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Our briefing for Tuesday, December 14, 2021:
Dec 14, 2021 2:41:41 PM
- U.S. drug maker Pfizer on Tuesday announced the results from its final round of testing on its new anti-viral pill that is used to treat patients with severe Covid-19 symptoms. The analysis showed that the pill is 90 per cent effective in preventing hospitalization or death from Covid-19. In the 2200 people tested, there were no recorded deaths among those who received the anti-viral pill, compared to 12 who received the placebo. If approved, the drug will be named Paxlovid, and will be administered in conjunction with older anti-viral medication every 12 hours for 5 days. “We’re talking about a staggering number of lives saved and hospitalizations prevented.” Pfizer Chief Scientific Officer Mikael Dolsten said in an interview. “And of course, if you deploy this quickly after infection, we are likely to reduce transmission dramatically.” Pfizer has said it expects authorization from the U.S. Food and Drug Administration “very soon.”
- Researchers in the Canadian province of Ontario have created a chemical compound that can neutralize SARS-CoV-2, the virus that has caused the Covid-19 pandemic. The compound created by researchers at the University of Toronto (UofT) has been proven effective against the Alpha, and several other variants of the virus. According to Journal of Medicinal Chemistry, the study has created D-peptides that can neutralize the virus and stop the infection in cultured human cells. The D-peptides, also known as mirror-image peptides have chemical properties that allow them to be turned into pharmaceutical solutions to SARS-CoV 2. “Our peptides act similar to antibodies that block the virus from entering the cells,” said UofT professor and senior study author Philip Kim, “but there are certain advantages in that they are cheaper to make [and] they have long stability.” According to Dr. Kim, the treatment can also be formulated to work against the new Omicron variant, however, it will be at least two years until it is available to public.
- The head of the International Monetary Fund has warned that Britain will be forced to enact stricter lockdown measures if the public does not receive booster shots to prevent further infections. Vaccine booster shots are “unquestionably an economic policy first order of magnitude,” IMF Managing Director Kristalina Georgieva said on Tuesday. “We see the impact as very significant.” Currently, the U.K. has limited restrictions in place, such as encouraging working from home and the adaptation of vaccine passports for large in-person gatherings. Georgieva also said that the government should prepare to reinstate furlough that was put in place in the beginning of the pandemic, “in the event of a virulent wave requiring widespread mandated closures.” Previous furlough handed up to 80 per cent of wages to those whose workplaces were closed due to the pandemic. The previous furlough had cost the U.K. 70 billion pounds, and the IMF says that another one should only be reinstated in the case of a “very large, temporary, and non-structural shock.”
- According to government officials, Italy has extended its state of emergency due to Covid-19 until at least March 31 because of the threat caused by the Omicron variant. The state of emergency, originally put in place in January of 2020, was set to expire on at the end of December. It gives more power to the central government allowing it to pass legislation without the hinderance of normal bureaucratic measures. The Italian Health Ministry has also decided that anyone entering the country between December 16 and January 31 is required to take a Covid-19 test. Unvaccinated people entering the country will be forced to quarantine for at least 5 days regardless of the results from the virus test. Italy recorded 20,677 new cases of Covid-19 on Tuesday, of which 27 were found to be the new Omicron variant. So far, the country has had 135,049 deaths relating to the virus, which is the second highest in Europe behind only Britain and the ninth highest in the world.
- China has offered 300,000 doses of its conditionally approved CoronaVac vaccine to South African National Defense Force the nation said on Tuesday. The South African department of health said that the donation is still pending approval citing unspecified protocols. Currently, only Pfizer and Johnson & Johnson shots are being administered in the country where the Omicron variant was first detected last month. Earlier this year, the South African National Defense Force was required to return doses of the Covid-19 drug Heberon to Cuba after it was rejected for approval in South Africa, the total cost of the Heberon shipment was roughly $12.4million USD. The country is undergoing what it calls its fourth wave of the Covid-19 pandemic as the new variant is spreading rapidly throughout the nation.
Covid-19 – Due Diligence And Asset Management
Fresh VIX spikes offer persistent opportunities for hedge funds
Brief: Increasingly frequent spikes in the VIX volatility index could offer hedge funds and other investment managers strong return opportunities amid the resulting equity market gyrations, new analysis published by Man Group suggests. Probing various trends emerging from the biggest VIX surges over the past 30 years, Man’s ‘Views From The Floor’ commentary noted that four of the top 10 spikes have occurred since the Covid-19 pandemic. At the end of last month, the volatility index soared by some 11 points – a 10-month high – as a result of growing fears over the emerging Omicron Covid-19 variant. The note, which explored the merits of investors buying into a VIX spike, observed that if the S&P 500 is up in the week after the VIX spike, history shows most forward returns come during that first week – generating a median return of 1.4 per cent. “As time goes on, returns drop, persisting into the second week less than half of the time,” noted Ed Cole, managing director, discretionary investments at Man GLG, adding that while the average return in the second week is negative, although this improves over a 3-month basis.
Fidelity, Morgan Stanley prepare for continued COVID-19 concerns
Brief: Asset management firm Fidelity Investments on Monday said it had paused some voluntary return-to-office plans while Morgan Stanley (NYSE:MS)'s CEO said he expects COVID-19 to be an issue through the next year, in a further sign that America's financial industry is rethinking its return to "business as usual." U.S. financial firms have been more proactive than other industries in encouraging employees to return to offices. Those plans have come under renewed scrutiny with COVID-19 cases again on the rise and as the Omicron variant of the coronavirus spreads swiftly. Some financial firms are now choosing to pull back on holiday parties, recommend booster shots, or even advise returning to work from home. "The private acknowledgement is that return to work plans set for January need another look," said Neal Mills, chief medical officer for professional services firm Aon (NYSE:AON), who advises corporations on their return-to-work plans. Mills said he received calls every day last week from companies experiencing COVID-19 outbreaks seeking advice on whether to delay bringing employees back or reinstate mitigation measures, like social distancing. Cases surged after Thanksgiving and are expected to continue rising and peak in January, he said. Family-controlled Fidelity, headquartered in Boston, paused pilot return-to-office programs at its offices in Boston, Smithfield, Rhode Island, and Merrimack, New Hampshire "due to rising COVID risk scores," spokesman Michael Aalto said.
ABD trims developing Asia’s growth forecast on Omicron fears
Brief: The Asian Development Bank (ABD) has cut its economic growth forecast for developing Asia for this year and next due to the emergence of the Omicron coronavirus variant. In its latest outlook published on Tuesday, the Manila-based development bank forecast the region’s emerging economies would grow 7 percent in 2021 and 5.3 percent in 2022, down 0.1 percent from its previous estimate. The bank cited a resurgence of COVID-19 cases due to the Omicron variant as the biggest risk to the region’s recovery, with other dangers including a prolonged slowdown in China’s housing market, rising inflation and global supply chain disruptions. Among the major economies looked at, the ABD trimmed China’s growth forecast to 8 percent in 2021 and 5.3 percent next year, down 0.1 percent and 0.2, respectively, from its September estimate. The bank cut India’s growth estimate to 9.7 percent for 2021, compared with 10 percent in September, with its 2022 estimate of 7.5 percent growth remaining unchanged. Growth for Southeast Asia was cut to 3.1 percent for 2021, down 0.1 percent, but raised 0.1 percent to 5.1 percent for next year.
Global fund managers well armed for 2022
Brief: Despite facing an array of both economic and competitive challenges, the outlook for the global investment management business in 2022 is neutral, says Fitch Ratings. In a new report, the rating agency said global investment managers are facing competitive pressures and obstacles such as high inflation and elevated valuations. But firms in the sector are prepared to face down these threats through a combination of scale, strategic diversification and robust finances. “Fitch expects rated global investment managers to be more resilient to continuing competition and potential market volatility given enhanced scale and strong franchises,” said Nalini Kaladeen, director with Fitch, in the report. “Overall, we believe alternative [managers] are better placed to withstand challenges than traditional [managers], given stronger active flow dynamics and locked-in fee streams that are largely insulated from fair value changes on investments,” she added. Fitch predicted traditional investment managers would likely use mergers and acquisitions to help fend off competitive threats.
JPMorgan tells unvaccinated Manhattan staff to work from home
Brief: JPMorgan Chase & Co on Tuesday instructed unvaccinated staff in Manhattan to work from home, a further sign that banks and other financial firms are tightening protocols as COVID-19 infections rise and the Omicron coronavirus variant spreads. The U.S. bank, one of the most aggressive in bringing employees back to the office, had previously allowed unvaccinated staff to work in its Manhattan offices provided they were tested twice a week. In a memo to staff seen by Reuters, the bank urged unvaccinated staff to get vaccinated and for those who are eligible to get booster shots. It also relaxed mask requirements for vaccinated staff working in its Manhattan offices. "We continue to agree with health authorities that being vaccinated against COVID-19 is the best way to keep ourselves and our loved ones safe - especially as we face the winter months and a new variant - so please consider getting vaccinated if you aren't already, and getting your booster if you are," the memo said. More than 90% of JPMorgan staff based in Manhattan are vaccinated, according to the memo.
