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Our briefing for Monday June 21, 2021:
Jun 21, 2021 3:52:24 PM
- In the United States, President Joe Biden’s administration announced on Monday their plan to release the remaining 55 million COVID-19 vaccines globally by the end of the month. Earlier in June, the White House had named the recipients of the first 25 million of the 80 million doses they planned to export as they took their first steps towards vaccine diplomacy. The remaining 55 million doses will be Johnson & Johnson, Moderna and Pfizer, most of which will be J&J and Moderna. Approximately 41 million of the 55 million doses will be shared through the COVAX initiative while the remaining 14 million will be shared with regional priorities and other recipients.
- The Canadian government will loosen COVID-19 travel restrictions for fully vaccinated people as of July 5th. In a statement on Monday, Prime Minister Justin Trudeau’s government said Canadian citizens and residents who’ve received two shots will be exempt from a 14-day quarantine on arrival to the country. Travelers will still need to show they’ve tested negative for COVID-19 before they arrive in Canada and take a second test at the border. Those travelling by air, who are currently expected to complete the first three days of their quarantine in a government approved hotel, will be exempt from that requirement. Speaking to CBC over the weekend, Public Safety Minister Bill Blair said a fuller reopening that allows tourist travel to resume won’t happen until 75% of Canadians are fully vaccinated.
- United Kingdom Prime Minister Boris Johnson said England is on course to be able to lift coronavirus restrictions as planned on July 19th, despite the spread of the Delta variant. Speaking to a television crew on Monday, Prime Minister Johnson said, “looking at where we are” and the effectiveness of vaccines against all the known variants, “I think it’s looking good for July 19 to be that terminus point.” The prime minister also tried to do some forecasting ahead noting even if domestic limits on social gatherings are soon eased, foreign travel is likely to continue to be disrupted, with delays and complications for travelers. Prime Minister Johnson stated the winter may be “rough” for many reasons with more pressure on the hospitals – noting he wouldn’t rule out the need for additional steps to protect the National Health Service if some new variant emerges.
- Indian media are citing a healthcare director that the country may be hit by a third wave of COVID-19 sooner, rather than later. The Times of India reported on Sunday infections could start rising again in 12 to 16 weeks, citing Randeep Guleria, director at the state-run All India Institute of Medical Sciences. Guleria said the Delta variant, largely believed to be responsible for the country’s second wave just a few months ago, continues to pose a risk to a large section of the population that has not yet been vaccinated. India’s confirmed coronavirus cases have passed 29 million with the death toll around 380,000, however experts believe both numbers are vastly undercounted in a country of close to 1.4 billion people.
- Hong Kong, home to one of the world’s toughest COVID-19 restrictions and border curbs, will be getting a break. Hong Kong Chief Executive Carrie Lam announced on Monday the region will shorten mandatory hotel quarantine to seven days for fully vaccinated people travelling from all, but a handful of high-risk places. The shortening of hotel quarantine will begin on June 30th and other plans such as lifting capacity limits at some restaurants and swimming pools will be lifted as of Thursday. The initial shortening of hotel quarantine will apply to Hong Kong residents first, with non-residents eligible likely a month later if all continues to go well. Lam noted Monday was a symbolic day as it coincided with the region not experiencing any local coronavirus cases for two straight weeks.
- Bloomberg is reporting Brazil hit a grim milestone over the weekend, recording at least 500,000 deaths due to the coronavirus. Despite this saddening total, Brazilians are said to be very picky on which vaccine they wish to receive with Pfizer being the brand of choice. For instance, media is reporting in Sao Paulo, people are demanding the American company’s shots at public clinics and often walk out if none are available. In order to save time, some health care centers have put up signs saying “no Pfizer shots” to save time. The reluctance of Brazilians is only adding to the death toll, which is believed to be about 2,000 a day and threatens a global resurgence of the pandemic if the nation of 213 million becomes a breeding ground for new strains.
Covid-19 – Due Diligence And Asset Management
How Covid-19 is Transforming the Hedge Fund Outsourcing Model
Brief : The Covid-19 pandemic is opening up a deeper discussion around more business functions becoming permanently outsourced, particularly among start-up and emerging hedge funds battling against budgetary constraints. Speakers at the fourth annual HedgeweekLIVE North America Emerging Manager summit this week discussed how approaches towards outsourcing – traditionally the next step on the emerging manager journey after launch – have dramatically changed as a result of the coronavirus crisis and remote working. Jack Seibald, managing director and global co-head of prime brokerage and outsourced trading at Cowen, believes the pandemic has accelerated what had already been a meaningful upward trajectory in terms of outsourced trading. Initially driven out of necessity as a result of homeworking, many temporary solutions have turned out to be interesting opportunities for both managers and service providers, Seibald told the panel. “It opened up the opportunity for a more comprehensive discussion about whether outsourced trading as a permanent solution would be the right thing for them,” he explained. “We saw an acceleration of that process and it’s particularly noticeable among emerging managers.”
Half of London Companies Plan for Home-Working Five Days a Week
Brief: Almost half of London companies whose staff can work from home expect them to do so up to five days a week after the pandemic finishes, and smaller businesses are more likely than larger ones to move ahead with remote working. That’s according to a poll of 520 business leaders by the London Chamber of Commerce and Industry, which also found that slightly more companies said employees’ main reason for concern about returning to the office was the risk of contracting Covid-19 when commuting -- rather than at the office. While most economists concur that remote working is likely to continue in some form, the figures suggest a profound impact on the workplace that could translate into reduced footfall in major cities and lower sales for businesses that rely on people going to offices. “Many businesses have already made decisions regarding their premises and ways of working once restrictions are lifted,” said Richard Burge, chief executive officer of LCCI. “It’s about what business has judged best for the bottom line or productivity of their company.” About 6 million professional jobs in the U.K. that could be done from anywhere risk being outsourced to other countries, according to a separate report by the Tony Blair Institute for Global Change, the research group founded by the former U.K. prime minister.
Shareholder Activism Campaigns Rebound Out of Pandemic
Brief: Shareholder activists, fresh from stepping up their campaigns by a third in the first half of the year, are expected to be emboldened by an economic rebound for the rest of 2021. The total number of activist campaigns launched through June 21 at companies with a market value of more than $1 billion reached 116, up from 87 over the same period in 2020 and 115 in 2019, according to data compiled by Bloomberg. The first six months of the year marked a rebound in activism generally as the economy started to recover from the pandemic. Advisers expect that momentum to continue into the second half of the year and into 2022 and beyond. This year’s proxy season will largely be remembered for the unexpected victory of first-time activist Engine No. 1 over Exxon Mobil Corp. and the lift it gave to activist investors focused on environmental, social and governance issues. The little-known fund managed to win three seats on the board of the oil and gas giant despite owning only a 0.02% stake. It’s something other companies will need to take heed of heading into next proxy season, said David Rosewater, Morgan Stanley’s global head of shareholder activism and corporate defense. ESG issues are now at the forefront of a lot of campaigns, and front of mind for a lot of investors, he said.
Dalio, Summers Still See Risk U.S. Overheats After Fed Shift
Brief : Former Treasury Secretary Lawrence Summers and billionaire investor Ray Dalio said the U.S. is headed for a period of overheating and inflation that could threaten the economic recovery, even as the Federal Reserve signaled it would step in before that happened. “It’s easy to say that the Fed should tighten, and I think that they should,” said Dalio, the founder of Bridgewater Associates, the world’s biggest hedge fund. “But I think you’ll see a very sensitive market, and a very sensitive economy because the duration of assets has gone very, very long. Just the slightest touching on those brakes has the effect of hurting markets because of where they’re priced, and also passing through to the economy.” Dalio spoke in a conversation with Summers at the Qatar Economic Forum Monday. Fed officials surprised markets last week by accelerating their timeline for potential interest-rate increases. They also raised their inflation expectations for the next three years and have started to discuss when and how to pare back from their $120 billion in monthly asset purchases. The Dow Jones Industrial Average fell 3.5% last week, the biggest drop since October.
M&G Unveils Impact Fund Focusing on Health and Wellbeing
Brief: M&G Investments has launched an impact equity strategy which will seek to deliver attractive returns by investing in companies whose products or services are designed to promote better health and wellbeing. The M&G Better Health Solutions fund will be a concentrated portfolio of 30-35 holdings (32 at launch), managed by Jasveet Brar. The stocks will be diversified around better healthcare and better wellbeing, with the latter theme covering improvements in lifestyle, hygiene and safety. M&G will publish annual reports on each company's impact on the two themes and their revenue alignment with health-related UN Sustainable Development Goals (SDGs). The fund follows the same investment approach and process as M&G's £480m Positive Impact strategy, managed by John William Olsen, who will be a deputy on the new fund, as well as the recently launched M&G Climate Solutions strategy. Investible companies are ranked in three categories: pioneers, whose products or services have a transformational effect on society or the environment; enablers, which provide the tools for others to deliver positive social or environmental impact; and leaders, which spearhead and mainstream impact and sustainability in their industries.
ESG Has So Far Been a Rich World Phenomenon. But Emerging Markets Are Catching Up
Brief: Emerging markets aren't what come to mind first when allocators think about investing in companies based on environmental, social, and governance goals. But the pandemic has accelerated the adoption of some of these objectives, especially the “S” in ESG. Teresa Barger, co-founder of Cartica Management, said the way companies treat their employees has become a critical factor in the valuation of their shares. Barger, who spent 21 years at the International Finance Corp. before going out on her own, should know. Cartica has a long history of applying activist techniques to companies exclusively in emerging markets. In fact, the firm, founded during the global financial crisis, makes money by persuading companies to fix their corporate governance issues, and identify and improve environmental and social risks. Barger said companies that weren’t providing safety measures for factory workers, for example, saw their shares tumble during the pandemic. On the flip side, companies such as retailer Magazine Luiza in Brazil, which isn’t currently in Cartica’s portfolio, saw their prices skyrocket after announcing they wouldn’t lay off workers and that some executives in the firm, including the CEO, would not be taking a salary. Magazine Luiza, which runs both brick-and-mortar and e-commerce, also provided accommodations for its employees and their families.
