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Our briefing for Tuesday, February 22, 2022:
Feb 22, 2022 4:08:24 PM
- According to a report from the Seattle Times, the Omicron variant has been more deadly than the previous Delta variant in the United States. Since the Omicron variant was discovered in South Africa in November of last year, the United States has recorded over 30,163,600 new infections and 154,750 new deaths. When compared to August 1 to October 31 in 2021 – roughly the same amount of time – the United States recorded 10,917,590 infections with 132,616 deaths. These numbers represent an increased death rate of nearly 17 per cent during the time when the Omicron variant was the dominant strain in the country. "When the number of infections is as astronomical as 30 million,” the report said, “even a tiny death rate will mean a catastrophic death count." As the number of people infected with the virus drops, the report aimed to highlight "the country's continuing vulnerability," in the face of relaxed Covid-19 restrictions and nationwide easing of mandates.
- Over 200 people were arrested in Ottawa over the weekend at protests over Canada’s Covid-19 mandates. Police sought to disperse protestors by towing vehicles and launching pepper spray at crowds that have been clogging the nation’s capital for several weeks. Prime Minister Justin Trudeau defended his use of the Emergencies Act at a news conference on Monday saying, “right now, when the situation is still of people pre-positioning, people being out there indicating that they are ready to blockade, to continue their illegal occupations, to disrupt Canadians' lives, we feel that this measure needs to remain in place while this emergency situation is still in place.” Through the Emergencies Act, the federal government can freeze the assets of anyone suspected of financing the illegal protests. Mike Duheme, the Royal Canadian Mounted Police (RCMP) deputy commissioner of federal policing, said that the RCMP froze 206 financial products, including a payment processing account valued at 3.8 million dollars. "We continue to work at collecting relevant information on persons, vehicles and companies and remain in daily communication with the financial institution to assist them," Duheme said.
- On Monday, Prime Minister of the United Kingdom Boris Johnson unveiled his plans for an end to Covid-19 measures in England. Johnson said that it was now time for England to start “living with Covid” and detailed his intensions to remove self-isolation rules and put an end to free Covid-19 tests. The announcement came just a day after Queen Elizabeth II had tested positive for Covid-19. “Today is not the day we can declare victory over Covid, because this virus is not going away.” Johnson said in an address to parliament. “But it is the day when all the efforts of the last two years finally enabled us to protect ourselves while restoring our liberties in full.” The restrictions will be dismantled in phases, with the legal requirement to self-isolate ending on February 24, close contacts will no longer have to take a Covid-19 test, and employees will no longer have to disclose a positive test to employers. As of March 24, some of the financial support for those who are unable to work due to Covid-19 will be removed, and as of April 1, the government will no longer provide free rapid tests for the public.
- Abu Dhabi, the capital of the United Arab Emirates has not disclosed its growth data since the pandemic began. The UAW hasn’t provided any official annual gross domestic product data since 2020, and the oil-producing nation’s hesistancy to disclose such information is frustrating investors worldwide. Ziad Daoud, chief emerging-markets economist at Bloomberg said, “withholding basic economic statistics, like GDP, isn’t great in normal times. It’s especially counterproductive when the economy faces and recovers from a global pandemic.” Abu Dhabi’s statistics office is “currently processing the GDP report 2020” according to government sources, and there has been no explanation for the delays in reporting the data. The UAE, consisting of seven emirates did, however, post 2022 GDP estimates but the federal statistics website only shows figures that go as far as the second quarter of 2020. According to the website, Dubai’s economy contracted nearly 11 per cent during the pandemic, although, those numbers only reflect the first nine months of 2021.
- Hong Kong Chief Executive Carrie Lam said on Tuesday that city will require mandatory Covid-19 tests for all 7.5 million residents starting in March. The city is in the midst of the worst outbreak of the virus since the pandemic began and will now test each resident three times in March. Lam said that the testing capacity will be increased to 1 million people a day and expects that the process will take about a week. Hong Kong has recorded nearly 5000 new cases a day since February 15, with the city amassing 54,000 cases in total and 145 deaths. While mainland China has repeatedly put entire cities on lockdown, Lam says that will not be the case in Hong Kong, as locking down a city of that size is “not realistic.” Lam has also denied that the semi-autonomous city is taking directions from the central Chinese government and remains steadfast that the decisions surrounding Covid restrictions rest with officials in Hong Kong. “I reiterate that the central government never issued any instructions on our anti-epidemic work,” she said. “The central government will offer support as needed or upon our request, but of course we will always exchange our views.”
Covid-19 – Due Diligence And Asset Management
Allianz nearing settlements with investors in Structured Alpha hedge funds
Brief: Allianz is close to agreeing settlements with the major investors in its failed Structured Alpha hedge funds, which failed during the early days of the global pandemic, according to a report by Bloomberg. Speaking in an interview on Bloomberg TV, Chief Financial Officer Giulio Terzariol, said: "We achieved an agreement with the majority of the investors. There are still ongoing conversations with remaining plaintiffs. We are in conversations with the US Department of Justice, and this conversation is very constructive." Blue Cross & Blue Shield and New York's Metropolitan Transportation Authority as well as other pension funds are among the investors to have brought multiple lawsuits against Allianz over the failure of the funds, leading the German insurer to last week announce that it would take a EUR3.7 billion charge in relation to the legal action and regulatory investigations.
HSBC donates US$12.8 million to help needy Hong Kong families hit by Covid-19, while AlipayHK cuts SME fees
Brief: HSBC, the biggest lender in Hong Kong, has donated HK$100 million (US$12.8 million) to help low-income households hit hard by the Covid-19 outbreak, the biggest so far by the city's financial sector. The lender has joined a slew of companies, including Bright Smart Securities, Futu Securities, Ant Group and FWD, which over the past week have offered support ranging from monetary donations, testing kits and other assistance to the city facing record infections nearly every day amid the fifth wave of the coronavirus outbreak. The Hongkong Bank Foundation, the bank's charitable arm, has teamed up with the Hong Kong Red Cross to help households who need to undergo compulsory home quarantine because of infections among family members or lockdowns of residential buildings for tests.
The M&A Frenzy May Be Over – But That’s Not a Bad Thing
Brief: After hitting records in 2021, deal-making looks like it may be coming down to earth this year. In 2021, the total value of mergers and acquisitions reached an all-time high of $5.9 trillion, up from $3.7 trillion the year before, according to a report on global M&A in 2022 from Bain Consulting. In January, however, the number of M&A deals declined for the first time in almost two years, according to data from II’s sister company, BCA Research. In a daily briefing, BCA noted that the dimming M&A outlook is a result of decelerating economic growth, sluggish equity returns, rising interest rates, and strong regulatory headwinds. “The environment is now less conducive for mergers and acquisitions,” according to BCA. “This is compounded by the fact that the number of M&A deals over the past 12 months far exceeds previous peaks, which raises the likelihood that dealmaking activity experiences a mean reversion.”
‘Living with Covid’ strategy could do more harm than good, say businesses and unions
Brief: Business leaders and unions have warned the government that scrapping free Covid tests in England and watering down sick pay will discourage workers from self-isolating and could damage the economy. Although welcoming Boris Johnson’s ambition to ease restrictions almost two years into the pandemic, company bosses said the prime minister’s newly unveiled “living with Covid” strategy came with major risks and could do more harm than good. Claire Walker, co-executive director of the British Chambers of Commerce (BCC), said the changes inched companies closer to pre-pandemic conditions. “However, for many firms, this move will not be without its challenges, and government must not pass public health decisions on to the business community, who are not public health experts.”
PDI: Credit Hemorrhaging Is Accelerating Into A 'Global Credit Crunch'
Brief: The prolonged era of ultra-low interest rates has pushed many investors into riskier "high-yield" assets. Older investors who are at or near retirement have never had as high allocations into risk assets as they do today. This issue has only worsened with inflation which has lowered real yields to unprecedented levels. At the same time, the global economy is slowing at a faster-than-expected pace, and, finally, interest rates are starting to rise back to normal levels. Today, investors face an undoubtedly odd set of market conditions with a multitude of both inflationary (supply & labor shortages) and deflationary forces (extreme public and private debt). In such an environment, high-risk assets, particularly credit assets, can easily lose most of their value if market conditions continue to sour. Thus far, most riskier credit assets have failed to hold their weight, given the rise in interest rates. This issue can already be seen in the breakdown of popular riskier-credit funds such as PIMCO Dynamic Income Fund (PDI).
