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Brief: A key signal of recession flashed in the bond market this week, but SkyBridge Capital’s Anthony Scaramucci told CNBC that he would be cautious on predicting there would be a downturn. On Monday, the U.S. 5-year and 30-year Treasury yields inverted for the first time since 2006. On Tuesday, the yield spread between the 2-year and the 10-year rate came close to inverting but stayed positive. Historically, the yield curve has inverted prior to recessions, indicating investors’ concern about the health of the economy. “So historically it would signal that we’re heading into a recession 12 to 18 months from now, but I will be cautious on that data,” Scaramucci said on CNBC’s “Capital Connection” on Wednesday. When the bond market is healthy, yields are higher for bonds with a longer time to maturity, and lower for short-term yields. Investors expect a bigger reward for lending their money for a longer time. But when the opposite occurs — meaning an inverted yield curve — short-term bonds pay a higher yield than long-term ones. That represents a distortion in the market and suggests bond investors are worried about the economy’s long-term prospects.
Brief: Mithril Capital Management, co-founded by Peter Thiel, intends to nominate candidates to the board of COVID-19 drug developer Adagio Therapeutics, according to a regulatory filing from the venture capital firm. Mithril Capital Management’s unit, Mithril II LP, owns a 10.1% stake in Adagio as of March 28 and has reached an agreement with some other shareholders to vote all of their respective shares in favor of the election of the nominees at the 2022 annual meeting. The battle for the board comes as the company announced on Wednesday plans to apply for U.S. emergency use authorization for its COVID-19 antibody, adintrevimab. Adagio’s shares jumped 54% to $5.94 before the bell. The company did not respond to a request for comment on Mithril’s filing.
Brief: The U.K. economy grew stronger than expected at the end of last year, displaying resilience as the omicron variant of the coronavirus spread. Gross domestic product expanded 1.3% in the fourth quarter, the Office for National Statistics said Thursday. That’s more than the 1% figure previously reported. Service industries expanded more quickly than the ONS had previously estimated, and exports also enjoyed a bigger jump. The figures also showed the collapse in the economy at the height of the pandemic was not quite as bad as previously thought. In 2020, GDP shrank 9.3% rather than the 9.4% previously estimated. The rebound in 2021 was correspondingly shallower, with growth of 7.4%, down from the earlier estimate of 7.5%. That’s still the largest increase in GDP in a single year since World War II.
Brief: China’s Covid lockdowns are putting the economy under strain and threatening to disrupt global supply chains, prompting Beijing to call for more contingency plans to deal with the risks. Purchasing managers’ indexes for March showed lockdowns in the technology and trade center Shenzhen and automotive city Changchun cut factory activity in the month. Services have also been hit hard as restaurants and retail shops close because of renewed restrictions and tightened social distancing measures. Supply chain scares are intensifying as Shanghai -- home to the world’s largest container port -- battles mounting infections. Covid controls in the city are impacting operations and reducing efficiency at the port, while shipping giant AP Moller-Maersk has already shut some facilities in the city. “Beijing’s determination in maintaining its Zero Covid strategy for fighting the infectious omicron variant will very likely deal a severe blow to China’s economy and will also have a global impact,” economists at Nomura Holdings Inc. led by Lu Ting wrote in a note.
Brief: Air Canada plans to more than double its capacity this year compared with 2021, but says that is still below its pre-pandemic level. In its outlook for this year the airline says its capacity, measured by available seat miles, for 2022 will be up about 150 per cent compared with last year. However, Air Canada says its capacity will still only be about 75 per cent of where it was in 2019 as it continues to account for passenger demand, public health guidelines and travel restrictions. The airline says it expects its adjusted cost per available seat mile for 2022 to increase about 13 to 15 per cent when compared with 2019. Looking further into the future, Air Canada says it expects its capacity for 2024 to be about 95 per cent of its 2019 level.
Brief: China’s banks and investment firms are calling on essential staff to live at the office this week to avoid any trading disruption during Shanghai’s massive Covid lockdown. A person familiar with the matter told CNN Business that traders and fund managers were being offered between 500 and 2,000 yuan ($78 to $314) per night to camp out at work, with some companies placing folding beds under workers’ desks. Other firms have also provided staff with sleeping bags, food and toiletries to get by. Much of Pudong “is doing it,” the source added, referring to Shanghai’s financial district, which is home to more than 1,000 financial institutions, and China’s leading stock exchange — which is continuing to operate as normal.Zhong Ou Asset Management, a Chinese firm that says it has $98 billion in assets under management, said that several of its investment directors and fund managers had begun staying overnight earlier this month to ensure operations continued as the pandemic “began to escalate” in Shanghai.
Brief: A key signal of recession flashed in the bond market this week, but SkyBridge Capital’s Anthony Scaramucci told CNBC that he would be cautious on predicting there would be a downturn. On Monday, the U.S. 5-year and 30-year Treasury yields inverted for the first time since 2006. On Tuesday, the yield spread between the 2-year and the 10-year rate came close to inverting but stayed positive. Historically, the yield curve has inverted prior to recessions, indicating investors’ concern about the health of the economy. “So historically it would signal that we’re heading into a recession 12 to 18 months from now, but I will be cautious on that data,” Scaramucci said on CNBC’s “Capital Connection” on Wednesday. When the bond market is healthy, yields are higher for bonds with a longer time to maturity, and lower for short-term yields.
Brief: Goldman Sachs Group Inc. plans a full return to its offices in Hong Kong starting in the middle of next month as the Asian financial hub begins to ease Covid measures amid declining virus cases. The New York-based bank on Wednesday started with a split-team arrangement and outlined a plan for a full return starting on April 19, according to a memo sent to staff that was seen by Bloomberg News. A spokesman for Goldman Sachs declined to comment. The lender will “welcome” all staff to return “in anticipated alignment with the government’s relaxation of social distancing measures and resumption of in-person school classes,” according to the memo. It added that if circumstances change, it will amend its approach accordingly. Hong Kong last week moved to scrap some travel curbs and laid out a road map for easing internal pandemic restrictions, acknowledging the damage its absolutist approach to Covid-19 has had on the city’s status as a financial hub. The moves were spurred by frustration in the banking community and wider population, which has endured more than two years of strict border controls.
Brief: Canadian insurer Manulife Financial Corp said on Tuesday that employees can return to its offices across Canada from April 25 regardless of vaccination status, amid a fall in COVID-19 infections. The country's biggest life insurer has asked staffers to return under a hybrid model with certain days of the week designated for remote work, according to an internal memo seen by Reuters. Guidelines on mask mandates and physical distancing will be set in line with local regulations, the memo said. Several financial firms across Canada and the United States that had postponed their back-to-office plans late last year are now looking to reopen offices and bring back employees with fresh coronavirus guidelines.Earlier this month, Manulife had opened select office locations as a part of its return-to-office plans in Canada after COVID-19 cases in the country declined.
Brief: BlackRock Inc. President Rob Kapito warned that inflation is having dramatic effects on the economy, with an entire generation now learning what it means to suffer from shortages. “For the first time, this generation is going to go into a store and not be able to get what they want,” Kapito said at conference held in Austin by the Texas Independent Producers and Royalty Owners Association. “And we have a very entitled generation that has never had to sacrifice.” The economy is reckoning with what he dubbed “scarcity inflation,” or the fallout from a shortage of workers, agricultural supplies and housing, and of oil in some regions. “I would put on your seat belts because this is something that we haven’t seen,” Kapito said.
Brief: Global investors’ confidence in China is at the lowest since the start of 2021. The bearish mood can be clearly seen in the data about redemptions from Chinese stock and bond funds. In the third week of March, global investors pulled out more than $3 billion from Chinese equities, the highest since the first week of 2021, according to the latest report from Emerging Portfolio Fund Research, which is owned by Informa and tracks fund flows and allocations. China bond funds saw a weekly outflow of more than $1 billion for the first time, EPFR data showed. The sizable capital outflow is in sharp contrast to the bullish consensus assessment of Chinese securities not long ago. From September to the first week of March, over $50 billion was pumped into EPFR-tracked China equity funds and $11 billion into Greater China fund groups, the report said.
Brief: 2022 will be the year the level of in-person and online meetings rebalance to create a new fundraising ‘normal’ for years to come. The private market fundraising process underwent a historic transformation through the various stages of Covid-19, but many of the adjustments made during 2020 and 2021 are now being reviewed by GPs and LPs as travel restrictions and lockdowns ease in the UK, Europe and the US. In 2020 fund managers relied mainly on existing relationships to raise and close funds virtually. Last year saw a shift back to engaging with new clients. “In 2021, the situation largely didn’t change, but we had to meet new managers and find new ideas,” says Kevin O’Donnell, global head of investment relations, Adams Street Partners. “And by doing so online, we raised double what we had in 2020, and it was a record year for the firm.” Over the past two years, LPs have been under pressure to allocate to existing GPs that have performed very well. There has been skepticism around investing in new managers virtually.
Brief: The Securities and Exchange Commission on Monday proposed two rules that would force more trading firms to register as dealers and open their books to far greater regulatory oversight. The move, applauded by SEC Chair Gary Gensler, would require many firms that execute algorithm-based, high-frequency trades to come under the regulator’s scrutiny as it looks to ensure liquidity across U.S. financial markets. “I was pleased to support this proposal because I believe it reflects Congress’s statutory intent that firms engaging in important liquidity-providing roles in the securities markets, including in the U.S. Treasury market, be registered with the Commission,” Gensler said in a statement. The SEC’s new rules would require firms or persons to register as a dealer if they regularly make comparable purchases and sales of the same securities in the same day or turn profits primarily through bid-ask spreads. Those who have at least $25 billion of trading volume in U.S. debt in at least four of the prior six months would also be compelled to register. People or firms that manage less than $50 million would not be subject to the new rules.
Brief: China's most extensive COVID-related lockdown in two years is underway in Shanghai, as the city of 26 million people undergoes a series of phased shutdowns to test a growing outbreak of the coronavirus. China's financial capital and largest city has implemented a two-phase partial lockdown for the next 10 days, starting with the Pudong financial district and nearby areas from Monday to Friday. This will allow mass testing to get underway after 3,500 new cases of COVID-19 were reported Sunday. In the second phase of the lockdown, the vast downtown area west of the Huangpu River that divides the city will start its own five-day lockdown. Residents will be required to stay home and deliveries will be left at checkpoints to ensure there is no contact with the outside world. Offices and all businesses not considered essential will be closed and public transport suspended. Bridges and tunnels in and out of the area are being strictly monitored.
Brief: Manulife's 2021 Wellness Report highlights how the pandemic is affecting employee health, and underscores that two years into the pandemic, Canadian workers continue to struggle to take care of their health and wellbeing. "Employee mental health patterns could be K-shaped as we move through the next phase of the pandemic," said Dr. Georgia Pomaki, Director, Mental Health Best Practices, Manulife. "One arm of the K represents employees who are excited about reopening and returning to the office—the other represents a group of employees who are facing mental health challenges and significant fatigue: for this group, a return to office may feel overwhelming. Organizations need to consider both groups to design effective and supportive return to office programs." The Report highlights that 16% of working hours (41 days) were lost in 2021 due to absences and presenteeism, and close to half (48%) of employees are experiencing at least one work-related mental health risk factor. These findings suggest employers should consider placing significantly more focus on culture and wellness programs in 2022 and beyond, particularly as large employee populations return to Canadian offices in the near future.
Brief: The PivotalPath Composite Index, a broad measure of overall hedge fund performance, was up 0.3 per cent in February, outperforming most major indices, according to data released by hedge fund research and intelligence specialist PivotalPath. The firm's Dispersion Indicator meanwhile, decreased during the month to 3.8 per cent. The firm writes in its Pivotal Point of Viuerw for March 2022, that strategies able to capitalise on the 'flattening yield curve rally in the energy complex and other factor trends', include Global Macro, Managed Futures, and Equity Quant. Multi-strategy, Managed Futures, Global Macro and Credit were also positive for the month, while commodities, especially oil, reached fresh highs not seen in a decade which, in turn, benefited Global Macro and Managed Futures funds.
Brief: A downgrade on that scale “in any ordinary year” would have left the economy in recession, David Miles, head of macroeconomic forecasting at the OBR, told U.K. lawmakers. That would be the third recession in 14 years. Rocketing energy prices are expected to drive the consumer prices index of inflation to a 40-year high of 8.7% later this year and trigger the worst household living standards crisis in over half a century. The economy is still rebounding from the pandemic, having only just recovered the output lost in 2020. That tailwind prevents a downturn. Normally, “if you’d seen the forecast of growth fall by around 2.5%, we would be in recession,” Miles said. Miles said the squeeze “hits consumption and that’s the biggest part of the downgrade in growth … it’s a hit to the standard of living of this country, it is a terms of trade shock. We are spending more on stuff we import and less on stuff we produce in the U.K.”
Brief: Smaller investors in Istanbul Airport, set to be the world’s highest-capacity hub when completed, have agreed to exit the project after the coronavirus pandemic slowed travel and delayed expected profits. Limak Yatirim Holding AS and Mapa Insaat AS are each selling their 20% stakes in the operating company IGA Havalimani Isletmeleri AS, according to people with direct knowledge of the matter. The two remaining partners Kalyon Insaat AS and Cengiz Insaat AS will raise their holdings to 55% and 45%, respectively, after the transaction, the people said, asking not to be identified because the talks are confidential. Limak, Kalyon and Cengiz declined to comment. Mapa Insaat, owned by Istanbul-based MNG Group, didn’t immediately respond to requests for comment. When signed, the deal will mark the second exit by the original builders that won the rights to build and operate the airport in a joint venture with equal stakes in 2013. Kolin was the first to sell its stake in 2019.
Brief: Household incomes in the U.K. continued to grow on average in the first full year of the coronavirus pandemic but the poor fared worse than others, official figures show. Adjusted for inflation, the median after-tax income rose by 2% in the year through March 2021 to 31,385 pounds ($41,270), the Office for National Statistics said Monday. It followed a 4.1% gain the previous year. However, the pandemic had a disproportionate impact, with the poorest fifth of the population experiencing a 2% fall in income. Many found themselves furloughed on reduced wages when businesses were shuttered to fight the spread of Covid-19, and an increase in welfare benefits only partially made up for the hit, the ONS said.The richest fifth also lost income, although not to the same extent, and the gap with the lowest-income households remained at almost 50,000 pounds.
Brief: China’s economy faces its worst downward pressure since the spring of 2020 when it was hit by the first wave of Covid-19, according to Nomura Holdings Inc. The slowdown in China’s growth worsened in the first quarter and markets should be concerned about a further slide in the second, Nomura Holdings Inc. economists including Lu Ting wrote in a note Saturday. Economic activities “may notably deteriorate across the board” in March, weighed down by increasing mobility restrictions across the country and a continued property sector slump, they said. With the outbreaks suppressing a wide range of sectors, including in-person services, construction and some manufacturing activity, “it’s getting harder for Beijing to achieve its ‘around 5.5%’ GDP growth target for 2022,” the economists said.
Brief: Nearly a year after COVID vaccines became freely available in the U.S., one fourth of American adults remain unvaccinated, and a picture of the economic cost of vaccine hesitancy is emerging. It points to financial risk for individuals, companies and publicly funded programs. Vaccine hesitancy likely already accounts for tens of billions of dollars in preventable U.S. hospitalization costs and up to hundreds of thousands of preventable deaths, say public health experts. For individuals forgoing vaccination, the risks can include layoffs and ineligibility to collect unemployment, higher insurance premiums, growing out-of-pocket medical costs or loss of academic scholarships. For employers, vaccine hesitancy can contribute to short-staffed workplaces. For taxpayers, it could mean a financial drain on programs such as Medicare, which provides healthcare for seniors.
Brief: Chances are roughly one in five that new Covid-19 variants will arise that are more dangerous than the current versions, Moderna Inc.’s chief executive officer said. The more likely scenario is that vulnerable people, such as the elderly and immunocompromised, will need annual boosters for protection against strains that are similar in virulence to omicron, Moderna CEO Stephane Bancel said Thursday in an interview with Bloomberg TV. The CEO spoke on the day of a company event detailing its research and progress with messenger RNA vaccines. Moderna is working to reassure investors about its longer-term growth prospects as the new cases decline following the winter spread of highly transmissible omicron. However, omicron’s BA.2 subvariant continues to circulate, leading to concerns about a resurgence and the emergence of new strains of the virus with greater power to infect and sicken.
Brief: Larry Fink, CEO and chairman of the world’s biggest asset manager, BlackRock, said Russia’s invasion of Ukraine has upended the world order that had been in place since the end of the Cold War. “The Russian invasion of Ukraine has put an end to the globalization we have experienced over the last three decades,” Fink said in his 2022 letter to shareholders. “It has left many communities and people feeling isolated and looking inward. I believe this has exacerbated the polarization and extremist behavior we are seeing across society today.” Fink’s letter came a month into Russia’s invasion of Ukraine with Moscow’s forces bombarding cities across the country and killing civilians unable to escape. The U.S. and its allies have imposed unprecedented sanctions on Russia and provided military assistance to Ukraine.
Brief: Singapore announced Thursday significant easing in its Covid-19 curbs, with a plan to lift most restrictions for fully vaccinated visitors and a requirement to wear masks outdoors as part of its shift toward living with the virus. The loosened domestic social measures come into effect on March 29, while easier travel rules apply from April 1. Here’s how the city-state’s regulations will compare with some global financial centers.
Brief: Private Markets Rally to New Heights, a comprehensive analysis of the dynamics and performance of the private investing industry, encompassing private equity, real estate, debt, and infrastructure and natural resources, shows that fundraising was up by nearly 20 per cent year over year to reach a record of almost USD1.2 trillion. In addition, dealmakers were busier than ever, deploying more than USD3.5 trillion across asset classes, while assets under management (AUM) grew to an all-time high of USD9.8 trillion as of July 2021, up from USD7.4 trillion the year before. Private equity continued to drive global growth in private markets. Fundraising rebounded across regions, and global totals fell just short of the pre-pandemic peak established in 2019.
Brief: Hong Kong, in the midst of an exodus of residents as it grapples with its largest ever outbreak of Covid-19, held its third place ranking among the world’s financial centers, trailing New York and London, according to a survey. In the main areas of competitiveness, Hong Kong ranked in the top four for business environment, human capital, infrastructure and general reputation, but out of the top 10 in financial sector development. Its overall hold on the third spot came as financial centers in Asia “generally recovered losses” experienced in the previous study, suggesting restored confidence in the region’s economic strength, according to the Global Financial Centres Index published by Z/Yen and the China Development Institute. Shanghai and Shenzhen moved up to fourth and 10th place, respectively. Hong Kong’s strict pursuit of Covid zero, coupled with a brain drain over the past years amid a political crackdown on media and civil society groups, has prompted warnings over the city’s status as a financial hub.
Brief: Private equity firms invested nearly $70 billion in the life sciences and medical device industries last year — a sign that the pandemic's disruptions didn't cool interest in the sectors, according to a new report by the American Investment Council. Why it matters: The influx of capital could help bring more lifesaving drugs and medical technologies to market. But private equity's growing presence in health care isn't always viewed positively, particularly when it's associated with price increases or reduced access to care. By the numbers: Private equity deals in the life sciences sector were worth nearly $26 billion in 2021, the highest amount in a decade. Medical devices and supplies deals were worth nearly $44 billion last year, which was also the highest value over the last decade — by far. Private equity has invested more than $280 billion into the sectors over the last decade, according to the report. What they're saying: "What COVID brought was probably a bigger focus on health care gaps and needs in the country, and I think you saw more money going into this sector as a result of a new focus on exposing some of the challenges we have in the health care system," American Investment Council CEO Drew Maloney said in an interview.
Brief: When pandemic-induced lockdowns started to spread in March 2020, partners at some venture capital firms became concerned about an overdue correction. Instead, the opposite happened, and the pandemic pushed the market into one of the strongest bull periods on record. Now, amid a geopolitical crisis and a downward-trending stock market, some in the industry say the overheated venture capital climate is finally beginning to cool down. Investors tell Forbes that late-stage deal activity — which set records for both deal count and investment volume in 2021 — has slowed considerably over the past few weeks. They say that crossover investors who helped drive the breakneck pace in 2021 may have overindulged at the late stages. The broader venture ecosystem is realizing the swollen price tags they were willing to buy into to get into the hottest deals of 2021 were inflated, these investors say.
Brief: Nearly half of the European companies in Hong Kong plan to fully or partially relocate operations and staff out of the city, a new survey suggests, in the latest sign that the world's toughest Covid-19 travel and quarantine restrictions are eroding the appeal of Asia's main finance hub. Around 25 per cent of responding companies said they planned to fully relocate out of Hong Kong in the next year, according to a new survey from the European Chamber of Commerce in Hong Kong, while another 24 per cent said they are planning to partially move out of the city. Roughly 34 per cent of firms said they were uncertain about their plans, while just 17 per cent said they had no desire to relocate over the next 12 months. The negative results, which come amid a surprisingly chaotic coronavirus outbreak, are the latest measure of declining business confidence in a once-freewheeling city that has been increasingly isolated from the world over more than 2 years.
Brief: Today’s high inflation is being compared to the 1970s. However, robust consumer spending, fuelled by pandemic savings, makes for a different set of circumstances. Memories of the 1970s were evoked as the price of Brent crude oil temporarily climbed above $139 a barrel in the wake of Russia’s invasion of Ukraine. That was a period when very high oil prices and elevated rates of consumer inflation plunged some of the world’s major economies into recession. Using the definition of recessions from the National Bureau of Economic Research (NBER), there have been seven such downturns in the US since the 1970s. The first four were all preceded by a pick-up in inflation and interest rates (see chart, below). The decision by the US Federal Reserve (Fed) to raise interest rates amid signs of inflationary pressures broadening out in the US – as they did in the 1970s – has further put parallels with the past back into focus. Could this “economic cycle” play out like those from the 1970s, 80s and 90s, when economic conditions were seemingly more akin than to those seen over the past two decades? The economic cycle, which is sometimes referred as the business cycle, is the period in which an economy moves from a state of expansion to one of contraction, before expanding again.
Brief: Amid ongoing uncertainty in Europe – from war in Ukraine to Covid – investors turned away from European mutual funds en masse in February, but ETFs managed to attract inflows, the latest data from Refinitiv shows. Bucking tradition, money market funds led the redemptions. European mutual funds lost net €67.6bn during the second month of the year, while ETFs took in €9.2bn. Overall flows for mutual funds and ETFs were negative at €58.4bn.Detlef Glow, head of EMEA research at Refinitiv Lipper, said: "It was not surprising that February 2022 was in general a negative month for the European fund industry given the geopolitical situation in Europe, the still ongoing Covid-19 pandemic, and the sluggish market environment." What did come as a surprise, however, was the fact that investors sold out of money market funds, which are usually seen as a safe haven in times of uncertainty.
Brief: Global mid-market M&A activity has continued robustly in the first quarter of 2022, says audit, tax and consulting network RSM, as it announces it worked on 614 completed deals in Europe last year. However, the war in Ukraine – which in addition to its dire humanitarian impact is causing inflation in the cost of raw materials and commodities – could impact deal activity and broader economic confidence in the months ahead. RSM’s advisers supported unprecedented levels of global deal activity in 2021. Among the 614 transactions completed by RSM Firms in Europe last year, the technology, media, and telecom (TMT) sector was the driving force, with 152 deals, followed by 90 completed in the engineering and manufacturing sector.
Brief: Today, UBS announced the launch of its Virtual Worker Framework, a new industry-leading approach to flexible working that will provide US employees in eligible roles with the opportunity to work 100% remotely. UBS will begin a phased implementation of the framework over the coming months to select current and prospective employees across the country. The Virtual Worker Framework represents a natural extension and evolution of UBS’s current hybrid work model. In a global survey, 86 percent of UBS employees stated that they value greater flexibility, including the ability to maintain a remote or hybrid work arrangement. With continued technology enhancements and positive adoption of virtual work, the firm is finding new ways to engage with clients and build trusted relationships. “Hybrid working has positively reshaped the future of our workplace,” said Tom Naratil, President of UBS Americas.
Brief: Institutions aren’t just worried about the effect of inflation, the pandemic, and what they fear are outdated asset allocation rules. They’re potentially moving a vast amount of money that will create opportunities and challenges for asset managers — and move markets. Those are some of the findings from Nuveen as part of its 2022 global institutional investor study, which is expected to be published on Wednesday. Sixty-four percent of investors told the asset manager that the current market environment is pushing them to entirely rethink their portfolio construction strategies.In the survey of 800 institutions, each of which had a minimum of $500 million in assets, Nuveen found that the overhaul is being prompted by multiple head-shaking developments — including inflation rates that haven’t been seen in 40 years, the pandemic, and climate change — that are affecting the value of assets not just in the future, but today.
Brief: After reporting strong results for 2021, the investment firm is raising its dividend in line with its assets under management growth. Zug-based Partners Groups posted a profit increase of 82 percent amounting to 1.46 billion Swiss francs ($1.60 billion) in 2021, it said in a statement Tuesday, after signaling the upward trend in January. The private equity company's assets under management (AuM) swelled to 17 percent totaling $127 billion, while performance fees increased by 46 percent of total revenues driven by «record exit activity and strong portfolio performance post COVID-19,» it said. The company will propose a dividend increase of 20 percent to 33 francs per share, in line with its AuM growth. Partners Group reconfirmed its guidance of gross client demand in the range of $22-26 billion in 2022. Its investment exposure to Russia and Ukraine was below 0.2 percent of AuM, it said.
Brief: Jason Dorsey, Gen Z Researcher and Author, joins Yahoo Finance Live to discuss how Gen Z and millennials are approaching retirement savings and finances emerging from the shocks of the pandemic. Video Transcript. DAVE BRIGGS: Is there a generational gap when it comes to saving for the future? Well, study after study has, indeed, shown that, but it might not be exactly what you think. Let's talk about it with Jason Dorsey. He is a Gen Z researcher and the author of "Z Economy." Jason, good to have you on, my friend. So tell me- JASON DORSEY: Thank you for having me. DAVE BRIGGS: --how are Gen Zers preparing for the future? Are they, indeed, putting away money for retirement? JASON DORSEY: They are, and it's pretty shocking. When we talk about Gen Z, the oldest members are about 25 years old. And what our research shows in multiple studies is that Gen Z is actually saving money. They're trying to hold on to the money that they were going to spend. They'll even have a birthday party. Keep the money, and then ask their parents for money to go spend, which is pretty funny. The Gen Z, right now, 70% of them say that they need to be saving money today in order to be able to retire one day.
Brief: India's MSME sectors were highly affected by the wrath of Covid-19. According to CII, MSME sectors employ about 12 crore people and about half of the Indian exports. According to experts the root problem from the domestic MSME sector is failure to attract the private capital into their business, leading to constant starvation for funds. “MSME owners and entrepreneurs should thrive to rope in professional money. Without any predetermined rate of interest, private investments are the most expensive form of capital for a business. One should use this capital in areas where the return on investments is higher than the cost of capital. Investing this capital judiciously in the needed business areas can fetch much higher returns than the actual cost. Lenders are not active participants of your business, whereas PE funds or VCs participate in the growth actively and give a professional structure to the business.
Brief: As China’s major financial centers confront their worst Covid outbreaks to date, many fund managers are rolling out sleeping bags on trading floors across Shanghai and Shenzhen. Traders are volunteering to take turns camping out in their offices to avoid restrictions sweeping through the cities at a time when Chinese capital markets are experiencing the biggest bout of volatility since mid-2020. With Shanghai becoming one of the nation’s epicenters for new coronavirus infections, employers are preparing for the possibility of sudden lockdowns that could forcibly quarantine traders at homes or work for days or even weeks. That means making sure workers have enough provisions on hand in case they get stuck in the office. At AXA SPDB Investment Managers Co., for example, staff is being supplied with airbeds, instant noodles and emergency kits.
Brief: Former White House biodefense adviser Rajeev Venkayya is taking the reins at a new venture-backed company that aims to fill a gap in treatments to combat Covid-19 and future pandemic threats. Venkayya, who stepped down as head of Takeda Pharmaceutical Co.’s vaccines unit last month, is now the chief executive officer at Aerium Therapeutics, a biotech company backed by Omega Funds. The company launched Tuesday with an initial focus on developing new monoclonal antibodies against Covid. The drugmaker is advancing with two such antibodies that have shown promise against the delta variant as well as omicron and its offshoots in animal tests, according to Aerium. The data will be submitted to a medical journal, meaning it hasn’t yet been peer-reviewed. Aerium sees an opportunity to expand in the field and a need for new tools to help patients, especially vulnerable people who haven’t been able to benefit from vaccines, after omicron overpowered some antibody treatments and raised questions about the efficacy of others. “The virus evolved very quickly around vaccines and therapeutics,” Venkayya said in an interview. “We increasingly will be trying to get away from the variant-chasing game and into the space of broadly protective therapeutics.”
Brief: Gold’s comeback amid Russia’s war in Ukraine and monetary policy uncertainty, the role of gold exchange-traded commodities (ETC) in a multi-asset portfolio and combining precious metals with ESG were the topics discussed at ETF Stream’s recent webinar in partnership with HANetf. The webinar, titled Inflation protection: Is gold still the best hedge?, started by looking at the dramatic return of gold ETCs to favour after a subdued COVID-19 recovery period in 2021. Anthony Bamber, head of business development at The Royal Mint, which co-created the Royal Mint Physical Gold Securities ETC (RMAU), said: “Towards the end of February, we saw gold jump around 6% which was the largest monthly gain since May 2021. “As everything in Russia and Ukraine began to escalate further in March, it got up to its record highs again. It was these escalations plus other underlying issues such as inflation and the energy crisis that caused this.
Brief: KKR & Co. warned that investing will require more risk given the market turmoil driven by Russia’s invasion of Ukraine. There may be opportunities in beaten-down growth stocks, liquid credit and inflation-hedging proxies including real estate and infrastructure, KKR’s Henry McVey and Racim Allouani said in a March 9 report to clients. Tightened financial conditions are also creating the prospect of partnering with companies facing temporary business disruptions or that have weak capital structures, they said. Low rates and government stimulus have boosted markets in recent years, with investors enjoying outsized returns even with relative safe portfolios. The war has created turmoil across asset classes from stocks and bonds to commodities and “tremendous volatility,” they noted.“The current crisis makes forecasting risk parameters such as risk of loss, volatilities, and correlations only more challenging,” said McVey, KKR’s head of global macro, balance sheet and risk, and Allouani, a managing director.
Brief: Markets have rallied nicely off the early March lows that were triggered by the start of Russia's war on Ukraine, but they are still dealing with a bout of depression. The percentage of individual investors who consider themselves bullish has averaged just 23.9% over the past 10 weeks, according to the American Association of Individual Investors (AAII). Truist co-chief investment officer Keith Lerner points out this is the lowest average level of bullishness since the June 2016 Brexit referendum and one of the least optimistic readings since the survey's inception in 1987. So what has this level of depression historically meant for the stock market in the months ahead? You guessed it, a rally! Historically, these low levels on the survey have been followed by consistent and positive returns on a six- to 12-month basis for the S&P 500, Lerner notes. Only in the land of investing does bad equal good (maybe it does in other places, who knows).
Brief: Firms across the globe are ditching fund-raising deals at a quickening pace, as volatility destabilizes credit markets following Russia’s invasion of Ukraine. Electric car giant Tesla Inc. is the latest big name firm to scrap financing plans, as it postponed a $1 billion offering of bonds backed by leases on its vehicles last week. Almost 80 companies, nearly half from the U.S., have put at least $25 billion of deals on hold since the start of the war nearly a month ago. “There has been a severe jolt to investor confidence since the invasion of Ukraine as sanctions have been slapped on Russia and commodity prices roared upwards,” said Susannah Streeter, senior investment and markets analyst with Hargreaves Lansdown Plc. The caution has reached all corners of the globe. India’s Mumbai International Airport Ltd. recently delayed a dollar bond deal, SS&C Technologies Holdings Inc. halted a $1.7 billion buyout loan on Wednesday and Brazil’s Trocafone SA scrapped an initial public offering.
Brief: The Trudeau administration spent so much money during the first year of the pandemic that it was easy to lose track of the profound growth taking place in the size of the federal government’s workforce.Employment across the country jumped more than six per cent year over year to 319,600 for all departments and agencies, according to data compiled by Treasury Board. That’s an increase of nearly 20,000 between the first three months of 2020 and the same period last year. Last year’s increase was more than double the average annual employment gains posted by federal government workers between 2015 and 2020, covering years the Liberals have been in power. The financial impact was significant: The federal government’s total payroll reached nearly $60 billion in fiscal 2021, up $4.4 billion from the previous year, according to the public accounts.
Brief: European fund flow patterns so far this year are emulating historical crisis periods for markets, including the 2008 global financial cash, according to new research from data firm Refinitiv. A sluggish market environment, lingering concerns around the Covid-19 pandemic and the emerging geopolitical tensions in Europe meant the continent’s fund industry saw net outflows in February that took overall flows so far this year to -57.2 billion euros (-$63.2 billion), according to the research. Mutual funds — pools from investors allocated by fund managers into stocks, bonds, money market instruments and other securities — faced 67.6 billion euros of outflows in February alone. Meanwhile exchange-traded funds (ETFs) — baskets of securities that trade on regular stock exchanges — enjoyed inflows of 9.2 billion euros.
Brief: The war in Ukraine is like a powerful earthquake that will have ripple effects throughout the global economy, especially in poor countries, according to the head of the International Monetary Fund. The conflict will lead to lower growth and faster inflation worldwide, Managing Director Kristalina Georgieva said Friday on an IMF panel about the lender’s strategy to support fragile and conflict-affected nations. Countries, businesses and households will face more serious debt problems after a jump in borrowing during the first year of the pandemic, she said. Ukraine and Russia together account for more than a quarter of the global trade in wheat, and a fifth of corn sales. The longer Russian forces remain in Ukraine, the longer tractors and combines to harvest the nation’s crops stay idle, threatening food security far beyond the region, Georgieva said. “We would have some very significant problems that would be particularly difficult for fragile states,” Georgieva said. The world tends to focus on “front-page issues, and not on this second- and third-order-of-impact consequences,” she said.
Brief: Federal Reserve Governor Christopher Waller told CNBC on Friday that the central bank may need to enact one or more 50-basis-point interest rate hikes this year to tame inflation. Though he voted this week for just a 25-basis-point move due to uncertainty from the Russian invasion of Ukraine, Waller said he thinks the Fed may need to be more aggressive soon. “I really favor front-loading our rate hikes, that we need to do more withdrawal of accommodation now if we want to have an impact on inflation later this year and next year,” he told CNBC’s Steve Liesman during a live “Squawk Box” interview. “So in that sense, the way to front-load it is to pull some rate hikes forward, which would imply 50 basis points at one or multiple meetings in the near future.” In addition to the rate hikes, Waller said he thinks the Fed needs to start reducing its bond holdings soon. The central bank balance sheet has ballooned to just over $9 trillion, and officials are preparing the process to start rolling off some of their holdings. Waller said that process should start “in the next meeting or two.” “We’re in a different place than we were before,” he said. “We have a much bigger balance sheet, the economy’s in a much different position. Inflation is raging. So, we’re in a position where we could actually draw down a large amount of liquidity out of the system without really doing much damage.”
Brief: An American private equity firm is weighing a potential takeover bid for Ted Baker, the British fashion chain. Sky News has learnt that Sycamore Partners is working with advisers to examine a potential offer for the London-listed company. Sycamore specialises in investments in the retail sector, having previously owned brands such as the upmarket footwear label Kurt Geiger. This week, it was linked with a $9bn takeover bid for Kohl's, the US department store chain. It was also reported to be among the suitors circling Boots, Britain's biggest chain of high street chemists, although City insiders have expressed scepticism about Sycamore's eventual involvement in the auction.
Brief: After two years of working from home – and seeing return-to-office plans derailed by new Covid-19 variants – a growing number of companies are eager to get employees back to the office. About 50% of leaders say their company already requires or is planning to require employees to return to in-person work full-time in the next year, according to new research fromMicrosoft, which surveyed 31,102 workers around the world between January and February. This number stands in sharp contrast, however, to what employees really want:flexibility. In the same report, 52% of workers said that they are thinking of switching to a full-time remote or hybrid job in 2022. “A lot of business leaders have told me that they don’t believe in hybrid work, that it has no place in their culture,” Elise Freedman, a workforce transformation practice leader at Korn Ferry who is helping companies coordinate their return-to-office plans, tellsCNBC Make It.
Brief: Commodities trader Pierre Andurand sees a path for crude oil to get to $200 by the end of the year as historically tight markets struggle to ramp up production and replace lost supply from Russia. He estimates some 4 million barrels per day have been taken out of circulation as a result of Russia’s invasion of Ukraine and subsequent restrictions on doing business with the Putin government. While releasing oil from strategic petroleum reserves could help boost supply in the short-term, it’s likely that the energy industry won’t be able to increase capacity to fully offset the lost barrels. Russian oil will likely be out of the market even if Putin agrees some sort of imminent ceasefire with Ukraine, the founder of Andurand Capital Management LLP said on the latest episode of the Odd Lots podcast. Meanwhile, shale producers and some OPEC members will also struggle to boost production after years of underinvestment.
Brief: Rising frustration from the public and financial institutions is pushing a review of pandemic control measures in Hong Kong, where a suite of stark containment measures have been in place since January to fight the city’s worst-ever Covid outbreak. Chief Executive Carrie Lam pointed to the strain on residents and damage to the reputation of the once vibrant Asian financial hub for the revision, asking for a few more days before she unveils what could be sweeping changes to the city’s approach next week. “I have a very strong feeling that people’s tolerance is fading,” Lam told reporters at a briefing on Thursday. “I have a very good feeling that some of our financial institutions are losing patience about this isolated status of Hong Kong,” she said. “Nobody attaches as much importance as myself to Hong Kong’s international status.” Lam signaled a possible reduction in the amount of time new arrivals from abroad must spend in hotel quarantine and said virtually every area of her government’s approach is being scrutinized.
Brief: Allocators’ interest in hedge funds may be waning. At least that’s what they told Preqin before Russia invaded Ukraine, a bloody war that has upended the country and global markets. According to research and data firm Preqin, only about 10 percent of allocators said they were “more aggressively” investing in hedge funds and accumulating assets as a result of their outlook for equity markets. In November 2020, double the proportion of investors, about 20 percent, were doing the same, up from less than 10 percent the year before. Returns may be partly to blame. The performance of the average hedge fund has declined from its peak of 18.9 percent in 2020, to 13.7 percent in 2021, according to Preqin’s latest investor outlook report. Only 49 percent of investors classified the performance of their hedge funds as acceptable last year; 28 percent said returns fell short of their expectations, according to the research firm. PivotalPath’s hedge fund composite index returned 7.9 percent in 2021.
Brief: The head of a U.S. markets regulator said on Wednesday that while U.S. markets are responding well to the ongoing tragedy in the Ukraine, the situation has resulted in ‘extreme volatility’ and record global markets trading volume. Inflation surges to 5.7%, adding pressure on Bank of Canada to accelerate rate hikes. Rostin Benham, chair of the Commodity Futures Trading Commission (CFTC), told an audience at the International Futures Industry Conference that he has tasked the agency’s surveillance unit to remain ‘surgically focused’ on analyzing trading for manipulative, inappropriate or disruptive conduct. “At my direction, CFTC staff are using every tool the agency has to ensure that commodity markets continue to fairly and transparently serve the intended price discovery and risk management function,” said Benham, adding that “markets are reacting and operating as well as anticipated given the challenging situation.”
Brief: Jefferies Financial Group Inc. expects Wall Street’s fierce battle for talent to continue even as the red-hot streak in global dealmaking begins to cool. “There is still tremendous demand for good talent in investment banking,” Dominic Lester, European head of investment banking at Jefferies, said in an interview. “This year’s market slowdown hasn’t had a material impact on that.” Deal values are down 10% in 2022, having fallen below year-ago levels in the week that Russia began its war in Ukraine, data compiled by Bloomberg show. Even before the invasion, the prospect of rising interest rates was threatening to derail a $5 trillion-plus run-in mergers and acquisitions that fueled more than a year of bumper fees and bonuses at the world’s biggest banks. That saw Wall Street lenders elevate pay for junior and senior dealmakers to new highs as they sought to poach stars from rivals and keep their best talent from leaving to join free-spending private equity firms. At Jefferies, which has been recruiting from the likes of Credit Suisse Group AG, Barclays Plc and Deutsche Bank AG, pay for some of the best performers has surpassed $25 million, Bloomberg reported last month. Lester said the fight to hire and retain the best bankers came down to more than money. “Of course, it’s important but you have to provide a good, dynamic culture, challenges, development and an interesting work environment to retain your team,” he said.
Brief: The pandemic slammed proptech investment, which fell abruptly in 2020, but also changed the proptech landscape, mainly by boosting the popularity of safety tech related to the health issues. Tech innovations, impact investing and corporate social responsibility pair seamlessly with the need to increase energy efficiency, promote carbon neutrality and raise climate resilience. “Proptech is changing building and monitoring systems by creating technologies that increase efficiencies and track anomalies and waste. Beyond just ensuring buildings are run, heated and cooled more efficiently and effectively, proptech is also greening construction, while literally capturing carbon in the creation of concrete,” Dave Harris Kolada, managing partner at Greensoil PropTech Ventures, told Commercial Property Executive. “When it comes to making offices safer and complying with the litany of new laws or raising revenue from increased efficiencies, we see profits and public service as intricately intertwined, not mutually exclusive,” he added. Harris Kolada discussed the state of the proptech industry following what has been (we hope) the worst of the health crisis’ impact.
Brief: An ex-Credit Agricole trader, fired for not flagging major volatility in the gold market, accused the bank of failing to set up proper working from home arrangements early in the coronavirus pandemic. Samuel Yang, who joined the bank’s precious metal desk in 2011, sued the lender in London under whistle blowing and race discrimination rules. He said he was “scapegoated” by Credit Agricole after it didn’t give clear guidance on how to manage risk while working remotely and accused it of “side-stepping” regulatory scrutiny, according to documents prepared for a London employment tribunal. The case is one of the first U.K. working from home in the pandemic employment tribunal to make it into the public domain.
Brief: China blasted foreign media organizations’ use of Chinese staff to report on issues such as Covid-19 and Xinjiang, in an apparent escalation of Beijing’s efforts to restrict critical coverage of the world’s second-largest economy. The official Xinhua News Agency criticized “Western media” for recruiting Chinese nationals “as pawns to propagate their China-bashing rhetoric” in a commentary Tuesday, without naming the media outlets or providing specific examples. The piece cited their involvement in coverage on the origins of the first known Covid-19 outbreak in Wuhan and criticism of Beijing’s rigid “Covid Zero” policies. “Manipulating these journalists to misrepresent China and stir up ideological bias against the country has once again revealed that so-called ‘press freedom’ touted by the Western media is just a handy tool to advance a narrow political agenda,” the commentary said.
Brief: The coronavirus pandemic obliterated 9.3 million jobs in Southeast Asia as lockdowns hit the region’s traditional engines of growth such as hospitality and tourism, according to the Asian Development Bank. This pushed 4.7 million people to extreme poverty last year, measured as living on less that $1.90 a day, the ADB said in a report Wednesday. Inequality also widened as movement restrictions hit hardest the retail and informal sectors, where women, young people and unskilled workers are typically employed. “The pandemic’s impact on poverty and unemployment will likely persist as inactive workers become de-skilled and poor people’s access to opportunities further deteriorates,” the ADB said. “When this happens, the deterioration in inequality could transfer across generations.” Green shoots are emerging though, with close to 60% of Southeast Asia’s population vaccinated and public mobility rebounding.
Brief: HSBC is to shut a further 69 branches, on top of the 82 it axed last year, claiming the pandemic has accelerated the shift to digital banking. It is the latest in a line of banks to announce it is reducing its network in response to changing customer habits. Consumer organisation Which? said the number of closures during the last few years was “alarming” and that millions of people were not yet ready or able to go fully digital. Early last year HSBC had 593 branches, but the latest round of closures – scheduled to take place between mid-July and early October – will take that down to 441, of which 96 are described as “full service” outlets offering a comprehensive range of services.The 69 branches that are closing are spread across the UK, from Inverness in the Scottish Highlands to Falmouth in Cornwall.
Brief: U.S. middle-market private equity firms experienced a year of strong dealmaking and exit activity in 2021. The road ahead may not be quite as smooth, however. Last year, middle-market PE firms closed 4,121 deals, accounting for a combined total of $602.6 billion — an all-time high for the sector, according to PitchBook’s PE middle-market annual report, released on Monday. The previous record for dealmaking activity in PE middle markets came in 2019, when total deal count reached 2,775 for a combined total value of $400.4 billion. PitchBook defines a middle-market deal as one in which a U.S.-based company is acquired through a buyout transaction valued between $25 million and $1 billion, with a fund size of $100 million to $5 billion. It doesn’t include growth equity deals.
Brief: Even as the events in Ukraine has dominated headlines and stokes fresh uncertainty, Canada and the world are facing economic challenges that go far beyond the conflicts in the region. According to a new commentary from RBC Economics, the Russian invasion will undoubtedly aggravate already-existing pressures. “Even before the escalation in geopolitical risk, production capacity limits—including acute labour shortages and rising input costs—were emerging as more significant concerns for businesses than any shortfall in orders,” said RBC economists Craig Wright and Dawn Desjardins, along with analyst Nathan Janzen. The invasion of Ukraine has jolted financial markets, pushed commodity prices higher, and posed a threat to already strained global supply lines. While improving labor markets, growing earnings, and savings acquired during the pandemic are expected to support household purchasing power, they cited strong demand and businesses’ ability to ramp up production as factors for broadening inflation. That has created a strong motivation for central banks to stay on their paths toward rate hikes.
Brief: Most investors now expect global equities to slump into a bear market this year as the growth outlook has tumbled to the lowest level since the 2008 financial crisis amid fears over the impact from the war in Ukraine. This is the takeaway of the latest Bank of America Corp. monthly global fund manager survey conducted in the week through March 10. While cash levels surged to the highest since April 2020, the early days of the Covid-19 pandemic, allocation to commodities jumped to a record and exposure to equities fell to the lowest in nearly two years. “Economic growth and profit expectations are recessionary,” BofA strategists led by Michael Hartnett wrote in a note to clients. Persistently high inflation readings, concerns that central banks will tighten policy more aggressively than previously anticipated, and Russia’s invasion of Ukraine have triggered a rout in global stock markets this year, with major indexes now deep into correction territory. This flurry of headwinds, which now also includes a flare-up in coronavirus infections from China to Germany, is raising fears that a downturn in equities will continue.
Brief: The global economy -- already struggling with war in Ukraine and the stagflation risks it’s fanning -- is bracing for greater disruption as China scrambles to contain its worst outbreak of COVID-19 since the pandemic began. Since Wuhan two years ago, China has had relative success in minimizing disruption by bringing virus cases quickly under control. Now, the geographic spread of infections and higher transmissibility of the omicron variant is challenging the country’s hawkish pandemic strategy of aggressive testing and locking down whole cities or provinces. If China fails to contain omicron’s spread, further movement restrictions would derail the economy’s promising start to the year, weakening a key pillar of global growth. As manufacturer to the world, any disruptions to exports resulting in shortages could also drive up inflation internationally, just as central banks begin hiking interest rates, like the Federal Reserve is expected to do on Wednesday.
Brief: After the COVID-19 pandemic, corporate players have introduced changes in their operations by enabling flexible work schedules, allowing remote working, and enhancing the employee experience. The hybrid work models are defined as a more flexible, digital, and rewarding future for their employees. According to an article published by GENESIS INTEGRATION, 55% of the US workers want a work pattern that allows the mix of working from home and office. The article data also reveals that more than 2 in 5 working adults (42%) are willing to give up some percentage of their salary for higher flexibility at work. Further, 74% of newer generation would prefer either working from home or splitting work time between home and work, as per the article published by GENESIS INTEGRATION. The rising adoption of a potentially permanent hybrid workforce has led to an increase in operational risk management solutions due to the rise in cybersecurity attacks with remote working. Further, businesses also need to address the increasing risk of internal fraud. According to the article by Risk Management Intelligence in October 2021, employee fraud cases in Asia Pacific region have increased over the past year in the COVID-19 pandemic.
Brief: Private equity set a new standard for itself in 2021 as buyout deal value reached an all-time high of $1.1 trillion, doubling 2020’s total of $577 billion, said global consultancy Bain & Company in a new report. The number of deals greater than $1 billion roughly doubled in 2021, with the average deal size reaching $1.1 billion, increasing 57% to pierce through the $1 billion mark for the first time, according to the company’s 13th annual Global Private Equity Report. One reason for the sharp increase in deal value last year is the sheer volume of capital in the market. After 10 years of steady growth, dry powder set yet another record in 2021, rising to $3.4 trillion globally, with approximately $1 trillion of that sitting in buyout funds. The opportunity to put large amounts of capital to work produced a sudden and sharp increase in public-to-private (P2P) deals, especially in North America and the Asia-Pacific region. These take-private transactions soaked up $469 billion in capital globally, a 57% one-year increase, and were largely responsible for 2021’s record-setting value total.
Brief: Britain’s over 50s were most likely to leave the workforce in the pandemic, suggesting most of the more than half million employees who fell out of the jobs market won’t come back. A surge in economic inactivity where people are out of work and not looking for a job is part of what’s tightened the U.K. jobs market, pushing up wages and fanning inflation. The government and Bank of England are looking for ways to loosen that pressure and halt the rise in prices across the economy that’s coming from higher wages. Findings published by the Office for National Statistics on Monday showed about 493,000 of the people that joined the rolls of the inactive since the start of 2020 were over 50, making 94.4% of the total, the ONS in a series of reports based on the labor force survey.Early in the pandemic, it was young people who fell out of the jobs market, with 229,000 becoming inactive from the fourth quarter of 2019 to the first quarter of 2021. Since then, their inactivity rate has fallen back to pre-pandemic levels while the rate for the over 50s has grown.
Brief: In what now seem the simpler days of December, when there was only a pandemic to worry about, Federal Reserve officials rallied around the view they could tame inflation with modest interest rate hikes while the economy and labor market thrived. A war in Europe has now been layered on top of the health crisis, and when U.S. central bank policymakers meet this week they will have to decide just how much damage has been done to that rosy outlook, and whether their hopes for an economic "soft landing" have been diminished or dashed altogether. The Fed is almost certain to raise its benchmark overnight interest rate by a quarter of a percentage point at the end of its two-day policy meeting on Wednesday. More important will be projections showing just how far policymakers think rates will need to rise this year and in 2023 and 2024 to tame inflation that has blasted past their expectations.
Brief: Shares in Asia-Pacific were mixed on Monday as investors monitored a Covid wave in China. Meanwhile, oil prices continued to be volatile amid the Russia-Ukraine war. Hong Kong’s Hang Seng index dropped 4.97% on the day to 19,531.66, leading losses among the region’s major markets as Chinese tech stocks took a beating: Tencent fell 9.79%, Alibaba slipped 10.9% and Meituan plunged 16.84%. The Hang Seng Tech index tumbled 11.03% to 3,778.60. Mainland Chinese stocks closed lower, with the Shanghai composite down 2.6% to 3,223.53 while the Shenzhen component shed 3.083% to 12,063.63. China is currently undergoing a wave of Covid infections — its worst outbreak since the country clamped down on the pandemic in 2020, and major cities including Shenzhen are rushing to limit business activity. Across Shenzhen’s border, the special administrative region of Hong Kong has also been battling a resurgence in Covid cases in recent weeks.
Brief: Change has been among the only constant for investors during the past two years of the COVID-19 pandemic.Today marks the second anniversary of the World Health Organization declaring COVID-19 pandemic. The lockdown of businesses and economies around the world soon followed. Economic growth ground to a halt. The U.S. economy subsequently entered a recession in February 2020 that lasted until April of that year, according to the National Bureau of Economic Research. Stock markets globally took it on the chin, hard. The Dow Jones Industrial Average tanked nearly 35% from mid-February to March 16 as COVID-19 infections and deaths spread. Even an often teflon stock such as Apple wasn't spared — it plunged 30% from mid-February to mid-March of 2020.In total, there have been 452 million cases of COVID-19 worldwide and more than 6 million deaths, according to WHO.
Brief: Canada's labour market showed signs last month of finally shaking off the shock COVID-19 delivered two years ago, with the share of workers with a job and the unemployment rate besting levels seen just prior to the pandemic. A gain of 337,000 jobs in February more than offset the loss of 200,000 jobs in January and dropped the unemployment rate to 5.5 per cent, falling below the 5.7 per cent level where it was at in February 2020. Statistics Canada said Friday the unemployment rate would have been 7.4 per cent last month had it included in calculations people who wanted a job but did not look for one. The majority of the decline in the ranks of Canada's unemployed came from people called back to work in February after a temporary layoff one month earlier as provinces tightened restrictions to slow the spread of the Omicron variant.
Brief: With the effects of the pandemic receding and a flood of information sources about world events aiding investment managers in thier risk assessment, there shouldn’t be any reason to take copious amounts of risk off the table according to a panel of researchers at the Professional Planner Researcher Forum in Sydney Monday morning. While acknowledging the complications caused by recent geopolitical events including the war in Ukraine, Scott Haslem, chief investment officer at leading wholesale advice group Crestone, said there are enough information channels for managers to incorporate the risks into their investment process. “Geopolitical risk is pretty hard, it’s often a difficult area,” Haslem said. “But I certainly would say that it’s no longer an acceptable answer to say ‘it’s too hard, it’s too binomial, I can’t factor that in’.” “There’s enough research going on around how [Russian President Vladimir] Putin and [Chinese Communist Party leader] Xi Jinping get on and what the implications of the Iranian oil deal is for China, and how that impacts their interaction with North Korea,” Haslem continued.
Brief: Technology industries hold out the potential for decentralized economic vitality. However, for decades, tech has remained highly concentrated in a short list of coastal “superstar” cities—places such as San Francisco, Seattle, and New York. More recently, though, the rise of remote work during the COVID-19 pandemic has spawned new hopes for the spread of tech jobs into the U.S. heartland. Given that possibility, this report probes the latest trends in the geography of tech over the past decade and through the pandemic. Specifically, the analysis examines detailed employment data as well as location-specific job postings to assess local and national hiring trends. Data on firm starts is also examined. Growth in key tech industries has been rapid and resilient in the last decade, including through the pandemic. Software publishing and other information services have led the way. The tech sector has until recently been concentrating, not decentralizing. Prior to the pandemic, tech was adding jobs across much of America, but it wasn’t really “spreading out” in terms of more cities increasing their shares of the sector’s jobs. Instead, coastal “superstars” like the Bay Area and Seattle predominated.
Brief: eFront, a financial software and solutions provider dedicated to private markets, and a part of BlackRock, has released its latest Quarterly Private Equity Performance Overview, covering the period to the end of Q2 2021. The report shows that the second quarter of 2021 was a particularly good one for the global LBO market, delivering a quarterly return of almost 12 per cent. This growth was mostly driven by the European and North American regions. The strongest progression was recorded for the youngest vintage years of 2017-2019. Growth in the VC market, meanwhile, slowed modestly, but this sub-strategy is still delivering a double-digit return for investors. On industry sectors, it was the private equity deals in the Industrials and Financials sectors that accelerated performance most intensively. After the initial shock brought on by the Covid-19 pandemic, the private equity market has bounced back to multi-year highs. Q2 2021 saw a quarterly return of 11.16 per cent for buyout funds globally, while venture capital stood at 11.87 per cent).
Brief: After an unrelenting year of fighting off cyber threats, the financial services sector should expect more of the same or even worse, as nation-state hacking campaigns are expected to mirror geopolitical tensions and ransomware gangs retool to dodge increased scrutiny, according to an industry group report. The Financial Services Information Sharing and Analysis Center, known as FS-ISAC, said in its annual report on cyber threats that global tensions could fuel further attacks by state-backed hackers and patriotic hacktivists. In addition, after a series of devastating breaches on the software supply chain, the group warned that its members need to be wary of potential nation-state meddling in products and services being used. “We expect current trends to continue and possibly worsen over the next year,” according the report, which was released on Thursday. Saying that cybersecurity is “no longer just a back-office cost,” the group warned that cyber threats pose critical business risks, including operational disruption, lawsuits and credit downgrades. FS-ISAC, which shares cyber intelligence among financial institutions around the world, published the report at a time when Russia’s invasion of Ukraine has kept organizations in the U.S. and elsewhere on alert for possible retaliatory attacks. So far, those fears appear largely unrealized, and cyberattacks have played a smaller role in the conflict than many predicted.
Brief: Rising inflation globally is forcing asset managers to reallocate their capital into commodities and real estate, according to new research from Clearwater Analytics (CWAN). A poll of over 100 firms representing more than USD5 trillion in AUM shows that the majority of asset managers favour commodities (58 per cent) and real estate (55 per cent) as their preferred asset classes to combat rising inflation. Interestingly, 42 per cent also see listed equities as part of their asset mix. The research follows the US inflation report last month which showed prices rising at their fastest pace in four decades. While in the UK, prices have also risen sharply in recent months, with the rate of inflation predicted to reach around 7 per cent by spring 2022, according to the Bank of England (BofE).
Brief: The COVID-19 pandemic set off nearly unprecedented churn in the U.S. labor market. Widespread job losses in the early months of the pandemic gave way to tight labor markets in 2021, driven in part by what’s come to be known as the Great Resignation. The nation’s “quit rate” reached a 20-year high last November. A new Pew Research Center survey finds that low pay, a lack of opportunities for advancement and feeling disrespected at work are the top reasons why Americans quit their jobs last year. The survey also finds that those who quit and are now employed elsewhere are more likely than not to say their current job has better pay, more opportunities for advancement and more work-life balance and flexibility.Majorities of workers who quit a job in 2021 say low pay (63%), no opportunities for advancement (63%) and feeling disrespected at work (57%) were reasons why they quit, according to the Feb. 7-13 survey. At least a third say each of these were major reasons why they left.
Brief: Canadian insurer Manulife Financial Corporation said on Wednesday fully vaccinated employees can return to its offices in select locations on a voluntary basis from March 14 as COVID-19 cases in the country ease. “With a decline in average daily COVID-19 cases and hospitalization rates, we are making our Halifax, Montreal, Toronto and Waterloo offices available,” the company said in an emailed statement to Reuters. The country’s biggest insurer had delayed its return-to-office plans for staffers in North America in December due to the fast-spreading Omicron variant driving a surge in cases. Several financial firms across Canada and the United States that had postponed their back-to-office plans late last year as governments reimposed curbs to contain the virus surge, are now looking to reopen offices and issue new guidelines for employees.
Brief: The number and value of acquisitions made by private equity-backed businesses across the UK in 2021 significantly exceeded levels seen in 2019 and 2020, according to Rickitt Mitchell’s Buy and Build Barometer. The latest analysis from the corporate finance firm, conducted in partnership with Experian Market iQ, reveals 578 deals were completed across the UK in 2021, up more than 56 per cent on 2020 (370) and more than double that of 2019 (276). The South East (58) saw the highest number of acquisitions out of any region, followed jointly by East of England and London (47). Elsewhere, Yorkshire (37) was the highest performing Northern region, ahead of North West (24) and North East (14). The UK’s devolved regions were amongst the least active, with Wales (16) ahead of both Scotland (14) and Northern Ireland (5).
Brief: Of around 200 employers surveyed in the San Francisco Bay Area, 71% have either brought non-essential workers back to the office or plan to do so by mid-March, according to a poll released Tuesday by the Bay Area Council, a business advocacy group. Most of the companies surveyed monthly since last year said they expect their workers to come into the office three days or fewer a week, with those days most likely being Tuesday through Thursday, the group said. This “new normal” mode of operations will be in place by June for about 67% of respondents, while 82% see it occurring by August or September. This bodes well for San Francisco, which is struggling with the nation’s weakest office occupancies, stubbornly low transit ridership and one of the country’s slowest job recoveries as remote work leaves downtown streets empty.
Brief: Institutional investors are offloading equities to retail buyers in a traumatized market. While similarities between now and the bottom of the coronavirus crash may end there, memories of how that episode played out are proving hard to shake. Despite breakneck volatility and harrowing images of war, retail traders just plowed money into the equity market for a ninth straight week, according to Bank of America Corp. client data. That’s a stark contrast to the firm’s hedge fund clients, which last week sold US$4 billion of stocks, the most on record. Same thing on Morgan Stanley’s trading desk, where professional speculators have been cutting equity exposure, alongside relentless buying from amateurs. Who exactly constitutes the smart money on post-pandemic Wall Street is a point of debate after mom and pop day traders dove into stocks as they were bottoming two years ago.
Brief: Since the outbreak of the pandemic, mass affluent women in Asia have increased their investment activities to build or expand their investment portfolio, and have been quite successful so far, HSBC finds. HSBC analysed the investment behaviour of mass affluent women in Asia, including Hong Kong, mainland China and Singapore, between 2019 and 2021. Here are the highlights of changes identified in their investment behaviour since the outbreak of COVID: A 14% increase in the number of mass affluent female investors compared to pre-COVID period. Female investors in the study have on average shown a double-digit increase in their trading activities, mainly driven by an increase in stock trading. Over 50% of female investors have increased their investment in different asset classes or added different market exposure within the same asset class compared to pre-COVID to further diversify their portfolios.
Brief: The Great Resignation is turning into a great myth for one Wall Street bank. Morgan Stanley chief James Gorman says the firm has seen relatively few departures in the wake of the pandemic, and certainly nothing like the trend that’s seen U.S. workers quitting their jobs in record numbers. In contrast, he says the bank received about 500,000 job applications last year. Together with a tightening economy that will make job-hopping even harder, that’s further emboldened him to champion a return to regular office life. “At the end of the day, people have to work somewhere,” Gorman said at the Australian Financial Review Business Summit in Sydney on Tuesday. “If the economy turns south a little bit, I think you’ll see much less job mobility than in the last 12 months.” Gorman said that anyone going to a restaurant should also be showing up to the office, reiterating comments that he made last year. They mirror those of his counterparts at Goldman Sachs Group Inc. and JPMorgan Chase & Co., who’ve made banking one of the most aggressive among white-collar industries in driving a return to the office.
Brief: Timed to the two-year anniversary of the COVID-19 pandemic, the Capital One Insights Center has released new research that shows the gap between lower and higher earners continues to widen against new affordability pressures. As part of the Center's ongoing Marketplace Index survey, this latest release dives into the disproportionate impact of the pandemic across income groups against the backdrop of rising inflation. The Marketplace Index is one of the longest-running surveys on the social and economic effects of COVID-19 to date by a private sector enterprise, having run surveys of 2,000-10,000 Americans every four to eight weeks since April 2020. Ahead of the forthcoming Federal Reserve's interest rate decision (3/15), the study addresses consumer sentiment on topics impacting Americans' financial health today. "Americans believe their financial health has declined to levels not seen since early in the pandemic," says Melissa Bearden, Head of Consumer Intelligence at Capital One.
Brief: Two years on, the consequences of the Covid-19 pandemic on workers’ health and well-being are staggering. In addition to lost income and unemployment, the stresses of working or looking for work during the worst public health crisis in generations have taken a punishing toll. Remote work, while literally a life-saver and certainly a job-saver for those to whom it’s been available, has come with costs. Younger workers have struggled to establish critical workplace relationships. The ability to work at any time has turned into working all the time. Parents and caregivers have been stretched past the breaking point. Remote workers who live alone have endured grueling isolation during lockdowns. Meanwhile, workers whose jobs can’t be done remotely have faced the direct threat of the coronavirus, as well as angry and anxious customers and clients, whose outbursts further exacerbate the stress of working through a pandemic.
Brief: Preqin's new Women in Alternatives 2022 report shows that although the alternatives industry has not seen a major drop in the proportion of female employees during the Covid-19 pandemic, there is more work to be done to rectify the marked gender imbalance, especially in senior positions. Gender balance has improved, albeit slowly, across the alternative assets industry as a whole. According to Deloitte, one woman in the C-suite leads to three promotions of women into senior management roles; simply put, the lack of women in leadership positions can negatively affect the prosperity of women in the industry as a whole. Preqin data shows that an eighth (12.9 per cent) of senior positions in the alternatives industry are held by women. As of January 2022, 20.9 per cent of the alternative assets workforce is female – and when looking at investors alone this rises to 24.2 per cent (up from 20.3 per cent and 24.0 per cent respectively a year earlier).
Brief: It’s great to be able to work from home, but even better if you’re a man. That’s according to a New Zealand study, which found that while both sexes mostly liked working from home during the pandemic, women still did the lion’s share of the housework and childcare. “Our study makes it clear that although flexible working has many benefits, it also highlights the difference between what men and women are expected to do around the home,” said Vittoria Shortt, chief executive at ASB Bank, which commissioned the survey. “With women still taking on responsibility for the bulk of domestic chores, the risk is that they are being disadvantaged both at work and in the home.” New Zealand was already adopting more flexible working arrangements before the pandemic, including discussions about shorter working weeks, but the strict nationwide lockdown in 2020 accelerated the trend toward working from home.
Brief: More than 6 million people worldwide have died from Covid-19 two years after the novel pathogen started spreading globally, despite the distribution of vaccines that slashed fatality rates across the globe. The latest 1 million recorded deaths came more slowly than the previous intervals. It took about 125 days to go from 5 million deaths to 6 million, compared to 117 days to hit the 5-million mark and less than 90 days each to reach the 3- and 4-million ones. The pace has returned to what was seen during the first year of the pandemic, when the virus was still taking hold. Covid continues to kill thousands of people every day. Billions more remain unvaccinated, either because they lack access to the shots or are unwilling to receive them, leaving them exposed to the infection and the world vulnerable to new variants.
Brief: More than half of U.K. managers expect to dial back their pandemic-era embrace of remote work and flexible arrangements once Covid-19 recedes, dampening hopes among employees that many of the changes will endure. A survey of U.K. managers and human resources leaders, carried out for workplace management firm GoodShape by Ipsos, showed that more than two-thirds of respondents describe many initiatives currently in place -- from working practices to mental-health provision -- as “much needed.” This is in sharp contrast to what they think will happen. Some 34% managers and HR professionals believe that remote working initiatives will be rolled back after the pandemic, the survey of more than 750 people showed, even though 66% support current policies. Respondents also expect initiatives addressing poor mental health among employees to be rolled back, even though that was the leading cause of work absenteeism in the U.K. in 2021.
Brief: As COVID-19 cases began to fall after the winter Omicron variant surge, governors across the country are beginning to ditch mask and vaccine mandates — presenting a conundrum for business owners who aren't entirely certain if they want to follow suit. Places like Florida and Texas have long abandoned indoor masking requirements, but major coastal cities are finally rolling back COVID-related restrictions. Monday will mark the official end of New York City's vaccine passport system, with the Big Apple already having loosened mask mandates. In California, Los Angeles County will no longer require masks for both vaccinated and unvaccinated people in most indoor places – a key milestone for the Golden State. The change aligns L.A. County with California state rules, which on Tuesday stopped mandating indoor masking for unvaccinated people.
Brief: The UK jobs market hit a two-year high in February as the British economy emerged from the coronavirus pandemic and final restrictions were lifted. According to the latest edition of accountancy and tax consultancy network BDO’s business trends report, the employment index rose for a fourth consecutive month to 110.75, representing a monthly gain of 0.77 points. This was the first time the labour market had returned to pre-pandemic levels, the accountancy firm said, since February 2020 when it came in at 112.86. The index now sits above the 95 level which indicates growth. The easing of restrictions provided a large boost to business optimism in February. As businesses fully re-opened and resumed normal operations, they have also been looking to hire more staff to cope with increased demand.
Brief: JPMorgan Chase & Co., the first Wall Street bank to offer a quarantine subsidy in Hong Kong, is now handing out HK$1,800 ($230) to each of its employees as the city grapples with its largest outbreak of infections during the pandemic. The cash payment will allow staff to treat themselves and their families to a meal once the current restrictions are lifted, a Hong Kong-based spokeswoman said. She wouldn’t provide the bank’s total headcount in the city. The city has closed schools, bars and evening dining, and is planning a mass testing drive coupled with a lockdown to gain control of an outbreak that has overwhelmed its health-care system even as most of the world returns to normal. Banks are now facing a potential exodus of expatriate staff who are fed up with the city’s draconian measures, which also include a two-week quarantine for incoming travelers and a potential isolation in government run facilities.
Brief: A coalition of more than 75 climate change-focused nonprofits want the biggest names in banking and fund management to “stop propping up Putin’s illegal war on Ukraine” by severing all financial ties with Russian energy companies. The organizations, which include Sierra Club and Rainforest Action Network, have requested 100 financial institutions — a group it’s calling the “Putin 100” — put an end to the financing, investing and insuring of companies in Russia's coal, oil and gas industries, and to divest from existing holdings. The letter was sent to firms including JPMorgan Chase & Co., BlackRock Inc and Citigroup Inc.Financial firms are scrambling to respond to Vladimir Putin’s invasion of Ukraine, the worst military conflict on the European continent since World War II, as sanctions pile up and a growing number of companies walk away or distance themselves from Russia.
Brief: The £1bn Janus Henderson UK Property fund may be facing closure as Nuveen has reportedly hired CBRE to independently value the assets in the fund. The fund, which launched in June 1999, is currently co-managed by Marcus Langlands Pearse and Ainslie McLennan. The fund was suspended in March 2020 as the pandemic hit the UK, before lifting ten months later as the economy returned to normal. Since the suspension was lifted, £1bn has been withdrawn from the fund. The fund is a Property Authorised Investment Fund (PAIF) and considers location, tenant strength, lease length and structure, building quality and sustainability considerations when investing. Oli Creasey, property research analyst at Quilter Cheviot, said that if the fund was wound up, "it would come as something of a surprise, as the fund has made it through the difficult period in 2020 when it was forced to close by new FCA rules and has since produced good returns."
Brief: February was the worst month for equity funds since July 2020, as capital flowed out of products in response to Russia’s invasion of Ukraine, according to the latest Calastone survey. Investors abandoned the region, while there was a slight increase in sellers, and inflows fell to £42m over the month, 96% lower than the average monthly inflow over the last year, representing a 79% month-on-month drop compared to January. According to Calastone, funds had inflows of £646m up until 23 February, though as Russia invaded, investors withdrew £604m during the last three days of trading. Head of global markets at Calastone, Edward Glyn, said: "Investors have a lot to worry them at present. Stock markets have certainly fallen since the Russian army invaded Ukraine, but the falls have not indicated a rout."
Brief: Pfizer and Moderna expect $51 billion in combined vaccine sales in the coming year, even as the omicron wave dramatically subsides in many parts of the world and both companies believe the pandemic is shifting into an endemic phase where the virus will be less disruptive to society. Pfizer expects $32 billion in Covid vaccine sales for 2022, while Moderna is forecasting at least $19 billion in sales, the companies said in their fourth-quarter earnings statements released last month. Those are minimum sales, reflecting contracts that have already been signed by nations across the world anticipating their need for the year. But they could be far higher, depending on the trajectory of the virus. Pfizer just raised its 2022 Covid vaccine sales guidance by $1 billion from its previous forecast given to investors in the third quarter while Moderna upped its guidance by $2 billion. The companies’ 2022 expectations come after booking bumper revenues during the the first full year of the Covid vaccine rollout.
Brief: WisdomTree has unveiled four sector-focused thematic ETPs that will seek opportunities in the post-Covid recovery, as well as the energy transition. The ETPs consist of two leveraged and two short/inverse exposure funds to STOXX Europe 600 sector indices, including Travel & Leisure, Automobiles & Parts, and Oil & Gas. Pierre Debru, head of quantitative research and multi asset solutions, Europe, for WisdomTree, said: "Our new launches give investors an even wider suite of products to choose from to express their investment views on the post-Covid economic recovery and the inevitable energy transition megatrend." The funds listed on the London Stock Exchange, Borsa Italiana and Borse Xetra today (2 March), and have management expense ratios of between 0.80% and 0.85%. According to WisdomTree's head of Europe, the launches are designed to complement the firm's existing range of tactical products and are "specifically designed to help investors navigate dynamic financial markets and challenging economic climates".
Brief: CFOs who work alongside their procurement officers can dramatically improve their EBITDA through procurement-related optimization, mitigate risk through supplier resiliency and achieve a competitive advantage in the marketplace. Thanks to inflation, labor shortages and supply chain woes, corporate CFOs are grasping for strategies to enhance revenue and mitigate risks. And, like the virus, the financial situation stemming from the pandemic is lingering longer than many expected. To strike back, CFOs are taking a page from the private equity playbook and turning to procurement as major lever for EBITDA improvement. Instead of viewing procurement as a back-office function, CFOs are embracing many of the same complex procurement strategies PE firms have relied on for years to make quick improvements in a portfolio company’s finances. Now, leaders see what good looks like, and more companies are starting to catch on and adopt this fool-proof cost optimization method.
Brief: While last year was a record-breaker in terms of venture capital doled out to startups, this year is trending to be a much different story. Geopolitical tensions, inflation, expected interest rate hikes, and a seemingly never-ending pandemic are starting to affect the private markets, venture capitalists say. While the effects on the public market are obvious—the Dow Jones Industrial Average is down about 7.5 percent and the Nasdaq Composite, a good indicator of tech prices, is down about 13.5 percent since the start of the year—getting a gauge on the private markets is more difficult. However, those in the industry say although deals are being made, valuations are coming off the highs of last year, and some companies are reevaluating their fundraising efforts. “If you are a special company, you are still getting the valuation you want,” said Mark Sherman, managing director at Telstra Ventures. “But I would say the more ‘meat and potato’ companies are probably down 20 percent in January-February in relation to November-December—some more, some less.”
Brief: Virtual underwriting has become a permanent fixture in private equity fundraising according to a new survey of global LPs, conducted by placement agent Capstone Partners. The survey, which seeks to explore how current underwriting trends impact LP’s ability to make commitments to private equity funds, shows that virtual underwriting has been fully adopted by LPs, with the vast majority virtually underwriting re-ups in 2021, and a comfortable majority virtually backing managers they know well or had met pre-Covid. Just 9 per cent of the 130 global investors said that they had not used virtual processes to underwrite re-ups in 2021. Moreover, the survey highlights how virtual underwriting is now also a valid option for backing new GP relationships, with just 14 per cent of global investors expressing reluctance to use it. North American and European LPs are the most comfortable, with just 3 per cent and 12 per cent respectively unwilling to use virtual processes in new relationships.
Brief: The upending of markets by shifting central bank policy, war and the pandemic is convincing professional investors the time is ripe to put their often-maligned stock-picking skills to work. Hedge funds that make both bullish and bearish equity bets became big buyers of shares in individual companies in February for the first time in four months, prime broker data compiled by Goldman Sachs Group Inc. show. The amount of net purchases in single stocks reached the highest level in the past year. The strategy is far from without its risks in a market being whipped around as violently as this one by war in Europe and anxiety about inflation. As often happens when big, world-changing headlines are moving indexes minute-to-minute, correlations among individual stocks have risen substantially recently.
Brief: HSBC Holdings Plc will require all employees to have a valid vaccine pass to enter its premises in Hong Kong from March 28, as the Asian financial hub battles its worst outbreak since the pandemic started. “All HSBC employees, contractors and third parties will need to be vaccinated or have a valid medical exemption to enter any HSBC premises, including all branches,” the bank said in a memo on Wednesday. The new requirement won’t apply to customers entering HSBC branches. A spokesman for the lender confirmed the content of the memo. The Hong Kong Monetary Authority last month urged banks to consider imposing a vaccine mandate at the workplace and required them to inform the regulator whether they will do so. Goldman Sachs Group Inc. earlier introduced rules requiring all staff to get their shots before entering the office from Feb. 24.
Brief: Hong Kong’s escalating Covid-19 crisis and its desperate bid to rid the population of the virus is pushing the economy into contraction again. Economists have been downgrading their growth forecasts for Hong Kong this year alongside the government’s ever-tighter virus control measures, from travel bans to business closures. With mass testing of residents on the cards in March, more disruptions to the economy are expected. Gross domestic product is now predicted to contract 1% in the first quarter, according to a Bloomberg survey of economists. While growth is set to rebound in the second quarter, the outlook is far from clear, given speculation of a full lockdown in the city. That would be unprecedented for Hong Kong and raise the prospect of an extended slump in the economy. There’s been no official information of a shutdown yet, though residents are already emptying store shelves to prepare for the worst.
Brief: The Covid pandemic has taken a dire toll on mental health, the World Health Organization (WHO) said today, indicating that cases of anxiety and depression had swelled by over 25% globally. In a fresh scientific brief, WHO also found that the Covid-19 crisis had in many cases significantly impeded access to mental health services and raised concerns about increases in suicidal behaviour. The brief, which was based on an umbrella review of a vast number of studies, determined that the world saw a 27.6% increase in cases of major depressive disorder in 2020 alone. During the first year of the pandemic, there was also a 25.6% hike in cases of anxiety disorders worldwide, it found. “In terms of scale, this is a very large increase,” said Brandon Gray of WHO’s mental health and substance use department, who coordinated the scientific brief. The brief, he told AFP, “shows that Covid-19 has had a large impact on people’s mental health and wellbeing”.
Brief: New York City Comptroller Brad Lander on Tuesday unveiled an online dashboard tracking how the city is spending and allocating more than $11 billion in federal stimulus funds. Lander pointed to several deficiencies in the city’s accounting of those funds, with unclear links between the source of funding and expenditures and sparse measures of the outcomes of that spending. He is hoping to work with fellow Democrat Mayor Eric Adams on addressing these issues left behind by the administration of Mayor Bill de Blasio. The city and its residents are expected to receive as much as $26 billion through the 2026 fiscal year in various forms of direct and indirect federal aid including stimulus checks, unemployment insurance, and federal grants, among others.
Brief: Bank of Nova Scotia and Bank of Montreal got an earnings boost with commercial clients ramping up their borrowing as economies emerged further from the pandemic. Scotiabank increased fiscal first-quarter government and commercial loans 8.2 per cent from a year earlier in its international division and 16 per cent in its Canadian unit. At Bank of Montreal, business loans rose 9.9 per cent in its Canadian banking unit and 9.1 per cent in its U.S. division. Both banks’ overall profit topped analysts’ estimates. Canada’s banks had weathered the COVID-19 crisis with strong mortgage growth, helped by the country’s hot housing market. That lending strength is now broadening to other categories as economies recover from the earlier phases of the pandemic and omicron-variant infections dissipate, prompting businesses and consumers to borrow more.
Brief: Returns, volatility and market depth: the Autorité des Marchés Financiers (AMF) and the Autoriteit Financiële Markten (AFM) have examined the effects of the temporary ban applying to French securities by comparing their respective markets. In March 2020, as the pandemic triggered exceptional lockdown measures around the world, financial markets underwent an episode of high volatility and sharp price declines. To curb any amplification of the unidirectional nature of the markets and restore investor confidence, six European regulators, including France’s Autorité des Marchés Financiers, imposed a temporary ban on short selling. Other European regulators chose not to take any temporary measures. In particular, the Netherlands Authority for the Financial Markets (AFM) considered that it had not observed any market failures requiring supervisory intervention, and therefore did not consider a short selling ban as an effective measure against the effects of the pandemic on the markets.
Brief: Early in the pandemic, an allocator told an audience on the audio app Clubhouse that he never invests with a new manager without doing an on-site visit; he said he needs to look the manager in the eyes before he commits capital. Egging him on, I asked what he would do if the manager had no physical office. He said he would never invest with such a manager. I’d like to think that this never-ending pandemic would have revealed to him and his cohorts the shallowness of such orthodoxy, but a recent survey shows that though allocators are fully prepared to transition to a hybrid of in-person and virtual meetings, only about a quarter said they had allocated to a new manager without physically meeting that person. Granted, the survey was completed in August 2021, but if 18 months of a global pandemic couldn’t change allocators’ minds, then I would not expect Omicron to be the catalyst.
Brief: The pandemic has highlighted the tragic impact of substandard conditions at nursing homes, which are home to many of our most at-risk community members. More than 1.4 million people live in over 15,500 Medicare- and Medicaid-certified nursing homes across the nation. In the past two years, more than 200,000 residents and staff in long-term care facilities have died from COVID-19—nearly a quarter of all COVID-19 deaths in the United States. Without decisive action now, these unacceptable conditions may get worse. Private equity firms have been buying up struggling nursing homes, and research shows that private equity-owned nursing homes tend to have significantly worse outcomes for residents. Private equity firms’ investment in nursing homes has ballooned from $5 billion in 2000 to more than $100 billion in 2018, with about 5% of all nursing homes now owned by private equity firms. Too often, the private equity model has put profits before people—a particularly dangerous model when it comes to the health and safety of vulnerable seniors and people with disabilities. Recent research has found that resident outcomes are significantly worse at private equity-owned nursing homes.
Brief: Historically, many family-owned businesses have not been inclined to accept funding from private equity investors, as they typically view such investors as being more interested in making a quick profit than improving the company’s long-term performance. The pandemic has upended the way global business is done. Like other corporate executives, family-owned business leaders are feeling the stress from Covid-19, but the effect for them is magnified as their personal wealth and income is deeply tied to their businesses. Such business owners may be more open to private capital than ever before, as they look to shore up their liquidity to weather the pandemic and sustain their business. This will give investors many more opportunities than in the past to take minority stakes in such businesses.
Brief: A large portrait of C.D. Howe stares down at the mere mortals who enter the minister’s office on the top floor of the building that houses Innovation, Science and Industry/Economic Development. As minister and deputy minister, we developed and implemented Canada’s Innovation and Skills Plan from 2015 to 2020 under the steady gaze of Canada’s postwar “Minister of Everything.” Much like after the Second World War, this is a crucial time for Canadians to take bold and decisive action. To get back on track after COVID-19, Canada must relaunch and refocus a comprehensive innovation plan. The focus should be on the long term, while drawing lessons from the past. As the architects of the past Innovation and Skills Plan, here are some lessons we learned to help secure growth and living standards. The four pillars of the past plan remain foundational today, with the pandemic further amplifying their relevance.
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