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Our briefing for Thursday, March 10, 2022:
Mar 10, 2022 3:41:19 PM
- The United States House of Representatives passed a $1.5 trillion federal spending bill on Wednesday, the bill includes wide-ranging support for Ukraine, while funding for Covid-19 aid in the country was cut. Disputes over the Covid-19 aid package threatened the other legislation put forth in the bill, as Democrats and Republicans were unable to come to an agreement. The proposed $15.6 billion pandemic aid package – which has originally started at $30 billion – was shut down by Republicans who were unwilling to spend any more federal money on virus prevention. Officials suggested that there was little money remaining in federal coffers for testing, therapeutics, vaccines, and efforts to stop new variants and were in need of another injection of funds to continue the fight against Covid-19. Instead of a new funding package, some money would be taken from the aid package originally intended to be distributed to individual state governments. The legislation did, however, provide funds to rebuild the country’s pandemic response infrastructure, including $845 million for the Strategic National Stockpile and 745 million for the Biomedical Advanced Research and Development Authority.
- Tourism and business groups in Canada are once again calling on the federal government to end pre-departure coronavirus testing for fully vaccinated international travelers at airports, saying that that at this stage in the pandemic, the process is no longer necessary. The groups said in a press conference on Thursday that the for the tourism sector to fully recover from the pandemic, the testing requirements must come to an end. “Businesses are becoming more confident that we are past the need to rely on restrictive measures like lockdowns to manage the virus,” said Lindsay Broadhead, the senior vice-president of communications and public affairs at the Toronto Region Board of Trade. The regulations are set to be updated on April 1, and the groups which include the Global Business Travel Association, American Express Global Business Travel, and Destination Toronto are demanding the regulations be removed on that date. “Travel and tourism are massive economic drivers in our province and many businesses in Toronto and across the country depend on international travelers, particularly business travelers,” Broadhead said.
- The government of the United Kingdom published its draft terms of reference for the Covid-19 public inquiry on Thursday. In a statement, the government said that the two main points of the inquiry will be examining the response to the pandemic and its impact on the countries of the U.K. and will provide a factual narrative on what happened throughout. It includes details on a set of lessons to be learned so that the U.K. can prepare for the next pandemic. Baroness Heather Hallet will be leading the inquiry and is expected to receive help from lower administrations to address some of the shortcomings the U.K. faced when dealing with pandemic and is intended to offer some consolation for those who have lost loved ones. “It comes far too late.” Becky Kummer, spokesperson for Covid-19 Bereaved Families for Justice said upon hearing the news. “The inquiry is a one-off and historic opportunity for the terrible suffering and loss of the past two years to be learned from, to ensure these tragedies are not repeated in the future.” Prime Minster Boris Johnson said he “will conform to what is required for the inquiry,” when asked if he would give oral evidence under oath as other departments are required to.
- Hong Kong Chief Executive Carry Lam says the city will not open its borders to international travel until it is able to contain its current outbreak of Covid-19. Lam said the city will not be able to open its borders to nine countries, including the United States and Australia, due the threat it would pose on the Hong Kong’s already-strained health care system. The ban is not expected to be lifted until the city’s entire population has been tested and the community transmission has slowed. “It’s not the time to immediately lift the ban,” Lam said. Once the reopening occurs, “a lot of people will rush to come back.” The announcement has given little hope to residents who have been stuck outside the country since January and will likely be forced to remain where they are for several months. “Inevitably among some of those people there will be infected cases. There may even be critically ill cases arising from the returns, and that would add a lot of pressure to our public hospital system,” Lam said. More than half-a-million cases have been recorded in the city since January, and its current Covid Zero policy aimed at completely eradicating the virus is still being enforced despite the advice of experts who say the ban is unlikely to stop the spread.
- Singapore is expected to allow more travel into the country in the coming months according to Transport Minister S. Iswaran. The current target is restoring passenger volumes to at least 50% of pre-Covid levels sometime this year. Singapore currently has vaccinated travel lanes open to 32 countries and regions and Iswaran says they “are really a mechanism to manage the volumes.” In next phase of recovery, the city-state is expected to remove quarantine restrictions for vaccinated travelers and soon after that the “volume control will be relaxed.” The current daily quota for passengers arriving in the nation is 15,000, and that number was halved in December when the government reduced ticket sales as the Omicron variant swept across the globe. The government of Singapore is closely monitoring the situation in Hong Kong and “it’s absolutely important that all the hubs in our region open up and reconnect, but of course each of us has to do this very mindful of the domestic public health situation,” Iswaran said. Several other nations in the region such as Malaysia, the Philippines and Thailand have begun removing quarantine restrictions for vaccinated travelers entering the respective countries.
Covid-19 – Due Diligence And Asset Management
Covid, geopolitical risks no excuse for money managers
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.
Superstars, rising stars, and the rest: Pandemic trends and shifts in the geography of tech
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.
Private Equity performance at decade high, says eFront
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).
Financial Firms Brace for More Cyber Threats After Trying 2021
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.
Commodities and real estate favoured to help asset managers navigate inflationary pressures
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).
