to “make progress against the pandemic”, according to the FT. "The pandemic has been calling the shots for the economy and for inflation," Yellen told CBS's ‘Face the Nation' programme. "And if we want to get inflation down, I think continuing to make progress against the pandemic is the most important thing we can do." US inflation reached its highest level since 1990, as October's consumer price index soared 6.2% year-on-year, and recorded a month-on-month increase of 0.9%, exceeding consensus expectations. The FT reported that Yellen expects the recent rise in prices of certain goods, such as fuel, to come down in the second half of next year as long as the economy recovers from Covid-19.
Brief: Firms such as State Street Corp. and CF Global that offer outsourced trading services are seeing more inquiries in Asia as fund managers and family offices look to cut costs and set up contingency plans. Asia, and China in particular, has lagged behind other regions on the outsourcing front because of a reluctance by particularly family offices to go outside for help, according to executives in the industry. That is now slowly changing in part as the pandemic revealed the need to have backups. “Asia is catching up,” said James Woodward, APAC head of portfolio solutions who runs the outsourced trading desk at State Street, which has been offering the service in Asia since 2010. “There’s obviously an education phase, but as we move forward, some of those Asian funds embrace the benefits that can be garnered from some of these firms’ investments in all the technology and infrastructure and capability sets.”
Brief: It's a new world for European asset managers. In the wake of the pandemic, a growing number of their clients have begun to opt for online communication tools rather than in-person conversations, and these businesses have been forced to rapidly rethink their sales and marketing strategies to meet the demand. According to a Cerulli report, managers in major European economies such as the U.K., Spain, and France are planning to increase their sales headcount and adjust their marketing strategies to catch the latest communication trends. More resources will be deployed to video production, social media, and brand development, a trend that will likely continue as managers compete for digital attention.During the early stages of the pandemic, European asset managers rushed to develop virtual communication tools to show their clients that “they were there if needed,” according to Fabrizio Zumbo, associate director of European retail and wholesale research at Cerulli.
Brief: AstraZeneca Plc is moving to profit from the COVID-19 vaccine it developed with the University of Oxford after watching Pfizer Inc. and Moderna Inc. reap huge returns over the past year of the pandemic. The U.K. drugmaker will start generating modest profits from the shot as new orders are received, AstraZeneca said in a statement Friday. The vaccine will continue to be sold at cost for developing nations. The company is shifting to a for-profit model even as many countries grapple with rising COVID cases. AstraZeneca Chief Executive Officer Pascal Soriot said COVID is moving into an endemic phase, and the move is in line with the company’s plan early in the crisis, when it pledged not to profit from the vaccine as long as the disease remained a pandemic.
Brief: Respondents to Dykema’s 17th annual M&A Outlook Survey believe nothing will break the stride of US M&A dealmakers over the year to come, with most viewing the Biden administration’s legislative agenda as positively impacting activity. A resounding 75 percent of respondents expect the US M&A market will strengthen in the next 12 months, while only 7 percent anticipate it will weaken. Respondents not only predict deal volumes will be up across the board, from small to mid-market to mega-deals of USD1 billion and more, but 9 out of 10 also expect M&A activity among privately owned businesses to increase over the next year… “This might stem from ongoing supply chain and labor shortage issues associated with the pandemic as well as the general, but persistent, uncertainty it brings,” says Jeff Gifford, leader of Dykema’s Corporate Finance practice group. “That said, now even after the surge in cases, dealmakers have learned how to manage Covid-19-related uncertainties, with respondents ranking Covid-19-related delays sixth in order of the most common obstacles they experienced in deal-making last year.”
Brief: The trading desk was just embarking on a second banner year when senior executives started defecting to the likes of Bank of America Corp., Citigroup Inc. and Millennium Management. By this fall, many of the team’s heaviest hitters had gone. The setting wasn’t some struggling investment bank. It was the equity derivatives desk inside the mighty JPMorgan Chase & Co. -- one of many pockets of employee turnover that have erupted there in recent months, keeping the company’s recruiters busy. Pan out, and it’s part of a trend sweeping across Manhattan’s financial industry. Signs of a surge in Wall Street job-hopping are emerging everywhere: An independent recruiter said he’s never seen so many eight-figure hiring packages. A career coach said his banker clients aren’t basing decisions solely on money -- they’re fed up with working so much they can’t even date. An industry veteran said moves are becoming so common that some people left behind are anxious: Are they making a mistake by staying? The trend coincides with the easing of a pandemic that bottled up job changes and prompted many in the industry to question whether they want to resume old commutes, or even stay in the same city. Now, rival firms are dangling money or, in some cases, more flexible lifestyles to lure talent and capitalize on the trading and dealmaking boom. There’s also more competition for women and members of minority groups after virtually every major firm promised to improve diversity in the wake of last year’s racial equity protests.
Brief: When venture capital investor Kate Bingham was appointed to lead the UK’s coronavirus vaccine procurement effort in May 2020, Prime Minister Boris Johnson tasked her with delivering “speed, not perfection”. By December that year, the UK had approved its first Covid-19 vaccine, developed by Pfizer/BioNTech. Since then, 80 per cent of the UK population over the age of 12 have received at least one vaccine, and the jabs are working “much better than anyone expected”. “To get any vaccine from identification of pathogen through to a vaccine, the quickest historically has been five years, but that was 50 years ago,” says Bingham, managing partner of venture capital firm SV Health Investors, speaking around a virtual impact investing event, GSG Global Impact Summit in October. Bingham has 30 years’ experience in the biotechnology sector, and her investments have helped launch new treatments for inflammatory and autoimmune disease and cancer.
Brief: Ray Dalio sounded the alarm bell on Thursday after inflation in the U.S. surged to the highest level since 1990 and warned his followers that rising portfolio values don’t actually signify increasing wealth. “Some people make the mistake of thinking that they are getting richer because they are seeing their assets go up in price without seeing how their buying power is being eroded,” Dalio wrote in a post on LinkedIn. “The ones most hurt are those who have their money in cash.” Dalio, the billionaire founder of Bridgewater Associates, has long been known for his view that there are better assets to hold than cash amid central bank money printing. In periods of rising prices, he says it’s actually more important to look at what you can buy with that money. “When a lot of money and credit are created, they go down in value, so having more money won’t necessarily give one more wealth or buying power,” Dalio wrote, adding that real wealth becomes a function of production capacity over time. “Printing money and giving it away won’t make us wealthier if the money isn’t directed to raise productivity.”
Brief: While most women in asset management would like the hybrid work model to continue, not everyone thinks it will have a positive impact on their career — unless firms address some of the challenges, including helping to foster connections with colleagues and clients. According to the 2021 KPMG Women in Asset Management Survey, 89 percent of respondents said they would like the option to continue remote or flexible work. KPMG’s findings were consistent across age groups. “Although there is a perception that working mothers most desire flexibility, our survey shows that nearly everyone wants it,” according to KPMG. Employees also want flexibility to care for aging parents, for example. However, 32 percent of respondents said the flexibility at work might have a negative impact on promotions and advancement. Among the 491 surveyed professionals, 93 percent were women, representing asset classes and categories including private equity, hedge funds, real estate, and mutual funds.
Brief: The UK’s Defined Benefit (DB) pension schemes are at their healthiest since before the onset of Covid-19, as of Q3 2021, according to Legal & General Investment Management (LGIM). LGIM's DB Health Tracker, a monitor of the current health of UK DB pension schemes, found that the average1 DB scheme can expect to fund 98.3 per cent of accrued pension benefits as of 30 September 2021. This is a rise of 0.1 percentage points from the figure of 98.2 per cent recorded three months before on 30 June 2021. The health of the UK’s DB pension schemes had been gradually improving since March 2020, when it had dropped as low as 91.4 per cent as a result of the immediate impact of the pandemic on financial markets. However, while these figures suggest that the health of UK DB schemes has been improving since the initial spread of Covid-19, it is important to note that these figures may yet still understate the negative impact of the pandemic, due to weakening covenants from pension scheme sponsors, which many schemes have endured.
Brief: Private equity funds are a major contributor in the rapid growth of the private credit market, according to global law firm Dechert. In its 2021 private equity outlook, the law firm reported that 45 percent of surveyed private equity firms have increased their use of private credit financing in buyouts over the last three years. This represents a 10 percentage point increase from last year’s survey, in which 35 percent of respondents said they had increased their use of private credit. Dechert surveyed 100 senior-level executives at private equity firms across the globe with $500 million or more in assets under management. According to the report, private credit is currently the third-largest private capital asset class after private equity and real estate. The law firm said that assets under management in private credit are projected to grow to $1.46 trillion by 2025. “People love [private credit],” Markus Bolsinger, Dechert’s private equity practice co-head, told Institutional Investor. He said that private credit also poses a strong opportunity for institutional investors chasing yields without equity risk.
Brief: DWS has held the final close of its inaugural Private Equity Solutions (PES) fund achieving USD550 million, including discretionary co-investment vehicles, which is in excess of its target and hard-cap of USD500 million and USD525 million respectively. Demonstrating significant demand for its mid-life secondaries strategy, the inaugural fund closed with a global investor base consisting of state pension plans, insurance companies, corporate institutional investors and family offices in North America, Europe and the Middle East. The fund has made a total of 12 investments, which have exhibited positive performance to date. The private equity business at DWS has focused on developing a differentiated mid-life secondaries strategy that offers a compelling risk-return profile to investors whilst allowing existing private equity sponsors to continue to back their better performing portfolio companies. Mark McDonald, Global Head of Private Equity at DWS, adds: “It is a testament to the strength of our team globally for the inaugural PES fund to be oversubscribed, and with the majority of the fundraise taking place during the current Covid-19 pandemic. We seek to deliver consistent risk-adjusted returns to our investors as we continue to build out our team and extend our reach going forward.”
Brief: As COVID-19 ripped through the world in 2020, a cluster of senior figures at Aviva Investors, the £262 billion U.K. asset manager, held a series of virtual meetings over the course of six months to discuss the other big issue looming over their portfolios: climate change. It was a bold move that dramatized a growing dispute within the US$110 trillion investment industry. Many big asset managers still routinely dismiss divestment, arguing it is better to stay invested and try to alter corporate behaviour through background conversations with companies. However, there are a growing number of large, traditional investors who are taking a tougher approach with companies over global warming, a change in attitude that could have huge ramifications for businesses around the world. Big investors including the Netherlands Stichting Pensioenfonds ABP one of the world’s largest pension funds, and Norway’s oil fund, the world’s largest sovereign wealth fund, have announced divestment plans. At the same time, some of the investors who remain as shareholders are willing to adopt more confrontational tactics — most notably, the successful campaign by an activist investor to join the board of ExxonMobil Corp.
Brief: Businesses are in limbo after a federal court halted the Biden administration’s vaccine-or-test mandate for private employers. Employers are preparing to enforce the Occupational Safety and Health Administration’s (OSHA) rule, which would require businesses with 100 or more employees to mandate COVID-19 vaccinations or weekly testing by Jan. 4. But it’s now unclear whether the requirement will survive legal challenges after the 5th U.S. Circuit Court of Appeals temporarily blocked the rule over the weekend, creating confusion among companies on how to move forward. Labor lawyers are urging businesses to continue preparing for key OSHA deadlines, given that the court’s stay, for now, is only temporary. “I think it’s prudent for employers to proceed with planning assuming that the OSHA rule, at least in some form or fashion, will be implemented pending final resolution of the various court cases,” said Michelle Strowhiro, a lawyer at McDermott Will & Emery who advises businesses on COVID-19 employment issues. While the OSHA rule requires businesses to mandate weekly testing for unvaccinated employees by January, the most important deadline is coming up soon. By Dec. 5, employers must collect employees’ proof of vaccination and provide paid leave for those getting the shot, while unvaccinated employees must begin wearing a mask.
Brief: Regeneron Pharmaceuticals Inc said on Monday a single dose of its antibody cocktail reduced the risk of contracting COVID-19 by 81.6 per cent in a late-stage trial, in the two to eight months period following the drug’s administration. Shares of the company were up about 1.2 per cent on the update as the data is expected to support the ongoing regulatory review to extend therapy’s use in preventing COVID-19 in people who are not exposed to the virus. The antibody therapy, REGEN-COV, is currently authorized in the United States to treat people with mild-to-moderate COVID-19 and for prevention of infection in those exposed to infected individuals, and others at high risk of exposure in settings such as nursing homes or prisons. The extended authorization could help boost sales of Regeneron’s antibody cocktail, in the face of competition from oral COVID-19 pills such as those being developed by Pfizer Inc and Merck & Co.
Brief: Global law firm Dechert has published its annual Global Private Equity Outlook report in association with Mergermarket, a leading provider of M&A data and intelligence. The benchmark report, which examines how private equity (PE) firms continue to successfully navigate their way out of the pandemic, has found that the unprecedented deal activity within the sector shows no signs of letting up, with the industry on course to far exceed past previous records. Between January and September 2021 alone there has been USD1.17 trillion worth of deals recorded, already eclipsing every prior full-year total stretching back to 2015. In other words, the annual PE deal value is on course to more than double year-on-year as the industry heads into 2022, with capital still pouring in. Global PE and venture capital dry powder hit a record level of nearly USD2 trillion in 2020. "Record deal volumes, historically low interest rates and huge amounts of dry powder is a combination for explosive alternative asset industry growth, which is expected to continue for several years, and with our complementary practices, Dechert is well-positioned to take advantage of these extraordinary growth opportunities.
Brief: Jon-Michial Carter was the biggest skeptic of remote work when one of his managers suggested they test the idea in 2019. “We had a 100,000 square-foot facility full of clinicians delivering remote virtual care,” said the founder and chief executive of ChartSpan, a chronic-care provider based in Greenville, South Carolina. “It seemed inconceivable that we could send them home.” When Covid-19 arrived in 2020, that’s what the firm did. As a direct result, it’s making more money. Employees say they’re happier, and the numbers say they’re more productive. Similar, potentially seismic shifts could be under way across the business world. The pandemic has killed more than 750,000 Americans and left millions more out of work. But something else has been happening too. The shock forced managers everywhere to try doing things differently, accelerating innovation. It “opens the door to this radical newness in the way businesses are configured,” said Jason Thomas, head of global research at Carlyle Group.
Brief: Health technology company Color said on Tuesday its valuation reached $4.6 billion after a recent $100 million investment, as venture firms continue to pour money into digital health businesses that saw service demand shoot up during the pandemic. The pandemic has supercharged the sector with healthcare moving to the virtual realm. While companies are looking to expand their scale and offerings, investors are betting on continued demand even after the pandemic for the convenience of the services. With the latest investment, Color plans to widen access to screening, diagnostics and initial treatments. It has more than 6,500 COVID-19 testing and 500 vaccination sites in the United States. Besides COVID-19 testing, the California-based company also conducts genetic testing. It has tied up with nearly 1,000 organizations, including public health departments, universities and employers. It has also partnered with Thermo Fisher Scientific, Salesforce.com Inc and the State of California, among others.
Brief: Covid-19 vaccine maker BioNTech SE’s success is having a ripple effect for younger companies, drawing interest from investors who might previously have been skeptical about the biotechnology sector in Europe, one of the German company’s early backers said. “I expect more money flowing into the European, particularly German, biotechnology industry through this new excitement,” said Matthias Kromayer, a partner at Munich-based MIG Verwaltungs AG. MIG, a venture capital investor, was among the founding backers of BioNTech, providing 13.1 million euros ($15.2 million). It has returned 600 million euros on that investment in the biggest payout to investors in the firm’s history. BioNTech and partner Pfizer Inc. may reap $29 billion in sales next year for their Covid shot, the U.S. company said last week. The vaccine will most likely be this year’s best-selling drug. The race to bring it to the market has helped companies understand ways to speed up drug development, Kromayer said. Still, it may take at least a decade for enough critical mass to build for European biotechs to choose their home turf for public offerings instead of the U.S. market, Kromayer said.
Brief: Wealthy real-estate buyers from overseas are expected to descend on the nation’s luxury housing markets Monday, giving a second boost to demand for high-priced apartments and mansions. The U.S. will lift the travel ban on about 33 countries for vaccinated visitors, easing restrictions that prevented most foreign real-estate buyers from entering the country to view and buy properties. Buyers from Europe, China, Brazil, and India will now be able to enter the U.S. for the first time in 20 months. Brokers in cities popular with the overseas wealthy — New York, Miami, Los Angeles — say they have a long list of showings scheduled in the coming weeks from buyers who have been anxious to invest in U.S. property. “This represents another upside in demand that just didn’t exist over the last two years,” said Jonathan Miller, CEO of Miller Samuel. “It will be especially beneficial to the high-end and luxury market.” Sales data suggests the wave of overseas buyers could generate tens of billions of dollars in added sales. Foreign buyers spent $267 billion on U.S. real-estate in 2018 and $183 billion in 2019, before the pandemic, according to the National Association of Realtors.
Brief: Quarantine-free travel between Singapore and neighboring Malaysia will start from Nov. 29 for vaccinated travelers, the two countries announced Monday. Sweden and Finland will also be included in Singapore’s so-called “vaccinated travel lanes” from Nov. 29, the health ministry said separately in a press release Monday. Instead of serving quarantines, inoculated travelers from these countries will take Covid-19 tests to ensure they are not infected with the coronavirus. Singapore and Malaysia’s prime ministers said in a joint statement that Covid border restrictions have separated families in both countries for many months. “It is timely to progressively resume cross-border travel between both countries, in a safe manner,” the two leaders said. Singapore has already launched vaccinated travel lanes with at least 12 nations including Australia, the United Kingdom and the United States. The city-state will start its joint vaccinated travel lane arrangements with South Korea on Nov. 15.
Brief: The U.K. economy faces inflation remaining above the Bank of England's 2% target and weaker growth next year, Deutsche Bank says. "The combination of supply shocks because of Covid and Brexit, alongside lower supply via weaker migration/lower participation and investment, should see the U.K. economy experience above-target inflation for almost all of next year at the same time as economic momentum slows materially," Deutsche Bank economist Sanjay Raja says. "We continue to see U.K. GDP coming in around 7% this year but slowing to under 4% next year."
Brief: China is resolutely sticking with its zero-tolerance approach to COVID-19, even as the delta variant continues to penetrate its formidable defenses. Officials are implementing increasingly aggressive measures -- ranging from internal travel restrictions and snap lockdowns to mass testing of millions -- in an attempt to rein in the virus. Yet more parts of the country are grappling with outbreaks than at any time since the deadly pathogen first emerged in Wuhan in 2019. Hundreds of locally transmitted infections have been found in about two thirds of its provinces. The last of the major Covid Zero holdouts, China is becoming ever more isolated, and its unpredictable curbs are beginning to disruptthe world's second-largest economy. How long can the vast nation maintain its strategy as the rest of the world learns to live with Covid, and what factors might force the country to re-open? Jason Brady, chief executive officer and fund manager with Thornburg Investment Management, said the policy gap between greater China and the rest of the world "is going to become more and more stark." As the reality of endemic coronavirus sets in, "investors need to cast their minds forward to what's the world going to look like six months from now."
Brief: The UAE looks set to become a global economic centre of gravity in post-Covid era because of its successful strategy to handle the pandemic and quick rolling out of vaccination drive and it has a potential to attract up to $450 billion investments in real estate sector, according to experts at the Cityscape Summit. Sultan Butti bin Mejren, director-general of Dubai Land Department, on Sunday inaugurated the latest edition of the summit at Expo 2020 site where government, industry and thought leaders descended to take part in a number of topics defining the current and future real estate landscape from across the region and beyond. Ian Goldin, Professor of Globalisation and Development at University of Oxford, shared his thoughts about the future of the world economy and the implications for Dubai and its property sector. Identifying the Urban 2040 Plan and recent amendments to property and visa laws, Goldin believes there are very few places on earth that have achieved what the UAE has in the last 60 years.
Brief: The Globe and Mail reports in its Friday edition that the federal government is refusing to disclose how often the vaccination status of air travellers is being confirmed in what the Liberals billed as a broad vaccine mandate but which is so far only being enforced through random checks. The Globe's Marieke Walsh and Eric Atkins write that on Saturday, the first stage of the government's promised vaccine mandate for air travellers took effect, requiring all passengers to be either vaccinated or present a negative COVID-19 test. However, while passengers need to attest to being vaccinated, their actual vaccination status or test result is not always verified. "We made the decision to randomly check status for a short period in line with advice from the Public Health Agency of Canada. This also prevents further congestion in airports," said a Transport spokesperson. B.C. NDP MP and transport critic Taylor Bachrach said he took three flights to get home from Ottawa on Saturday without once being asked to prove he is vaccinated.
Brief: Emergent Biosolutions shares plunged 38.6% on Friday after the company disclosed that the federal government had canceled its multimillion-dollar contract with the Covid-19 vaccine manufacturer. Emergent, the Maryland-based company blamed in March for ruining millions of Johnson & Johnson’s Covid doses after the shots were contaminated with ingredients intended for the AstraZeneca vaccine, was awarded a $628 million U.S. government contract last year to help make the shots. An inspection by the Food and Drug Administration later found its plant in Baltimore was unsanitary and unsuitable to manufacture the shots. In a 13-page report, inspectors wrote that the facility used to manufacture the vaccine was “not maintained in a clean and sanitary condition” and was “not of suitable size, design, and location to facilitate cleaning, maintenance, and proper operations.” The U.S. would put J&J in charge of the plant and end the production of the AstraZeneca vaccine at the facility. The company will forgo $180 million due to the contract’s termination, executives told investors on a call Thursday, according to a transcript by FactSet.
Brief: HSBC Holdings Plc asked all of its Hong Kong staff to get vaccinated against the Covid virus after city authorities issued a new circular to push for higher inoculation rates. Colleagues who have not received a first dose should either get inoculated by Nov. 30 or submit to a Covid test every 14 days, the London-based bank, which counts Hong Kong as its largest market, said in a memo to staff seen by Bloomberg News. The memo was confirmed by a bank spokesman. The Hong Kong Monetary Authority and four other regulator issued circulars to financial institutions last week “strongly encouraging all employees to get vaccinated or undergo virus testing every two weeks,” according to HSBC. The circulars expanded on a June request that staff in client facing roles or support functions get vaccinated. Hong Kong has struggled to get its population vaccinated, lagging behind rival financial centers such as Singapore, London and New York. The city’s zero-Covid policy has been successful in keeping local cases at bay, and most businesses have been back to close to full capacity over the past months. HSBC opened its offices fully in June.
Brief: European markets closed marginally higher on Friday as investors reacted to promising news on Pfizer’s Covid-19 pill and a strong U.S. jobs report. The pan-European Stoxx 600 closed up by just 0.05% with most sectors finishing in the black. Pfizer announced Friday that its easy-to-administer Covid-19 pill, used in combination with a widely used HIV drug, cut the risk of hospitalization or death from the virus by 89% in high-risk adults. Stateside, stocks rallied to record levels on Friday after the October jobs report came in better than expected, boosting optimism about the economic recovery. Job gains for the month roared to 531,000 versus a consensus projection of 450,000. The Bank of England surprised markets on Thursday by holding interest rates at historic lows, after the U.S. Federal Reserve announced Wednesday that it will begin to curb the pace of its monthly bond-buying program “later this month.” British Airways parent IAG, Germany’s Uniper and Spain’s Amadeus were among the European companies reporting earnings before the bell on Friday. In other corporate news, UBS is set to ditch the rank of group managing director as CEO Ralph Hamers looks to streamline the Swiss lender’s management hierarchy.
Brief: Should a public utility be compensated like a hedge fund? When the average businessperson thinks of alternative lending, the notion of direct lending platforms — business development companies, private debt funds and other specialty lenders — serving a public utility function does not likely come to mind. Ask these same people whether they believe commercial banks provide a necessary service to a modern economy, however, and one can expect nodding agreement. It is well-established among academics, policymakers and practitioners that the allocation of credit from savers to borrowers is essential financial "plumbing," directing capital to its best uses, and that regulated lenders (along with functioning capital markets) exist in order to provide this service. Since the 2008 financial crisis, a change in market architecture for the allocation of credit (particularly but not exclusively in the middle market) has occurred, with a considerable shift of market share away from traditional commercial banks to alternative lenders. This trend has accelerated further in the COVID-19 era. Preqin reported in February that fundraising for direct lending vehicles had increased 62% from January 2020; funds with direct lending investment mandates were targeting $150.3 billion as of January, compared to a target of $93 billion in January 2020.
Brief: Canada’s banks will be able to resume buying back shares and increasing their dividends after regulators removed restrictions put in place to protect the financial system during the pandemic. Banks may immediately begin increasing regular dividends and executive compensation, the Office of the Superintendent of Financial Institutions, said in a statement Thursday. Subject to approval by the superintendent, they may once again repurchase their stock as well, OSFI said. The risks associated with capital distributions “have abated somewhat,” Peter Routledge, head of OSFI, said during a virtual event Thursday. “I believe that now is the time for OSFI to lift this expectation.” The move, which comes months after the Federal Reserve lifted similar constraints on U.S. firms, lets Canada’s banks start releasing the stockpile of capital they amassed to protect against a wave of pandemic-induced defaults that never occurred. Canada’s six largest banks could return a combined C$47 billion ($38 billion) in cash to shareholders and still exceed regulators’ capital requirements, according to an analysis by Bloomberg Intelligence.
Brief: Carlyle Group Inc. is in advanced discussions to invest in Resonetics, a health-care asset owned by fellow private equity firm GTCR, according to people familiar with the matter. Carlyle is in talks to buy half of Resonetics in a deal that will value the medical-device manufacturing company at about $2.3 billion, including debt, the people said, asking not be identified because the matter is private. The deal isn’t finalized and talks could still fall apart. Representatives for Carlyle and GTCR declined to comment. A representative for Resonetics didn’t respond to a request for comment. Resonetics, based in Nashua, New Hampshire, was founded in 1987 and focuses on laser technology for the life-sciences industry, according to its website. GTCR first invested in it in 2018 through its portfolio company Regatta Medical, a statement showed.
Brief: Moderna is scaling back expectations for the number of COVID-19 vaccine deliveries it expects to make this year and the revenue it will record from them. Issues including longer delivery lead times for exports and a temporary impact from expanding the company’s capacity to fill vials with vaccine and package them for shipping, which may shift some deliveries to early 2022, the drugmaker said Thursday. The company now expects full-year, 2021 product sales of between $15 billion and $18 billion. That’s down from a prediction for $20 billion in sales that it made in August. CEO Stephane Bancel told analysts on Thursday that his company’s issues stemmed from scaling up production so quickly. He also said the problems are short-term and can be fixed.
Brief: Canada's two biggest life insurance companies, Manulife Financial and Sun Life Financial, reported a rise in third-quarter profits on Wednesday, driven by growth in new business and higher assets under management. Sun Life beat analysts' expectations, helped by a 23% surge in earnings from its asset management business that offset losses in the U.S. and Asia from COVID-related claims, but Manulife missed estimates due to weather-related charges. While the pandemic and related claims, largely outside of Canada, have weighed on parts of insurers' businesses, the growth in wealth, lifted by lockdown-induced savings and government stimulus has proved a boon for their wealth management units. Core earnings at Manulife, Canada's biggest life insurer, rose to C$1.5 billion ($1.2 billion), or 76 Canadian cents a share, in the three months ended Sept. 30, from C$1.45 billion, or 73 cents, a year earlier. Analysts had expected 79 Canadian cents.
Brief: Since the second half of 2020, institutional investors in Asia have been changing their strategic asset allocation and shuffling their portfolios to reflect the new policies, research from Cerulli Associates shows. They’ve also been seeking investment strategies to meet what Cerulli called “pent up demand” for yield. Over the next 12 to 18 months pension funds are most interested in allocating to Asian equity, global equity, Asian high-yield bonds, global high-yield bonds, infrastructure, and hedge funds, according to a newly released Cerulli report. Triggered by the low-yield environment, asset owners and managers in Asia are going after growth opportunities using stocks as well as alternatives, including private credit, real estate, and infrastructure. About 30 percent of asset owners in the region have been looking to incorporate alternatives into their portfolio in 2021, according to data from the report. Even with the demand for alternatives, allocators in Asia also have a growing interest in passive investment strategies.
Brief: The Federal Reserve announced Wednesday it soon will begin reducing the pace of its monthly bond purchases, the first step towards pulling back on the massive amount of help it had been providing markets and the economy. Tapering of bond purchases will start “later this month,” the policymaking Federal Open Market Committee said in its post-meeting statement. The process will see reductions of $15 billion each month -- $10 billion in Treasurys and $5 billion in mortgage-backed securities – from the current $120 billion a month that the Fed is buying. The committee said the move came “in light of the substantial further progress the economy has made toward the Committee’s goals since last December.” The statement, approved unanimously, stressed that the Fed is not on a preset course and will make adjustments to the process if necessary. “The Committee judges that similar reductions in the pace of net asset purchases will likely be appropriate each month, but it is prepared to adjust the pace of purchases if warranted by changes in the economic outlook,” the committee said.
Brief: The hedge fund traders watched as a nightmare scenario played out in the world’s bond markets. From Australia to the U.K. to the U.S., government bond yields abruptly moved against them last week amid growing speculation that central banks will accelerate plans for raising interest rates in the face of persistent inflation. The losses piled up -- and for a few became so big that the firms halted some trading to contain the damage. Balyasny Asset Management, BlueCrest Capital Management and ExodusPoint Capital Management each curtailed the betting of two to four traders after they hit maximum loss levels, according to people with knowledge of the matter, who asked not to be identified because the information is private. That step stopped traders from changing their positions, an extraordinary risk-management move used so firms can reassess trades or unwind them. ExodusPoint lost about $400 million last month, leaving it down 2% in October, people said. The fund is still up 2.8% year-to-date.
Brief: The S&P 500 just capped its best year ever following a U.S. presidential election, surging 37% since Joe Biden won the vote. The benchmark index gained more in the past year since the 2020 election than any other modern president has seen in their first year in office. But the advance has more to do with the “everything rally” following the vaccine rollout than any specific policy decision, Charles Schwab UK Managing Director Richard Flynn said in a note. “While presidents are always quick to take credit for strong performance and quick to blame their predecessor for poor performance, it is likely that they are responsible for neither,” Flynn wrote. The gains come as the results of Tuesday’s elections offered a warning shot to Biden and the Democrats after Republicans won in key races. While the stock market has rallied to all-time highs, the nation’s mood has been less bullish amid rising prices and mixed economic reports. The last time the S&P 500 recorded a post-election day annual gain above 30% was after Bill Clinton’s re-election in 1996. The index gained 21% during Donald Trump’s first year.
Brief: The rate of expansion in the U.S. services sector, where most Americans work, hit a record high in October as demand remained strong even as supply chain problems persisted. The Institute for Supply Management reported Wednesday that its monthly survey of service industries — which includes restaurants and bars, trucking companies, hotels and many other businesses — jumped to a reading of 66.7 from September’s reading of 61.9. Although business activity, new orders, supplier deliveries and backlog of orders all surpassed previous records, sticky issues that have plagued almost every kind of economic activity since infections began to ease in the U.S. continued: labor shortages, supply chain bottlenecks and higher prices. “The broad picture painted by this report is that the economy is overheating,” said Stephen Stanley, chief economist for Amherst Pierpont Securities. “Demand is overwhelmingly strong at the same time that supply is constrained. Still, I am not sure that even a fully-functioning supply side, with more labor and a resolution of snags would be able to handle the pace of demand right now.”
Brief: Private market investments reign supreme with a sharp increase in interest in this area over the past five years to top position of importance, according to Global wealth manager Julius Baer's just published 2nd Annual Family Barometer 2021 which highlights the top priorities for UHNW families right now. The survey covered more than 800 wealth management industry experts who work with and advise UHNW clients and their families. However, it is sustainable and impact investing and ESG-related topics which have grown the most (17%) in terms of importance over the past five years when it comes to investing… Against the backdrop of Covid-19, health has replaced regulatory aspects as the third most important topic when it comes to topics ‘beyond investments' for families, with 19% of respondents citing it as the most important topic for their clients. Guy Simonius, head of family office service at Julius Baer, said: "Perhaps now is the right time to think about starting a meaningful dialogue with your family and your chosen experts. Experience shows that doing so can bring greater peace of mind and contentment, and can also help to mitigate conflict and bring a family closer together.
Brief: Even with five million fewer people employed in the U.S. than before the start of the Covid-19 pandemic, the economy’s recovery has been so robust and thethreat of inflationso high that hedge fund manager Bill Ackman thinks the Federal Reserve should “begin raising rates as soon as possible.” “A ‘wait and see’ approach to raising interest rates creates significant risks given the substantial progress to date on employment and inflation combined with the unprecedented economic backdrop,” Ackman wrote in an extensive presentation of the Investor Advisory Committee on Financial Markets to the New York Federal Reserve on Oct. 20. Ackman, a member of the investor committee, acknowledged on Twitter — where he posted his PowerPoint presentation — that “as we have previously disclosed, we have put our money where our mouth is in hedging our exposure to an upward move in rates, as we believe that a rise in rates could negatively impact our long-only equity portfolio.”
Brief: When Hannah Olson was in college, she was diagnosed with chronic Lyme disease. The severity of her case required Olson to have a PICC line — essentially, a permanent IV that funnels antibiotics into the patient eight hours a day — inserted in her arm. As a young woman hoping to start her career in marketing, Olson felt anxious about telling her new boss about her condition and its impact on her day-to-day life. “I felt so much fear and shame and stigma,” Olson told Institutional Investor. “No one wants to go into their first job ever and have to be hooked up to an IV all day. I ultimately ended up at a company that wasn’t inclusive and didn't allow me to administer my meds at work, so I was forced to choose between my health and my work.” In 2020, Olson founded Chronically Capable, a job-matching platform that connects people with disabilities and chronic illnesses to jobs with accommodations. A month after the platform launched, the Covid-19 pandemic hit.
Brief: Pfizer is hiking sales expectations for its top-selling COVID-19 vaccine again, and its early look at 2022 also falls well above Wall Street forecasts. The drugmaker said Tuesday that it now expects to book about $36 billion in revenue from Comirnaty this year. That’s about 7% higher than what Pfizer forecast in July and more than twice what the company expected at the start of the year, shortly after distribution of the two-shot vaccine began. Next year, Pfizer says global vaccine sales could total around $29 billion or more, and there’s room for growth. The company expects to recognize revenue for 1.7 billion doses in 2022, but it could produce 4 billion. “We continue to believe the vaccine has durability, and there will continue to be significant revenue beyond 2022,” Chief Financial Officer Frank D’Amelio told analysts. Analysts forecast, on average, $24 billion in sales from the vaccine next year, according to FactSet. They also expect revenue from the shots to start waning in the following years, depending on how the pandemic plays out.
Brief: Air Canada sees hope on the horizon as revenues soared over 2020 levels last quarter, despite continuing to operate far below pre-pandemic capacity and at a loss of hundreds of millions of dollars. Domestic leisure bookings have started to rebound, but business travel remains down across the board amid the persistence of remote work. "We're witnessing a strong rebound in VFR (visiting friends and relatives), and leisure traffic remains strong, specifically within North America, across the Atlantic and to sun destinations," chief operating officer Lucie Guillemette told investors on a conference call Tuesday. "We were pretty confident that come 2022 corporate Canada returns to their offices and business travel should return. But no doubt that for us, business has lagged a little bit." Revenue nearly tripled year over year to $2.10 billion in the quarter ended Sept. 30 alongside an 87 per cent boost in capacity. But revenue and capacity remained more than 60 per cent and two-thirds below Air Canada's third-quarter figures in 2019 respectively as COVID-19 fallout continues to damage carriers' bottom lines.
Brief: An overwhelming majority of UK renters aged 25-40 want desk space for working from home, according to new research from M&G Real Estate, the real estate investment division of M&G plc – a leading savings and investments business. Almost nine out of ten (87 per cent) of those who have experienced home working questioned in M&G’s 2021 Home Renters Survey said that, in the wake of the Covid-19 pandemic, dedicated home workspace is ‘quite’ or ‘very’ important to them. Furthermore, three quarters (75 per cent) of these home renters stated they were now using rooms and spaces at home differently. More than a third have improved garden or balcony spaces or rearranged internal areas for ‘living or relaxing’ during the various restrictions, while 34 per cent of respondents had used the time to allocate more space for exercising or to improve sleeping areas. When asked if the pandemic had made them more or less likely to continue renting in the future, just over a quarter (26 per cent) said they were less likely to continue renting, rising to 37 per cent among those on higher incomes (GBP50,000 plus per annum). Nearly two thirds (64 per cent) said that Covid-19 has had no impact on their attitude towards renting.
Brief: For years, U.S. businesses could rely on a steady flow of workers arriving from around the world on various types of visas. The pandemic has slowed that to a trickle -– making the current labor shortages even worse. And the shortfall of migrant workers will likely persist even after U.S. borders reopen, as they’re scheduled to do next week. The State Department issued about 850,000 non-immigrant work visas between March 2020, when Covid-19 forced borders and consulates to shut down, and July 2021, according to research by Alex Nowrasteh at the Cato Institute. That’s less than half the number in the previous 17 months. The slowdown is having an impact across the economy, from seasonal work in agriculture to high-paying tech companies. It’s especially challenging for U.S. manufacturers, who say they’ve long struggled to fill mid-skilled positions that require some level of technical training, like machine operators or welders.
Brief: With inflation at its highest point in three decades, the Federal Reserve is set this week to begin winding down the extraordinary stimulus it has given the economy since the pandemic recession struck early last year, a process that could prove to be a risky balancing act. Chair Jerome Powell has signaled that the Fed will announce after its policy meeting Wednesday that it will start paring its $120 billion in monthly bond purchases as soon as this month. Those purchases are intended to keep long-term loan rates low to encourage borrowing and spending. Once the Fed has ended its bond purchases by mid-2022, it will then turn to a more difficult decision: When to raise its benchmark short-term rate from zero, where it’s been since COVID-19 hammered the economy in March 2020.
Brief: Hong Kong will end quarantine exemptions for senior executives, bankers and most entitled groups starting Nov. 12, tightening what is already one of the world’s strictest Covid-19 policies as it works to open the border with mainland China. Exemptions for directors of listed companies and senior executives from the banking, insurance, securities and futures sectors will be canceled, Hong Kong’s government said. Consular and diplomatic officers will need to self-isolate at designated quarantine hotels, it said, with home isolation not allowed except for consuls general or representatives at an equivalent or higher level. Only members of some essential groups linked to the city’s daily operations will get exemptions, including airline crew, sea crew working on cargo vessels, government officials and drivers of cross-border buses.
Brief: A new joint venture between alternative investment firm Arcapita Group Holdings and Arden Group plans to acquire $2 billion worth of industrial property assets in the U.S. as capital pours into niche real estate sectors amid the global pandemic. The venture already completed the purchase of multi-tenant industrial properties in urban centers valued at over $550 million, with an additional $250 million of real estate closing in the near term, according to a statement on Monday. The goal is to grow the portfolio to as much as $2 billion in gross asset value across the top 25 U.S. industrial markets, it added. The shift toward online shopping is altering supply chains and giving a boost to industrial landlords, especially those with space around major cities. While hotels and retail properties have been battered by the pandemic, investors have flocked to warehouses as an e-commerce boom that was flourishing before the pandemic accelerates with consumers increasingly shopping online.
Brief: Thailand is ending quarantine for vaccinated visitors from more than 60 countries, the biggest reopening gamble in Asia and one that could mark a turning point for the revival of mass tourism during the pandemic. Starting Monday, fully-vaccinated travelers flying in from the U.S., China, Singapore, Japan, India and most of Europe will be able to freely tour Thailand’s sandy beaches, temples and tropical islands after testing negative for Covid on arrival. Inoculated visitors from countries not on the list can travel to Bangkok and 16 other regions, but they will be confined to their initial destination for the first seven days before being allowed to travel elsewhere. It’s the biggest step Thailand has taken to welcome back a slice of the nearly 40 million visitors it hosted the year before the pandemic, and is billed as a “fight to win foreign tourists” as countries from Australia to the U.K. also loosen Covid curbs.
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