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Our briefing for Friday, February 25, 2022:
Feb 25, 2022 3:28:29 PM
- In the United States, the Biden administration will update the guidelines for when and where Americans should be wearing a mask to protect themselves from Covid-19. The Centers for Disease Control and Prevention will announce changes to its metrics for determining face mask recommendations, shifting the focus from caseloads to hospitalizations, officials said. Right now, case counts define whether an area is considered to have substantial or high transmission of the coronavirus - currently 95% of communities in the U.S. - and therefore whether masks are recommended. Under the new metrics, more focus will be placed on things like hospitalizations and health care system capacity. According to the latest available data, the majority of Americans live in areas where indoor masks in public spaces will no longer be recommended.
- Health Canada has issued a warning against spilling or ingesting the fluid from rapid antigen test kit solutions, after about 50 calls were made to poison control. The public advisory, issued on Thursday on the federal government’s website, said that no one had been seriously injured by the misuse of a rapid test and that only minor health problems have resulted. The agency said the test kits are safe when used properly, but many test kits contain liquid solutions with chemical preservatives that may be harmful if swallowed or absorbed through the skin. Health Canada advised that the solution be kept out of reach of children and pets, as they’re especially vulnerable.
- In the United Kingdom, all remaining coronavirus restrictions have been lifted in England, including the requirement for people who test positive to isolate at home. As of Thursday, all remaining Covid-19 restrictions have been replaced by the government’s “living with Covid plan.” Adults and children who have the virus will still be advised to self-isolate – but it won’t be a legal requirement. Contact tracing has ended and businesses are no longer required to tell their staff to isolate if they have Covid. "Because of the efforts we have made as a country over the past two years, we can now deal with it in a very different way, moving from government restrictions to personal responsibility, so we protect ourselves without losing our abilities and maintaining our contingent capabilities so we can respond rapidly to any new variant," said Prime Minister Boris Johnson.
- Germany’s health minister has warned that the coronavirus pandemic is not over yet, referring to the country’s high infection rates and number of deaths. “We need to be careful not to think that the pandemic is over,” Health Minister Karl Lauterbach told reporters in Berlin. Germany reported 210,743 new coronavirus cases and 226 deaths within the past 24 hours, according to the Robert Koch Institute. Lauterbach also warned that the subtype of Omicron, known as BA.2, could lead to another rise in cases. He said the country will not participate in a Freedom Day type of celebration as some other countries have done.
- In Japan, drugmaker Shionogi & Co Ltd. announced it has applied for approval to make and sell its oral Covid-19 treatment. The pill would become the third antiviral approved for Covid-19 infections in the country, following Pfizer and Merck. The drug, known as S-217622 would be the first of its kind developed by a Japanese drugmaker. In a press release, Shionogi said that clinical trials focused on people who became sick after the onset of the Omcron wave. The firm has said it can supply between 400,000 and 500,000 doses of the drug by the end of February, and 1 million doses by the end of March.
- In New Zealand, Prime Minister Jacinda Ardern’s van has been chased down a driveway by a group of shouting protesters, amid growing tensions over coronavirus vaccine mandates. Ardern was visiting an elementary school in Christchurch when she was met by a crowd of people shouting things like “shame on you” and traitor.” Protesters have been occupying New Zealand’s parliament for more than two weeks now and blocking a number of Wellington’s central streets with their cars. Last month Ardern’s vehicle was chased on to a curb by anti-vaccination protestors, but when asked about the incidents, Ardern said she was not concerned.
Covid-19 – Due Diligence And Asset Management
Wall Street Cuts European Stock Targets as War Prompts Outflows
Brief: Wall Street strategists are cutting their forecasts on European equities on concern that the war in Ukraine will hurt economic growth, while investors pull money from the region’s stock market at the fastest pace in three months. Bank of America Corp. and Goldman Sachs Group Inc. both lowered their index targets, with the latter now expecting virtually no full-year returns for Europe’s Stoxx 600 in 2022. Credit Suisse Group AG reduced its overweight, while EPFR Global data showed $1.8b outflows from the regional equity funds.The conflict has exacerbated an energy crunch in Europe, which is heavily reliant on Russian imports, just as central banks prepare to tighten policy to tackle already-high price pressures. Europe is also expected to be hit harder than the U.S., due to its closer economic ties and geographical proximity to the conflict. “Higher energy prices will likely push up inflation further and any tightness or disruption to the supply of energy, especially gas, in Europe would also have implications for production and GDP,” Goldman strategists led by Sharon Bell wrote in a note to clients.
Most hedge fund strategies positive in Q4 2021, says Citco
Brief: Q4 was another solid quarter for hedge funds, with most strategies and all AUA categories delivering positive results, according to the Citco 2021 Q4 Hedge Fund Update. Overall weighted average returns for hedge funds were 1.52 per cent. The quarter once again largely continued a trend for funds on the Citco platform with net positive inflows for the months intra-quarter, and the quarter-end trading cycle experiencing some net outflows. In aggregate, investors added a net total of USD5.7 billion over the whole three-month period. In terms of flows into and out of strategies, Private Capital Hybrid saw impressive net capital of USD11.4 billion, while Multi Strategy and Equities saw meaningful outflows of USD2.7 billion and USD3.1 billion respectively. A year of record-breaking activity in Treasury continued into the final quarter, with total volumes breaking through the 100,000 mark after 39,790 payments in December. The grand total for Q4 came in at 102,549, 47 per cent higher than Q4 2020’s 69,905 payments.
European fund industry net outflows top €12bn in January
Brief: January was a "negative month" for the European fund industry, as estimated net outflows from mutual funds and ETFs topped €12 billion during the month, according to new figures.The latest data from Refinitiv Lipper showed that overall fund flows amounted to net ouflows of €12.4 billion in January. Of the asset types, equity funds were the best-selling, recording net inflows of €38.6 billion in the same month.Detlef Glow, head of EMEA research at Refinitiv Lipper, said: “Despite the deteriorating situation with regard to the Covid-19 pandemic and the sluggish market environment, it was not surprising that January 2022 was, in general, a negative month for the European fund industry.” Promoters of mutual funds “faced outflows” of €38 billion, while promoters of ETFs saw inflows of €25.6 billion, he added.Glow said: “Within this market environment and given the economic uncertainties, it is somewhat surprising that European investors sold money market products, which are normally considered as safe haven investments. As a result, the overall fund flow numbers are heavily impacted by the high outflows from money market products (-€56.3 bn).
Taking advantage of current market volatility
Brief: We are all hoping that the pandemic is almost over and the global economy is now on a path back to normal. However, what constitutes the ‘new normal' is uncertain and inevitably such uncertainty creates market volatility. Investors have to figure out where this path is leading them. As tepid as the post-Global Financial Crisis recovery was, the post-lockdown recovery has so far been very fast. Post-2008 high inflation was not an issue but in this cycle it has been higher and stickier. Moreover, demographics, deglobalisation and decarbonisation all suggest that the post-1980 disinflation is a thing of the past and that inflation will settle higher and retain upside risks.This is important because inflation pressures and central bank reaction functions will most likely define the tenor of this business cycle. If higher inflation is the new normal, then central banks are right to implement faster rate hikes.For equity investors this dilemma has so far played out as a rotation from growth to value. Strong economic growth and high inflation suggest upward sloping yield curves. Within equities, this is perfect territory for banks and commodity stocks. The prospect of higher discount rates also suggests the sell-off in technology stocks may have another leg to run.
Axa Profit Jumps Above Pre-Pandemic Levels After Covid Woes
Brief: Earnings last year jumped to 7.3 billion euros ($8.3 billion), the Paris-based insurer said Thursday in a statement, beating the average estimate in a Bloomberg survey of analysts. The figure was more than double earnings posted for 2020, when the firm booked a 1.5 billion-euro charge due to the pandemic. “Regarding Axa’s fundamentals, we are extremely confident,” Chief Financial Officer Alban de Mailly Nesle said in a call with reporters. “This is what we showed in 2021, and we start the year with confidence. Axa is emerging from a difficult period for insurers, which were hit by simultaneous claims across various industries when the coronavirus pandemic shut down large parts of the economy. Munich Re also reported a profit rebound for 2021, saying Wednesday that profit more than doubled, which will allow the company to return 2.5 billion euros via a share buyback and higher dividend.
