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Our briefing for Tuesday July 13, 2021:
Jul 13, 2021 3:58:13 PM
- In the United States, the Centers for Disease Control and Prevention (CDC) is prepared to meet on July 22nd where COVID-19 safety will be at the top of the list. The announcement by the CDC comes one day after the fact sheet for Johnson & Johnson’s COVID-19 inoculation was revised by federal regulators to note a “small possible risk” of an auto immune disease. In a statement on Monday, America’s Food and Drug Administration (FDA) added the warning after 100 reports of Guillain Barre Syndrome were made among the roughly 12.8 million Americans that were given the one-dose vaccine.
- In Canada, as of Tuesday, more than 50% of Canadians have been fully vaccinated against the coronavirus. Prime Minister Justin Trudeau has defended the country’s vaccination strategy noting, mixing and matching vaccines is “bearing out” with increasing take-up and steadily declining new infections. The prime minister felt the need to defend the strategy after Dr. Soumya Swaminathan of the World Health Organization (WHO) noted the data of mixing and matching coronavirus vaccines is “a bit of a dangerous trend”. Health experts in Canada say the comments made by Dr. Swaminathan were taken out of context and that mixing and matching COVID-19 vaccines under public health guidelines is safe and effective. Prime Minister Trudeau noted by continuing this strategy, the country is on track to have everyone who is eligible fully vaccinated against COVID-19 by the end of the summer.
- In the United Kingdom, leading scientists are urging Prime Minister Boris Johnson to end the mixed messaging on face masks, working from home and vaccine passports as lockdown restrictions are expected to be fully lifted less than a week from now. The scientists, who include Professor Graham Medley, chairman of the modelling advisory SPI-M group, are warning of the dangers of a third wave that could last six weeks after legal restrictions are abandoned on July 19th. Professor Medley noted the evidence that face masks help reduce the spread of the virus, but only if everyone does it, rather than 70% or so – noting he wants the prime minster to reconsider the ditching of mandatory face coverings on public transport and enclosed public spaces.
- German Chancellor Angela Merkel said the country will not follow the UK’s lead in dropping restrictions next week and urged more Germans to get the COVID-19 vaccine. Chancellor Merkel noted the more people get the shot, “the more free we will be again.” Vaccination rates have slowed in recent weeks with about 58.7% of the population receiving at least one shot and 43% fully vaccinated. Germany’s Robert Koch Institute, the government run disease control agency, said last week the country should aim to vaccinate 85% of people ages 12-59 and 90% of people over 60 to prevent the delta variant from causing a resurgence of coronavirus cases this fall and winter.
- France’s President Emmanuel Macron’s pressure to get vaccinated to save the summer season and French economy seems to have worked. More than one million French citizens made COVID-19 vaccine appointments on Tuesday – a new record since the country rolled out coronavirus vaccines in December. President Macron’s announcement on Monday of special COVID-19 passes that will be required starting in early August to enter restaurants and shopping malls and to get on trains and planes raised questions and worried French residents and foreign tourists on what the logistics will look like and what will be expected.
- In Australia, government officials on Tuesday announced added financial supports for businesses and households in Sydney negatively affected by the region’s latest coronavirus lockdown. “The New South Wales outbreak has proved to be more severe, more dangerous, and it’s in the national interest that we now put in place an upgraded set of arrangements for cooperation with the states and territories,” said Prime Minister Scott Morrison of the disaster funding deal. New South Wales state Premier Gladys Berejiklian said she would announce on Wednesday whether Sydney’s 5 million residents would remain locked down beyond the three-week mark, which is set to be on Friday.
Covid-19 – Due Diligence And Asset Management
Goldman Says Pandemic is Shaping a More Productive U.S. Economy
Brief : The Covid-19 pandemic is fueling a productivity boost for the U.S. economy by speeding up workplace digitization, according to an analysis by Goldman Sachs Group Inc. Since the crisis began, annualized growth in output per hour has risen 3.1%, compared with 1.4% in the previous business cycle, Goldman economists wrote in a note. “Stronger productivity growth has been one of the silver linings of the pandemic,” they said. Those gains are most visible in sectors that can take advantage of virtual meetings, and where in-person expenses such as travel and entertainment have scope to decline. The gains are being led by sectors including information technology, professional services and wholesale trade, while online shopping has lifted productivity in the retail sector. Figuring out how to boost productivity among workers and companies is often identified as one of the biggest obstacles for global growth. The ability to work from home has been singled out as one area where gains are obvious, with a recent study estimating a productivity lift in the U.S. economy of 5%, mostly because of savings in commuting time. However, that study found gains were disproportionately available to the highly educated and well-paid, with many lower-paying jobs -- such as in food preparation and other essential industries -- unable to be done remotely.
US and UK Lead the Way as Most Attractive Countries for Post-Covid PE and VC Investment
Brief: The United States remains unparalleled as a magnet for investors, according to the 10th anniversary edition of the Venture Capital (VC) and Private Equity (PE) Country Attractiveness Index. The index ranks 125 countries according to the quality of their investment environment for adventurous VC and PE investors. The countries are analysed and ranked according to thousands of weighted data points covering six key drivers: economic activity, depth of capital markets, taxation, investor protections and corporate governance, human and social environment, and finally entrepreneurial culture and deal opportunities. Based on its strong performance in all six areas, the United States continues to be the index benchmark with a score of 100. It is followed by the United Kingdom, Japan, Germany, and Canada to round out the top five. Within the top 10, the most remarkable gains were seen for China, South Korea and France, who entered the top 10 for the first time. All top-ranked countries are expected to make swift recoveries from the COVID-related recession, especially China (now 7th), where GDP growth is already recorded.
Women Push Against Being Left Behind Amid Pandemic Recovery
Brief: Proponents of women’s progress on Tuesday launched a political push in Rome to ensure that global pandemic recovery efforts won’t leave women lagging even farther behind, with the chief of the European Union's executive arm lamenting the scarcity of women in political leadership positions. Advocates are using Italy’s current leadership of the G-20 grouping to campaign for pay equality, greater involvement in decision-making and elimination of cultural stereotypes that hinder women’s advancement. “At the next G-20 summit in Rome, I could be the only woman in the group” of leaders, European Union Commission President Ursula von der Leyen told a forum examining where women lag behind and how they can catch up to men. Italy holds a summit of G20 leaders until the end of October. While von der Leyen didn't elaborate, she appeared to be referring to the prospect that Angela Merkel would no longer be leading Germany's government after elections in September. “There could be no better reminder of how long the road towards gender equality still is,” von der Leyen said, speaking by video message at the opening of the three-day forum.
75% of Asset Management Firms do not Want to Return to Pre-Covid Working Arrangements
Brief : Three-quarters of asset managers want to embrace the new normal, with only 25% desiring to return to the pre-Covid work environment, according to a survey from Magellan Advisory Partners. Three-quarters of asset managers want to embrace the new normal, with only 25% desiring to return to the pre-Covid work environment, according to a survey from Magellan Advisory Partners. The Post-Pandemic Working Environment study spoke to management teams across 62 fund houses globally, with assets under management ranging from under $1bn to more than $1trn and found that 75% want the post-Covid hybrid working environment to be permanent. There is an overwhelming preference for three days in the office per week to become the norm, with almost 60% of respondents opting for this balance. Regionally, there was some divergence, with asset managers in the Middle East and Africa and the US leaning towards a four-day office week, while employees in Asia-Pacific may find themselves in work just two days out of five. When not in the office, the majority of firms do not mind where their employees base themselves, with 56% stating they would allow staff to work from anywhere in the world that is not their home address.
B.C. Sees Record Capital Raising and Market Capitalization During COVID-19 Pandemic
Brief: The total market value of B.C.’s public companies grew nearly 50 per cent in 2020 to reach record highs, despite the impact of the pandemic on global financial markets, according to a new report from the British Columbia Securities Commission (BCSC). The BC Capital Market Report 2020 shows that the total market value of B.C.-based companies grew 47 per cent in 2020 to $286 billion, compared to 2 per cent growth in the previous year. “COVID-19 rattled B.C. investment markets in the first quarter of 2020, but they rebounded quickly, demonstrating their resilience and strength even during a global pandemic,” said John Hinze, the BCSC’s Director of Corporate Finance. “Not only did B.C. public companies finish the year with a record market capitalization, they also reported record capital-raising, including filing a record number of prospectuses with the BCSC.” The annually produced report provides a snapshot of the province’s capital market activity in the calendar year, detailing how much money was raised by B.C. companies and investment funds as well as how much was raised from B.C. investors.
Private Equity Firms Set ‘Frenetic’ Pace for 2021
Brief: Based on performance in the first half of the year, 2021 is shaping up to be a record-breaking year for private equity. In deals, exit activity, and fundraising, the industry its set to outpace previous highs, according to new data from PitchBook. In the second quarter of 2021, private equity deal making “continued at a frenetic pace,” the report said, with funds closing 3,708 deals worth an estimated total of $456.6 billion. For context, the entire year of 2020 saw 5,734 deals with a combined value of $711.6 billion. “We are running out of metaphors to describe record-breaking deal, exit, and fundraising activity,” said Rebecca Springer, PE analyst at PitchBook and co-author of the study. The report attributed the staggering levels of deal activity to various factors, including a partially vaccinated population, high investor confidence in the equity markets, a “frenzied” demand for high-yield debt, and the regulatory nature of the Biden administration. June’s club buyout of Medline Industries, a medical supply company, was cited as an example of the “risk-on” environment for dealmaking.
