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Our briefing for Thursday, November 25, 2021:
Nov 25, 2021 3:06:13 PM
- Beginning on January 22, the United States will require all travelers crossing the land border into the country to be fully vaccinated. All non-residents of the U.S. will now have to show proof of two doses of an approved Covid-19 vaccine, bringing regulations for essential travelers in line with those made for leisure travelers earlier this month. American citizens will remain eligible to cross the border without proof of vaccination, provided they have passed the required tests before entry. The proof of vaccination requirement was temporarily delayed allowing trade between Canada and the United States to remain unimpeded as it was throughout the pandemic thus far. Meanwhile, due to the extensive flooding in British Columbia, some border restrictions have been waved to allow for Canadian residents to pass through the United States to get home as many roads remain closed in the province.
- Canada has become the first country to grant full approval to the Johnson & Johnson single-shot Covid-19 vaccine. People 18 and over will now be able to receive the Johnson & Johnson vaccine that had been approved for use under an interim order earlier in the year. The vaccine was approved for emergency use in several countries across the globe including the United States. In August, Canada had agreed to send roughly 10 million doses of the J&J vaccine to poorer countries who were unable to secure vaccines on their own. Canada has so far administered over 60 million doses of Covid-19 vaccines since the pandemic began and is currently registering just under 2500 new cases of the virus a day.
- Ministers in the United Kingdom are urging the public to get a Covid-19 booster shot before the holiday season. Experts are recommending that Britons do everything in their power to get a booster shot before December 11 to ensure they have the strongest amount of protection against the virus before Christmas Day. Earlier this month Prime Minister Boris Johnson acknowledged that the vaccine efficacy wanes over time, and that booster shots remain the best defense against contraction the virus. Nearly 16 million people across the country have already received a booster shot or third dose of the vaccine, currently, anyone over 40 or those deemed especially vulnerable are eligible to receive a third dose. A Department of Health and Social Care spokesperson said, “those eligible for a booster have been urged to take up the offer as soon as possible to protect themselves and their families and help to reduce the pressure on the NHS.”
- On Thursday, Germany became the fifth country in Europe to surpass 100,000 deaths related to Covid-19. Chancellor Angela Merkel called it a “very sad day” in a press conference in Berlin. “And unfortunately, at the moment, more than 300 deaths are being added to that each day,” she added. Merkel, who is acting as a caretaker before her new replacement Olaf Scholz is sworn in, has praised the new government for creating a specialized group of experts tasked with containing the virus. In the last 24 hours, Germany broke their single day record of new confirmed cases of the virus with 75,961. The country has seen over 5 million confirmed cases of Covid-19 since the start of the pandemic. With ICU beds in the country filling up, Germany has now contracted medical evacuation airlifts to transfer patients to regions with more available hospital beds.
- South African scientists have found a new variant of the Covid-19 virus on Thursday. The new variant, named B.1.1.529 has been found in Botswana and Hong Kong in travelers that had recently visited South Africa. Virologist Tulio de Oliveira said that the variant has a “very unusual constellation” of mutations that could help the virus evade the body’s immune response, making it very easily transmissible. Health Minister Joe Phaahla said on Wednesday that the variant is behind an “exceptional” rise in cases over the last week, which could make it a “major threat.” New daily infections in the country were close to 1200 on Wednesday, up drastically from roughly 100 earlier in the month. Early indicators show that the new variant has already spread substantially in South Africa’s most populous province of Gauteng. Phaahla has said that it is still too early to tell whether the country will impose stricter restrictions due to the new variant.
Covid-19 – Due Diligence And Asset Management
Four in 10 Canadian businesses say profitability won't return to pre-COVID levels until 2023
Brief: Nearly 40 per cent of Canadian businesses say they do not expect a return to pre-pandemic profitability levels by the end of next year, as concerns about rising inflation and new waves of COVID-19 weigh on business prospects. That's according to HSBC's most recent Voice of Business survey of more than 7,300 business leaders in 14 countries, including 536 Canadian companies. The survey found that 25 per cent of businesses will reach pre-pandemic levels of profitability by the end of the year, and another 36 per cent expect to hit those levels by the end of 2022. But other companies expect a more prolonged recovery period, with 39 per cent reporting that they will return to pre-pandemic levels of profitability after 2022. The survey also found that Canadian businesses are feeling more pessimistic about their future growth prospects than entrepreneurs in other countries. In Canada, 56 per cent of businesses say they feel more optimistic than they did a year ago – a time that was marked by COVID-19 uncertainty – compared to 72 per cent in the U.S. and 64 per cent globally.
Europe Lockdowns Put $50 Billion of Bonds on Cusp of Junk Grade
Brief: A new wave of junk downgrades looms over Europe as the region shudders under one of the worst outbreaks of the pandemic. Some 84 bonds worth 46 billion euros ($52 billion) are on the cusp of losing their investment-grade ratings -- marking a reappearance for fallen angels that had all but vanished this year, according to Bloomberg Intelligence analysts. “With European lockdowns back on, fallen angels are a worry,” Mahesh Bhimalingam and Bhumika Gupta wrote in research published Thursday. There was just one fallen-angel downgrade in Europe in the past six months, they wrote. The downgrades are another sign of cracks emerging in the European credit market that’s been buttressed by central bank bond buying for years and even more so during the pandemic. But now that support is set to diminish as soon as March -- and the prospect is pushing up borrowing costs and volatility. The risk premium in euro-denominated corporate bonds, as measured by Bloomberg indexes, just rose above 1% for the first time in more than a year. This comes as spread volatility is rising to multi-month highs from depressed levels.
Europe’s Recovery at Risk From Covid Wave, Inflation Pressure
Brief: Euro-area business activity unexpectedly quickened, though the region’s recovery faces headwinds from a fresh wave of Covid-19 infections and “record inflationary pressures.” IHS Markit’s composite Purchasing Managers’ Index rose to 55.8 in November from 54.2 in October, according to a survey of purchasing managers by IHS Markit published Tuesday. While that defies the median estimate in a survey of analysts that forecast the measure would retreat, it still points to weaker economic growth in the closing quarter of 2021, the report said. That’s partly down to the pandemic’s latest surge across Europe, which looks set to cause renewed disruptions to the economy in December. Any new lockdowns are likely to hit the currently thriving services sector, while manufacturing is already suffering from a global supply squeeze.
European close slightly higher despite Covid concerns; Telecom Italia up 16%
Brief: European stocks eked out small gains on Wednesday as traders digested a fresh batch of economic data and monitored the region’s latest Covid surge. The pan-European Stoxx 600 closed up 0.1% after choppy trading earlier in the session. Telecoms shares rose 1.2% to lead the gains while autos stocks sank 1.5%. European investors continue to monitor the acute Covid crisis in the region this week, with more countries considering stricter restrictions and partial lockdowns to curb rising infections. Germany is expected to make a decision on stricter measures on Wednesday amid a surge in cases there, and France recorded more than 30,000 new daily infections on Tuesday for the first time since August. In political news, German parties agreed to form a three-way coalition after almost two months of talks. The deal will see Olaf Scholz, the center-left Social Democratic Party’s candidate, become Germany’s next chancellor, replacing Angela Merkel who has led Germany for 16 years.
Hong Kong’s status as a global financial centre can withstand city’s quarantine rules, SFC chief says
Brief: The head of Hong Kong’s securities watchdog categorically defended the government’s restrictive quarantine policy, saying that it will not affect the city’s status as a global finance hub. “There will be no long-term impact on Hong Kong as an international financial centre,” said Ashley Alder, chief executive of Securities and Futures Commission. Alder, who is currently undergoing a 21-day quarantine after returning from the COP26 climate summit in Glasgow, answered media queries from his hotel room as he remotely took part in the SFC Regulatory Forum. Other financial centres like Singapore, London and New York have eased travel restrictions and opted for “living with Covid”. Hong Kong, on the other hand, has adopted a zero-Covid-19 policy and requires travelers to undergo up to 21 days of compulsory quarantine. “The other cities cannot replicate what we are doing,” he said. “Hong Kong has a range of successful cross-border trading schemes with the mainland, including the two Stock Connect schemes, Bond Connect and Wealth Management Connect schemes.”
