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Our briefing for Tuesday March 9, 2021:
Mar 9, 2021 3:23:03 PM
- In the United States, the House of Representatives will take up the Biden administration’s $1.9 trillion COVID-19 relief bill on Wednesday. The Senate passed its version of the bill over the weekend and eliminated or pared back some provisions in the original House bill, such as the increase to the federal minimum wage of $15 an hour. Democrats only hold a small majority in the House, but it is expected to pass the chamber’s approval, meaning President Biden should be able to turn the bill into law later this week.
- In Canada, Global News is reporting a joint letter from senior scientists from a number of major health institutions are raising questions about the plan to delay second doses of COVID-19 vaccinations by four months. The draft of the letter, obtained by Global News, was sent to Canada’s Chief Public Health Officer Dr. Theresa Tam, as well as the governments of Ontario, Alberta and British Columbia – all of which have indicated they are on planning on implementing the four-month delay. The document, signed by doctors with the University of Toronto, University Health Network (UHN), Sunnybrook Research Institute, Princess Margaret Cancer Centre and Montreal Clinical Research Institute, raised concerns about COVID-19 variant speed and the effect a delayed second dose could have.
- The United Kingdom’s chief medical officer is trying to tone down the government’s optimistic set of assumptions when it comes to COVID-19. Professor Chris Whitty has told government MPs another surge in coronavirus cases is inevitable and could hit in the late summer. Professor Whitty went on to add at the Science and Technology Committee, that even under the most optimistic set of assumptions, a further 30,000 lives could be lost in the UK due to COVID-19. The country’s chief medical officer attributes this to not everyone in the country being vaccinated, or having full protection, as restrictions are eased, causing the virus to circulate in pockets of the population that remain susceptible.
- In Germany, the country’s four leading business associations agree with the government and are pushing companies to expand coronavirus testing in an effort to curb the spread of the new variants until more people are fully vaccinated. The four groups – the BDI industry association, DIHK Chambers of Industry and Commerce, the BDA employer association and ZDH skilled trades association represent companies with more than 90% of the 30 million private sector employees making social insurance contributions. However, the business associations call for more testing, while influential, have no real direct power to enforce such a mandate over companies operating in Germany.
- The United Arab Emirates (UAE) government has extended a freeze on service fees in Dubai until 2023 in a decision to help ensure economic and social stability as the world continues to feel the impact of COVID-19. Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Executive Council, made the move on Tuesday to strengthen the region’s competitiveness, attract entrepreneurs and investors, while keeping pace with market trends. According to UAE media, the move compliments the five economic stimulus packages launched by the Dubai government since March 2020 with the aim of helping businesses survive over the course of the pandemic.
- Multiple media sources are citing the Kyodo news agency saying Japan has decided to stage this summer’s Tokyo Olympics and Paralympics without overseas spectators due to the coronavirus pandemic. Japanese citizens have been wary of holding the global event since it was canceled last summer due to COVID-19 and the latest polls have showed most don’t want international visitors to attend the Games. The Olympics are scheduled for July 23rd until August 8th and Paralympics from August 24th to September 5th. In the last Olympic Games held in 2018 in South Korea, local fans accounted for 80% of ticket sales, with international fans buying the remaining 20%.
Covid-19 – Due Diligence And Asset Management
ESG Investment Market set to Double in 2021
Brief : The environmental, social and governance-based investment market is set to double in 2021 as investors plan to move funds to support companies with a positive ESG rating or impact, a new report shows. The study by OnePlanetCapital, a new sustainability driven investment house focused on climate change, revealed that a tenth of (9 per cent) investors currently hold ESG investments. The market is set to double this year as over one in 10 (12 per cent) investors who do not currently invest in ESG plan to move investments to ESG related funds in 2021. Furthermore, an additional 17 per cent of investors are planning to move to ESG in 2022 or later, showing the potential the market has to grow in the coming years. Even of those who do not plan on moving investments to ESG this year or next, two fifths (40 per cent) are still considering moving them in the future, which is a higher proportion than those who are not considering moving them at all (30 per cent). ESG is now a key factor for investors when making decisions about their portfolio, with the research suggesting investors are becoming increasingly concerned about global environmental issues such as climate change… As the UK economy plots a course to economic recovery post-Covid 19, it is clear that there is a very real opportunity for this recovery to be built upon investment in green business and technology.
CVC Capital Partners Is Said to Near $2.6 Billion Deal for Pharma Firm Cooper
Brief: CVC Capital Partners is nearing a deal to acquire European over-the-counter drugmaker Cooper for about 2.2 billion euros ($2.6 billion), people familiar with the matter said. The private equity firm is negotiating detailed terms of an agreement with Cooper’s owner, Charterhouse Capital Partners, according to the people. CVC beat out rival suitors including a consortium led by PAI Partners, the people said, asking not to be identified because the information is private. No final agreements have been signed yet, and talks could still fall apart, the people said. Representatives for Charterhouse, CVC and PAI declined to comment. A deal would add to almost $11 billion of health-care acquisitions by private equity firms in Europe so far in 2021, a figure that’s up more than 700% year-on-year, according to data compiled by Bloomberg. Charterhouse bought Cooper in 2015.
Banks Press Fed to Preserve $600 Billion in Balance-Sheet Leeway
Brief: Thanks to the pandemic, U.S. banks won a long-sought regulatory break that let them expand their balance sheets by as much as $600 billion without adhering to profit-denting safeguards. Now, firms are frantically lobbying to extend that relief before it expires at month’s end. The reprieve from what’s known as the supplementary leverage ratio -- granted a year ago as Covid-19 rocked markets and the economy -- gave lenders free rein to load up on Treasuries and deposits, while avoiding a requirement that they hold more capital as a buffer against losses. The Federal Reserve and other agencies eased the rules because they said they wanted excess capital deployed to struggling businesses and households. As watchdogs mull letting the relief continue, Wall Street isn’t shying away from offering arguments and even warnings. Executives point out that the pain from coronavirus is far from over, and JPMorgan Chase & Co. has cautioned that it might have to shun customer deposits if tougher rules are reinstated. Analysts have also said recent bouts of wild trading in the $21 trillion Treasury market could be tied to concerns that banks will be forced to hold less government debt, even selling some of their holdings.
The Pandemic Forced a Massive Remote-Work Experiment. Now Comes the Hard Part.
Brief: In March 2020, companies across the US abruptly shuttered their offices and instructed employees to work from home indefinitely as a result of the pandemic. At first, many thought the shutdowns would last a couple months. But one year later, millions of workers are still working remotely. The pandemic has forced a large segment of the global workforce to go through a remote-work experiment on a scale never seen before -- and a lot has changed in the last 12 months. The boundary between our work and our personal lives has become blurred. Working at the kitchen table has become common and, for parents, juggling virtual school while trying to hit work deadlines has become a daily challenge. Employers have also been forced to become more nimble. They've had to loosen restrictions on where employees can work, equip them with the tools do so and support them both professionally and personally. We've learned many lessons as a result: meetings aren't always necessary, working a standard eight-hour shift may not be the best schedule for everyone, sitting at a desk doesn't always mean you're being productive and perhaps, you miss your coworkers more than you thought you would.
Ireland sees 9% Asset Increase Despite Pandemic Year
Brief: Ireland saw a bumper year in fund sales last year, which was reflected in higher funds under administration. At the end of December 2020, net sales for the year had reached €245 billion – the highest across all European fund jurisdictions, according to Irish Funds, the country’s industry body. This included a strong December, when €72.2 billion worth of fund sales were recorded. Net assets closed the year at €3.32 trillion - the highest level ever reached in Ireland and a 9% year-on-year increase. Irish Funds also said it had seen 27 financial firms entering or expanding their presence in Ireland in January, bringing the total to 137 new entries or expanded offers since January last year. Membership is also up 30% over the past four years. The trade body said the primary driver of the expansion over the past year was alternative investment fund managers. Sales for Ucits funds during December 2020 were of €64.8 billion, while alternative investment funds had sales of €7.3 billion.
Value Investing Gains US$100B and Wipes out Pandemic Losses
Brief: The left-for-dead value trade has roared back to life to wipe out all its pandemic losses, with its revival reshaping the US$2 trillion world of factor investing. The strategy that bets on low-priced stocks and against expensive counterparts has surged back to levels last seen before the onset of the once-in-a-century outbreak, a long-short index from Bloomberg shows. As the market braces for US$1.9 trillion in fresh U.S. stimulus and an economic rebound spurred by falling virus cases, a deluge of cash has rushed back into cyclical shares whose valuations were flattened by the 2020 doom and gloom. “Value crushed it for the right reasons,” Evercore ISI strategists led by Dennis DeBusschere wrote in a note. Exchange-traded funds following the systematic investing style have drawn new money for 10 straight weeks, with inflows and the market rally fueling a US$100 billion jump in assets since the start of November. These products are on course for their best-ever quarter for new cash and are just US$5 billion away from overtaking their nemesis -- the growth factor -- in assets. Put another way: A famously misfiring trade for the last decade now looks set to overtake one of the hottest strategies of the bull market.
