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Our briefing for Wednesday, February 23, 2022:
Feb 23, 2022 3:51:16 PM
- In the United States, the Associated Press is reporting the country’s COVID-19 vaccination has all but bottomed out. The average number of Americans obtaining their first dose of the vaccine is down to about 90,000 a day, the lowest point since the first few days of the country’s vaccination campaign in December 2020. Vaccination incentive programs such as cash, sports tickets and even beer have all largely dissipated, while government and employer vaccine mandates have faced court challenges. About 76% of the U.S. population has received at least one shot and less than 65% of all Americans are fully vaccinated.
- In Canada, the country’s capital city has learned the ‘Freedom Convoy’ that took over downtown streets for about three weeks to protest COVID-19 restrictions has come with a price tag of close to $30 million. Ottawa city manager Steve Kanellakos told city council members the exact figures will be available sometime next week and, in the meantime, will be reaching out to the province of Ontario and the federal government for funding to help cover the costs. Ottawa city council are discussing a slate of measures to help businesses and residents of the downtown core recover, including a targeted property tax deferral program, funding to help the most impacted business districts, and an expansion of the no-fare transit service that will include all routes that bring customers to and from the affected areas 30 days after the state of emergency ends.
- Bloomberg is reporting in the United Kingdom, London’s Heathrow airport’s losses from two years of coronavirus disruptions has swelled to £3.8 billion pounds ($5.2 billion USD). In an earnings statement on Wednesday, Heathrow reported a loss of £1.8 billion in 2021, narrowing slightly from 2020 – after passenger numbers fell to their lowest levels since 1972. Heathrow was Europe’s busiest airport pre-pandemic but was the region’s only major hub to see traffic drop again in 2021. Heathrow will now hitch its recovery to a hopeful summer travel rebound and the go-ahead from regulators to raise prices.
- A Hong Kong lawmaker has said the region should impose a strict, city-wide lockdown for nine days to help control the recent COVID-19 outbreak. Michael Tien, a member of the city’s Legislative Council and a Hong Kong deputy to China’s National People’s Progress, suggested the proposal during an interview with Bloomberg. “I’d rather have a quick fix than long-term pain,” Tien said. “It is time we bite the bullet and take a quick one.” Tien’s other ideas include the lockdown taking place from March 19th-28th, spanning two weekends to minimize business losses and give the city time to build up its testing and isolation capacity. Hong Kong Chief Executive Carrie Liam has repeatedly dismissed the lockdown prospect, instead saying the city will engage in a mass testing effort.
- The World Health Organization (WHO) is creating a global training center to help poorer countries make vaccines, antibodies and cancer treatments using the RNA technology that has been successfully used to make COVID-19 vaccines. At a press briefing on Wednesday, Director-General Tedros Adhanom Ghebreyesus said the new hub will be setup in South Korea and will share mNRA technology currently being used in South Africa to recreate the COVID-19 vaccine made by Moderna. The interesting development being the re-creation is taking place without Moderna’s help and is the first time WHO has supported efforts to reverse-engineer a commercially sold vaccine. The WHO is looking to end the run of pharmaceutical companies prioritizing and supplying rich countries over poor countries in both sales and manufacturing.
Covid-19 – Due Diligence And Asset Management
What’s at Stake for Global Economy as Russia Standoff Escalates
Brief: A world economy that’s still recovering from Covid-19 faces new risks from an energy-price spike as the standoff between the West and Russia escalates. The U.S. and its European allies unveiled limited sanctions on Tuesday, in response to Russian President Vladimir Putin’s decision to recognize two breakaway republics in eastern Ukraine, and warned that tougher penalties may follow. Russia, whose troops are massed around Ukraine, says it has no plans for a full-scale invasion. The crisis has driven oil prices toward $100 a barrel and sent tremors through other commodity markets too, threatening another wave of price pressures on top of already-high pandemic inflation. Russia is a commodities powerhouse and a key supplier of energy to Europe. Western nations are caught between the desire for harsh sanctions to deter Putin, and concern that they’ll suffer blowback themselves. For now, Europe and the U.S. have shied away from blocking Russia’s energy exports, or freezing it out of dollar-based finance. Even so, U.S. President Joe Biden warned Americans Tuesday that there’ll be a price to pay at gasoline pumps back home.
Covid Fraud Will Cost U.K. as Much as £15.7 Billion, Lawmakers say
Brief: Fraud and error on the U.K.’s coronavirus support programs is expected to cost British taxpayers as much as 15.7 billion pounds ($21.4 billion), an influential panel of lawmakers said, calling on the government to ensure transparency around ongoing costs associated with the pandemic. Some 5.3 billion pounds of cash lost through fraudulent or mistaken claims is estimated to have been in Chancellor of the Exchequer Rishi Sunak’s flagship furlough program, the cross-party Public Accounts Committee said in a report published Wednesday. That’s 8.7% of payments made under the program, which paid idled workers as much as 80% of their wages. Other loans and grants programs added to what the panel branded as “unacceptable” losses. The government has spent 261 billion pounds on 374 different measures tackling Covid so far, according to the panel. That is expected to reach 370 billion pounds over the lifetime of the measures, with some loan repayments not due for two decades. It pointed also to other losses, including 21 billion pounds of loans that the government doesn’t expect to ever be repaid.
JPMorgan’s Kolanovic says Stocks Will Rise on Pandemic End, China Stimulus
Brief: There are two things that give Marko Kolanovic confidence in his bullish stocks call for 2022, even after a difficult start to the year for financial markets, with rising inflation and Russia-Ukraine tensions. The co-head of global research at JPMorgan Chase & Co. has been asserting for some time that investors should buy dips in stocks -- but now he sees the acute pandemic phase of Covid nearing an end and better times ahead from China, which he expects to offset Federal Reserve tightening. And he sees scope for significant rotation within equities as these changes take place. “Our base case is the end of the pandemic completely,” Kolanovic said in an interview. “During the spring and summer we will have a very strong recovery because omicron is in fast decline and now the immunity rates are really, really high.” He added that when looking at pandemics in the last century, they lasted about two years and maybe three to four waves, “and then for the next 10 to 20 years nothing. We think we’re basically at that point, two-plus years of pandemic, we’ve had the four major waves. And so we think now maybe we’ll be fine for the next 10 or 20 years.”
Fiera Real Estate UK Closes Fifth Value Add fund at GBP180m
Brief: Fiera Real Estate UK (FRE UK) has held the final close of Fiera Real Estate Opportunity Fund V (FREOF V) at GBP180 million. FREOF V is the fifth and largest Fund in the Firm’s value add series which has raised over GBP780 million to date. The firm launched FREOF V in November 2019 to take advantage of the unprecedented transitional buying opportunities created by Brexit and the Covid-19 pandemic. The fund is targeted to deliver a 15 per cent total net IRR to investors with little to no leverage. The GBP180 million came from both UK and overseas investors, which, coupled with its successful close during the pandemic, reflects the resilience of UK real estate as an asset class and increased global investor confidence in the UK market.
In Private Credit, Bigger is Better – At Least When Attracting Assets
Brief: As competition in private credit heats up, larger managers have begun to squeeze their smaller and newer competitors out of the market. While private credit funds reached a new fundraising record in 2021, less established managers generally had to settle for a smaller piece of the pie. Forty-two percent of capital raised by private credit managers last year was taken in by the ten largest funds, according to Charles McGrath, author of Preqin’s latest Global Private Debt report. The private debt industry has seen continued growth in assets under management since the onset of the pandemic. Distressed debt, for example, was a big hit for investors interested in betting on a wave of corporate defaults caused by Covid-19. As the market matures, however, the rules of the game are being rewritten by the bigger players. “Just as we see in private equity, experience is a big draw for investors,” McGrath said. “Experienced managers generally raise larger funds and also take a larger share of the market.”
