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Our briefing for Tuesday, March 1, 2022:
Mar 1, 2022 4:39:24 PM
- According to a study from researchers in state of New York, two doses of the Pfizer-BioNTech vaccine quickly lost its effectiveness in children aged 5 to 11 during the most recent surge of Omicron variant. The U.S. researchers found that the vaccine was only 12 per cent effective at stopping infection in children in January, down from 68 per cent in mid-December. For children aged 12 to 17, the vaccines efficacy declined to 51 per cent, down from 66 per cent. “These results highlight the potential need to study alternative vaccine dosing for children and the continued importance layered protections, including mask wearing, to prevent infection and transmission,” the researchers said. In mid-December, the vaccine was 100 per cent effective in keeping severe infection leading to hospitalizations at bay but declined to 85 per cent by mid-December. Dr. Paul Offit, a pediatric infectious disease expert at Children's Hospital of Philadelphia, said that “it's not surprising that protection against mild illness would wane. We know that Omicron is somewhat immune evasive for protection against mild illness. The goal of the vaccine is to protect against severe illness - to keep children out of the hospital.”
- The Bank of Canada is expected to raise interest rates this week as the Canadian economy showed signs of improvement in the fourth quarter this year. Statistics Canada said that the output expanded by an annualized 6.7 per cent from October to December 2021, which followed growth of 5.5 per cent in the third quarter. The numbers show that the Canadian economy has returned to near pre-pandemic levels. Economists in the country were expecting fourth quarter growth to fall flat due to Covid-19 surges across the country and lockdown measures put in place. However, preliminary data is showing a 0.2 per cent growth for the country in January. According to the data, the growth was driven by business spending, as companies race to replenish inventory and spark new investments. The central bank is suggesting that the economy has almost reached its capacity limit and is no longer seeing a need for higher-than-average levels of monetary stimulus.
- A study conducted in the United Kingdom suggests that the Novavax Covid-19 vaccine can provide long-term protection against the virus. The protein-based vaccine, NVX-CoV2373, was shown to maintain an overall efficacy of 82.7 per cent efficacy over a 6-month period. The efficacy was just slightly lower, at 82.5 per cent at preventing symptomatic and asymptomatic infection, with the vaccines efficacy at preventing severe disease was at 100 per cent. However, this analysis was conducted between November 2020 and May 2021, before the onset of the Delta and Omicron variants. Novavax said on Monday they are currently working on an Omicron-specific vaccine and expects to begin manufacturing a commercial shot in the first quarter of 2022. Earlier this year the U.K. approved the vaccine for use in adults aged 18 and older and the company expects US$4 billion to $5 billion in overall revenue in 2022. “We are encouraged to see that our COVID-19 vaccine maintains a high level of durable efficacy and continues to exhibit a reassuring safety profile in this extended timeframe,” said Gregory Glenn, president of research and development.
- Investors are losing confidence in Hong Kong’s ability to withstand the Covid-19 surge it is currently experiencing. Bets against the city are at an all-time high, with over 225,000 cases being recorded in the latest wave but some estimates but that number as high as 1.7 million. Hong Kong residents are quickly converting their currency to the Chinese yuan as the local dollar depreciates and housing prices have fallen to an 11-month low. While Hong Kong once endured one of the strictest Covid-19 policies in the world under the cities Covid-Zero plan, residents are panic buying supplies such as medication and painkillers due to the possibility that the government will no longer be able to further contain an outbreak. “Nobody knows where the government is going,” said Simon Powell, a Hong Kong-based equity strategist at Jefferies Group. “If you’re a Hong Kong trader or fund manager, you’ve had a shocker -- the performance has been awful. Throw into the mix that you’re probably home schooling and your family is scared of getting sent to a quarantine camp.” In the past two weeks, nearly 45,000 people have fled the city, with some foreign nationals resigning from their positions to return home. In the event of worsening outbreaks, Bank of America analysts project that 2 to 3 per cent of Hong Kong’s population could depart every month.
- Travel restrictions across Europe are being dropped as new Covid-19 cases on the continent continue to decline. Covid-19 cases in Europe peaked in mid-January and several nations, including England and Switzerland decided to start removing Covid restrictions and instead opted to learn to live with the virus. On January 25, the Council of the European Union recommended that nations use a “person-based approach” to border restrictions rather than one that was country-based. Many nations are considering dropping the requirement to show the EU digital certificate or Covid-19 passport for travel throughout the bloc. Earlier this month, the Council recommended that nations now allow travelers from outside of Europe to enter, provided that they are able to show proof of vaccination or proof that they have recently recovered from the virus. The recommendation, however, did not suggest that they open borders to people who were unvaccinated, but were able to show proof of a negative test. Cyrille Cohen, head of the immunotherapy laboratory at Israel’s Bar-Ilan University, said that allowing people who are unvaccinated to cross the border with only a negative test can prove catastrophic for countries whose health care systems are already strained, as the unvaccinated are more at risk of severe disease.
Covid-19 – Due Diligence And Asset Management
French and Dutch market authorities publish a joint analysis of the impact of the short selling ban at the onset of the Covid-19 crisis
Brief: Returns, volatility and market depth: the Autorité des Marchés Financiers (AMF) and the Autoriteit Financiële Markten (AFM) have examined the effects of the temporary ban applying to French securities by comparing their respective markets. In March 2020, as the pandemic triggered exceptional lockdown measures around the world, financial markets underwent an episode of high volatility and sharp price declines. To curb any amplification of the unidirectional nature of the markets and restore investor confidence, six European regulators, including France’s Autorité des Marchés Financiers, imposed a temporary ban on short selling. Other European regulators chose not to take any temporary measures. In particular, the Netherlands Authority for the Financial Markets (AFM) considered that it had not observed any market failures requiring supervisory intervention, and therefore did not consider a short selling ban as an effective measure against the effects of the pandemic on the markets.
The Pandemic Made Offices Dispensable. The Metaverse Makes Them Irrelevant.
Brief: Early in the pandemic, an allocator told an audience on the audio app Clubhouse that he never invests with a new manager without doing an on-site visit; he said he needs to look the manager in the eyes before he commits capital. Egging him on, I asked what he would do if the manager had no physical office. He said he would never invest with such a manager. I’d like to think that this never-ending pandemic would have revealed to him and his cohorts the shallowness of such orthodoxy, but a recent survey shows that though allocators are fully prepared to transition to a hybrid of in-person and virtual meetings, only about a quarter said they had allocated to a new manager without physically meeting that person. Granted, the survey was completed in August 2021, but if 18 months of a global pandemic couldn’t change allocators’ minds, then I would not expect Omicron to be the catalyst.
Protecting Seniors and People with Disabilities by Improving Safety and Quality of Care in the Nation’s Nursing Homes
Brief: The pandemic has highlighted the tragic impact of substandard conditions at nursing homes, which are home to many of our most at-risk community members. More than 1.4 million people live in over 15,500 Medicare- and Medicaid-certified nursing homes across the nation. In the past two years, more than 200,000 residents and staff in long-term care facilities have died from COVID-19—nearly a quarter of all COVID-19 deaths in the United States. Without decisive action now, these unacceptable conditions may get worse. Private equity firms have been buying up struggling nursing homes, and research shows that private equity-owned nursing homes tend to have significantly worse outcomes for residents. Private equity firms’ investment in nursing homes has ballooned from $5 billion in 2000 to more than $100 billion in 2018, with about 5% of all nursing homes now owned by private equity firms. Too often, the private equity model has put profits before people—a particularly dangerous model when it comes to the health and safety of vulnerable seniors and people with disabilities. Recent research has found that resident outcomes are significantly worse at private equity-owned nursing homes.
Two trends for APAC family businesses: private equity and ESG
Brief: Historically, many family-owned businesses have not been inclined to accept funding from private equity investors, as they typically view such investors as being more interested in making a quick profit than improving the company’s long-term performance. The pandemic has upended the way global business is done. Like other corporate executives, family-owned business leaders are feeling the stress from Covid-19, but the effect for them is magnified as their personal wealth and income is deeply tied to their businesses. Such business owners may be more open to private capital than ever before, as they look to shore up their liquidity to weather the pandemic and sustain their business. This will give investors many more opportunities than in the past to take minority stakes in such businesses.
The plan for getting innovation back on track after COVID-19
Brief: A large portrait of C.D. Howe stares down at the mere mortals who enter the minister’s office on the top floor of the building that houses Innovation, Science and Industry/Economic Development. As minister and deputy minister, we developed and implemented Canada’s Innovation and Skills Plan from 2015 to 2020 under the steady gaze of Canada’s postwar “Minister of Everything.” Much like after the Second World War, this is a crucial time for Canadians to take bold and decisive action. To get back on track after COVID-19, Canada must relaunch and refocus a comprehensive innovation plan. The focus should be on the long term, while drawing lessons from the past. As the architects of the past Innovation and Skills Plan, here are some lessons we learned to help secure growth and living standards. The four pillars of the past plan remain foundational today, with the pandemic further amplifying their relevance.
