Brief: If you think financial markets have been strange the past 18 months, just wait. What lies ahead is an unfamiliar macroeconomic environment that’s undergoing dramatic changes, says Pacific Investment Management Co. The firm released a report Wednesday warning that over the next five years the global economy will see “a more uncertain and uneven growth and inflation environment with plenty of pitfalls for policymakers.” Higher macroeconomic and market volatility will likely mean lower returns across fixed-income and equity markets, according to the manager, which oversees around $2.2 trillion in assets. But while overall capital market returns will likely be lower, increased volatility should spell opportunity for active fund managers, wrote Pimco. Markets are already bracing for the prospect that major central banks will soon begin withdrawing the emergency support provided during the Covid pandemic, with the Federal Reserve widely expected to start dialing back asset-buying next month, while inflation risks remain a major source of disquiet.
Brief: The chief executive of the world’s largest asset manager has called on governments globally to treat climate change with the same urgency as COVID-19 by supporting private capital investment in new technologies, but warned capitalism alone could not solve this crisis. BlackRock chief executive Larry Fink, who oversees around $10 trillion globally, said the pandemic had shown technologies can be developed quickly once the world recognises there is an “existential crisis”.However, Mr Fink said capitalism had fallen short in its pandemic response with large swathes of the emerging world struggling with very low vaccination rates, which could allow the virus to mutate. “We did not have the resolve to invest in the manufacturing, so we could get the whole world vaccinated, so we don’t have to worry about the next variant and the next variant and the next variant,” Mr Fink said during an online sustainability forum hosted by Credit Suisse.
Brief: The 2021 Global Management Survey, published by NAREIM, INREV and Ferguson Partners, paints a varied picture of real estate investment managers’ recovery from Covid-19. In terms of 2020 financial performance, 38 per cent of respondents recorded a 10 per cent increase in EBITDA, while 32 per cent reported a 10 per cent drop. The median firm in the survey recorded net AUM growth of 6 per cent. While still positive, this reflects the first year of slowing growth since 2016. The survey reports 29 per cent of respondents recording a year-on-year fall in AUM – up from 21 per cent in 2019.Unsurprisingly, employee numbers were impacted during the pandemic. In 2020, headcount either fell or stayed the same for 42 per cent of respondents, versus 26 per cent in 2019; and the number of investment managers who decreased headcount grew from 17 per cent to 27 per cent over the same period.
Brief: In 2018, Blackstone became the U.K.’s largest small-business landlord. That year, Blackstone partnered with the U.K.’s largest privately owned property company, Telereal Trillium, to buy an entire portfolio of commercial real estate off British government-owned Network Rail. It seemed like a good investment: Network Rail, swimming in £46.5 billion ($63.9 billion) in debts, had delayed £162 million in investment in the portfolio. Tenants — thousands of them, renting sometimes damp, sometimes noisy railway arches for businesses including bakeries, hair salons, and car garages — were long overdue for structural inspections to make sure the trains could still run safely overhead. And because Network Rail still owned the tracks, the British taxpayer would foot the bill to inspect and maintain the structures, while Blackstone could focus on filling empty arches and revaluing tenanted ones.
Brief: United Airlines Holdings Inc. posted a narrower loss than analysts had expected as a dip in demand from a summer surge in the coronavirus delta variant proved fleeting. The carrier lost $1.02 per share, or $300 million, in the third quarter on an adjusted pretax basis, better than the $1.61 loss analysts had estimated, according to figures compiled by Bloomberg. United shares rose 1.4% in trading after the market close. The stock has gained 6.9% this year through the end of trading Tuesday. Pandemic-driven losses persisted for a seventh quarter at United, which as recently as July had predicted a profit for the latter half of 2021 based on strong demand from leisure travelers and a gradual return of corporate road warriors. But that was before a summer wave of Covid-19 infections and hospitalizations caused an industrywide sales slowdown. United had warned investors Sept. 9 that its planned profit would turn into red ink due to this change in business conditions.