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Our briefing for Friday October 8th, 2021:
Oct 8, 2021 3:16:35 PM
- In the United States, CNBC’s Global CFO Council for the fourth quarter of 2021 view a COVID-19 outbreak as the biggest external risk factor that their businesses face. The American media outlet’s CFO Council features a group representing public and private companies from various major sectors including Facebook, IBM, BNP Paribas and Johnson & Johnson, just to name a few. A COVID-19 outbreak marks the second straight quarter for the biggest external risk factor. The first two quarters saw cyberattacks and inflation as CFO’s biggest concerns. The majority of the firms are also in favour of President Joe Biden’s vaccine mandate where he recently ordered all federal workers and contractors to be vaccinated. Eighty percent of CFO’s surveyed say they “totally support” the Biden administration’s mandate, while 15% said they totally oppose it.
- The Canadian job market received some good news on Friday. According to Statistics Canada, the country added 157,100 jobs last month, returning the job market to pre-pandemic levels. According to Bloomberg, Canada lost roughly 3 million jobs to the pandemic and the news is a welcoming sign to the nation’s economy – showing that employers are willing and able to hire workers as virus restrictions ease and vaccination rates continue to climb. The employment numbers will also bolster the predictions by Bank of Canada officials that the economy will post a strong rebound in 2021 after contracting earlier in the year.
- In the United Kingdom, British Airways was reporting a nearly 400% increase in website searches for popular sun destinations as the country slashed its travel red list to just seven countries and PCR tests will no longer be required on travellers return to England, as long as they are fully vaccinated. As of 4 AM Monday, places such as Mexico, South Africa, Seychelles, and Thailand are some of the 47 places being take off the red list. The only countries that remain will be Panama, Columbia, Venezuela, Peru, Ecuador, Haiti, and the Dominican Republic – those that choose to travel there still must stay in hotel quarantine for 11 nights upon their return at a cost of £2,285 per adult.
- Germany has vaccinated 3.5 million more citizens than previously stated. The announcement was made on Thursday by the country’s health minister after Germany’s disease control center, the Robert Koch Institute, stated almost 80% of Germans are fully vaccinated with 84% receiving at least one shot. So how did Germany lose track of almost 3.5 million people? “The discrepancy between the numbers that had been reported so far and those that the Robert Koch Institute now found out about in surveys is due to the fact that some vaccinations may not have been reported,” Health Minister Jens Spahn told reporters in Berlin. Spahn also pointed out that vaccinations of employees at large companies, mobile vaccination teams in nursing centres and surveys not including those under the age of 18, as reasons for vaccinations not being fully reported.
- In Japan, the country’s new prime minister gave his first policy speech on Friday and promised to strengthen the country’s response to the coronavirus pandemic in case of another resurgence. Prime Minister Fumio Kishida pledged to be more attentive to public concerns and needs and prepare virus measures based on “a worst-case scenario.” Those measures included improving crisis management before the weather turns cold, approving drugs for treatment of COVID-19 by the end of December and digitization of vaccine certificates as Japan gradually expands social and economic activities.
- With Sydney, Australia prepared to relax restrictions after more than 100 days in lockdown next week, doctors are sounding the alarm. Stay-at-home orders are expected to be lifted on Monday in New South Wales after hitting its 70% target of full vaccination, but Australian doctors warned a too-rapid easing of COVID-19 curbs could put pressure on health systems and risk lives. While government officials already previously planned to ease travel restrictions upon hitting the 70%, they also decided to bump up permitted limits for home gatherings, weddings, and funerals – drawing the ire of the Australian Medical Association.
Covid-19 – Due Diligence And Asset Management
Asset Management Industry Emerges Unscathed from the Pandemic
Brief: The global asset management industry reached an all-time high of $114.7 trillion in assets under management in 2020, according to a McKinsey report released yesterday. That made 2020 the second-best year since the financial crisis in terms of AUM growth, according to the report. It was not just driven by performance: Net new flows of assets grew at 2.7 percent in 2020, just slightly down from 2019. “In North America, 2020 was a story of the updraft in the U.S. markets in particular, in large part because U.S. media, technology, and healthcare companies were overrepresented in the circle of winners of the global pandemic economy,” McKinsey said in the report. Yet even as assets surged, asset manager revenues and operating profits have grown at a slower pace. In North America, AUM grew at 13 percent last year, while revenues and operating profits grew at 7 percent and 9 percent, respectively. McKinsey pointed out that despite the market shocks and the prolonged suspension of in-person interactions caused by Covid-19, the asset management industry has picked up some tailwinds as the U.S. economy quickly recovered to the pre-pandemic level.
Challenges and Opportunities: How Hedge Funds are Grappling with ESG, Remote Working and the ‘Portfolio Conundrum’
Brief: With traditional equity and credit returns set for a squeeze, and ESG, Covid-19 and remote working upending the hedge fund industry from both an investment and operations perspective, managers face both considerable challenges and sizable opportunities up ahead, speakers at EisnerAmper’s 6th annual Alternative Investment Summit said this week. Opening this year’s event, the ‘Future of Hedge Funds’ panel explored an assortment of industry themes and trends – including the increased importance of ESG considerations, the far-reaching operational changes stemming from the Covid-19 pandemic, and the range of emerging investment opportunities coming down the pipeline. Simon Fludgate, head of operational due diligence of Aksia, described a “cataclysmic shift” in how much investors care about ESG, but observed how different people want different things from ESG policies, acknowledging a contrast between sentiments in US and Europe.
Global Financial Assets Reach Magic €200trn for the First Time
Brief: Allianz has unveiled the twelfth edition of its ‘Global Wealth Report', which puts the asset and debt situation of households in almost 60 countries under the microscope to reveal a sizeable growth in financial assets over the last year. 2020 was the year of extreme contrasts. Covid-19 destroyed millions of lives and livelihoods and the world economy plunged into its deepest recession since World War II. At the same time, monetary and fiscal policy mobilized unimagined sums to support the economy, markets and people. Incomes were stabilised and stock markets recovered quickly. With this tailwind, households' wealth weathered the Covid-19 crisis: Global gross financial assets increased by 9.7% in 2020, reaching the magic EUR 200 trillion mark for the first time. Savings were the main driver: As lockdowns drastically reduced consumption opportunities, the global phenomenon of "forced savings" was born. Fresh savings jumped by 78% to EUR 5.2 trillion in 2020, an absolute record. Inflows into bank deposits - the default option of forced savings, simply leaving unspent income in the bank account - almost tripled (+187%).
Facebook Set for Longest Streak of Weekly Losses Since Pandemic
Brief: Facebook Inc. shares rose on Friday, though not by enough to prevent what is set to be the social-media company’s longest streak of weekly losses since the pandemic started. The stock climbed 0.5% today, but remains down 3.6% for the week. Should the stock end the week in negative territory, that would mark its fourth straight weekly loss, the longest such streak since a five-week decline that ended in March 2020. At current levels, Facebook shares are down more than 13% off a September peak. Over the past month, the stock is down 12%, making it the weakest performer among Wall Street’s biggest names. Recent losses reflect a rise in Treasury yields, which have broadly weighed on growth stocks, along with a number of company-specific headwinds. This week saw a lengthy global outage of the company’s sites, along with Senate testimony from a former insider turned whistle-blower, who argued that Facebook puts profits ahead of user safety.
Pandemic Fuels Activity in Health Care’s Billing Industry
Brief: Money is flowing heavily into the business of medical billing as hospitals and doctors — whose revenues were disrupted by the coronavirus — focus on maximizing every dollar they can collect from patients and insurers. The big picture: The rise and even existence of the billing industry is the result of a fragmented system that is designed around multiple types of insurance plans and a system that has increasingly forced patients to shoulder more of the costs of their care. The state of play: Companies involved with billing and collections, called "revenue cycle management" in industry jargon, increasingly advertise themselves to health care providers as one-stop shops for all things involving payments. Driving the news: The pandemic drastically shrank revenue among hospitals and other providers, and although that drop was relatively short-lived, it spurred even more revenue cycle activity.
