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Brief : Jamie Dimon is sending a message to his fellow Wall Street chiefs: It’s time to bring employees back to the office. JPMorgan Chase & Co. became the first major U.S. bank to mandate a return to offices for its entire U.S. workforce, with staffers being told they’ll need to come back in about two months. The lender’s top decision-making body, led by Chief Executive Officer Dimon, said in a memo to staff Tuesday that it “would fully expect that by early July, all U.S.-based employees will be in the office on a consistent rotational schedule.” Industry leaders have been preparing for an end to remote work since the earliest months of the pandemic last year. Dimon, who’s been going into the bank’s headquarters since June, said as far back as September that he expects economic and social damage to result from a longer stretch of working from home. David Solomon, Dimon’s counterpart at Goldman Sachs Group Inc., called the remote-working arrangement an “aberration” that needs to be corrected as quickly as possible. “This is fantastic news and the fact that it’s JPMorgan and Jamie Dimon — this will send a very positive message to other CEOs, not just in New York but around the country, to start making plans to on-board their employees,” Bill Rudin, chief executive officer of Manhattan office landlord Rudin Management Co., said in a phone interview.
Brief: HSBC Holdings Plc expects to cut its office footprint by 20 per cent this year and is budgeting for half its previous business travel costs as the adoption of flexible working spurs changes to longstanding practices. The bank, which has already committed to a 40 per cent reduction in office space in the long term, expects to get halfway to its goal over the course of this year, Chief Financial Officer Ewen Stevenson said in an interview with Bloomberg Television Tuesday. “We do very much want to move to a hybrid working environment,” he said. HSBC’s pace highlights how quickly the pandemic has redrawn the office market as businesses debate the type and extent of space required for their newly-remote workforces. Vacancies have soared in financial centers such as London, and even Chief Executive Officer Noel Quinn and his senior team at HSBC are hot-desking to help reduce the bank’s footprint at its Canary Wharf headquarters. “Firms have told us that they remain committed to retaining a central London hub but how they operate will inevitably change to reflect post-pandemic trends, such as hybrid and flexible working,” Catherine McGuinness, chair of the policy and resources committee at the City of London Corporation, said in a statement Tuesday.
Brief: By almost any measure, this has been an astonishing earnings season for US corporates. At the time of writing, around two-thirds of companies had beaten expectations – and not just by a little. Barclays analysts put average earnings per share growth at an impressive 63%. However, it doesn’t appear to be having much impact on share prices. Why? Tesla is a case in point: its earnings rose to 93 cents per share, against expectations of 79 cents with revenue up 79% year on year. Its share price dropped 3% in the immediate aftermath of the results. Overall, the S&P 500 has been treading water even as results have come through strongly. The strong macroeconomic picture is also not providing the support it should. The US economy is flying. Retail sales registered almost 10% growth year on year in March. The IMF is predicting GDP growth of 6.4% for 2021. Manufacturing is seeing huge expansion and jobs growth is buoyant. Steven Bell, chief economist at BMO Global Asset Management, says there is more to come. “The excellent vaccine rollout plan is unleashing a surge in spending as consumers emerge with bank accounts bursting with cash from a whole series of fiscal handouts,” he says.
Brief: Consumer confidence rose sharply for a second straight month, hitting the highest level since the pandemic began, as the rapid rollout of vaccines and another round of U.S. financial support for Americans boosts optimism. The Conference Board reported Tuesday that its consumer confidence index advanced to a better-than-expected 121.7 in April, up from 109.0 in March. It was the strongest reading since the index stood at 132.6 in February 2020, right before the COVID-19 pandemic struck in the United States. The present situation index, based on consumers assessment of current business and labour market conditions sored from 110.1 to 139.5. The expectations index, based consumers' views of what conditions will be like over the next six months, posted a more moderate gain, rising from 108.3 last month to 109.8 in April. Economists believe that the rising consumer confidence will bolster overall economic growth as consumers, who account for 70% of economic activity, step up their spending as lockdown restrictions are eased.
Brief: Goldman Sachs’ long-planned online migration of some lucrative prime-brokerage businesses picked up steam during the pandemic as hedge funds and investors working from home were unable to meet in person, while other Wall Street banks are taking more measured steps. Last July, Goldman Sachs Group Inc launched Marquee Connect, offering online virtual introduction services for top clients. Other prime brokers told Reuters they were also moving to bring some prime broker services online, but one cautioned that clients may be getting “Zoom fatigue” with hopes to resume meeting in person once more people are vaccinated. Humans have long handled capital introduction services, in which third parties like banks attempt to matchmake investors with hedge funds. But as large swathes of other bank services have moved to virtual platforms, banks have been increasingly looking at how to move some of these services online too.
Brief: It is not clear that U.S. inflation will be “transitory” as the Federal Reserve economists are trying to convey, according to Jeffrey Gundlach. “I’m not sure why they think they know that it’s transitory,“ Gundlach of DoubleLine Capital LP said in an interview with BNN Bloomberg Tuesday. “How do they know that when there’s plenty of money printing that’s been going on and we’ve seen commodity prices going up really massively.” While the Fed does have a point in saying the year-over-year increase -- which Gundlach says could be as high as 4% -- is higher in part because of the low, pandemic-induced numbers from 2020, the central bank may also be underestimating the impact of its wide-open monetary policies. “There’s plenty of indicators that suggest that inflation is going to go higher, and not just on a transitory basis, for a couple of months. So we’ll see how the Fed is trying to paint the picture, but they’re guessing.“ Gundlach is chief executive and chief investment officer of Los Angeles-based DoubleLine Capital, which managed more than $136 billion as of Dec. 31. While bond yields remain very low, it’s hard to figure out who’s going to buy the massive bond market issuance, he said.
Brief : Long-running systematic macro hedge fund IPM says the Covid-19 pandemic “aggravated” an already challenging situation for the firm, leading to its decision to shut down the business. Stockholm-based systematic pioneer Informed Portfolio Management announced last week it was ending all investment activities. It said the recent investment environment has proved challenging for systematic macro as a strategy and IPM as a manager, which has suffered “lacklustre performance and significant outflows”. “The investment environment has been difficult in recent years for strategies focusing on economic fundamentals, with the Covid-19 pandemic aggravating the situation,” IPM chairman Lars Ericsson said in a statement. Founded in 1998 by Anders Lindell and Jonas Rinné, who had previously been at Swedish fixed income trading house JP Bank, the firm built considerable momentum in its early years, gaining more than 31 per cent in 2008 during the Global Financial Crisis using computer models to trade government bonds, currencies and equities futures. But the systematic hedge fund’s assets steadily eroded in recent times, from a high of some USD9 billion just a few years back to roughly USD1 billion in 2020.
Brief: Harrison Street Real Estate Capital is betting on the growth of the U.K.’s bio-tech industry with a deal to combine the country’s largest science incubator with a portfolio of science parks. The company’s venture with Trinity Investment Management has agreed to acquire BioCity Group, according to a statement. BioCity helps startups through early stage venture capital investment and accelerator programs. Science parks have become one of the hottest real estate niches in the U.K. as international investors look to piggy-back on increased government funding for a sector that has been among the few beneficiaries of the coronavirus pandemic. The country has a shortage of purpose-built space for commercializing scientific research, despite boasting several of the world’s top academic institutions and pharmaceutical companies. The venture will acquire a portfolio of 12 facilities across five U.K. science parks for about 120 million pounds ($167 million), according to the statement. The new business will be called We Are Pioneer Group and will manage a portfolio spanning 2.6 million square feet.
Brief: Last week we saw Europe’s rebel soccer league crumble within 72 hours from announcement to demise. One can only imagine what might have happened behind closed doors – frantic phone calls, secret meetings and very tense meetings. Outraged fans took to the streets to protest, players openly expressed their frustration, politicians weighed in and this rogue league made headlines around the world… The pandemic has both highlighted and exacerbated the inequalities that were already present. We have all spent the last year, and some of this year, making enforced sacrifices; some financial, some social. None of us want those sacrifices to have been made in vain. That means a more equitable share both of rewards and prospects for everyone. After the Global Financial Crisis of 2008/9, there was a widespread perception of financial greed and mistrust of the world’s bankers and financiers, none of whom were ever held to account for any misdemeanours, real or imaginary. A decade of austerity left the perception that ordinary citizens were left to suffer the pain and pick up the bill. The reaction to Covid-19 is different.
Brief: Early signs are emerging that the U.S. stock market rotation into cyclicals and out of big tech still has room to run. The reopening trade has lagged for weeks and it’s been the topic of fierce debate among equity strategists. Last week, smallcaps beat tech for the first time in about a month, and the trade looks sets to continue once again on Monday. Evercore ISI and Fundstrat Global Advisors LLC are urging clients to buy stocks tied to the economic recovery. It’s “time to re-engage cyclicals,” said Dennis DeBusschere, head of portfolio strategy at Evercore, in a note on Sunday. “The rapidly improving labor market is inconsistent with peak GDP fears and suggests the output gap will close quickly, putting upward pressure on inflation, bond yields, and cyclical assets.” The U.S. economy is reaping the rewards of a fast vaccine rollout, with about 42% of the population having had at least one dose. Economists have raised growth estimates, and there’s every sign that life is returning to normal for millions of Americans.
Brief: The chief executive of British Airways said there was a "great opportunity" for Britain and the United States to open a travel corridor given their high vaccination rates, and said he was optimistic for European travel from June onwards. Airlines are readying their planes, pilots and crew for travel this summer, hoping for a bounce back after over a year of pandemic restrictions, although governments have yet to agree the details of how and when the restart will work. British Airways chief executive Sean Doyle, who took the helm of the IAG-owned airline in the middle of the COVID-19 crisis last October, said that travel between Britain and the United States should be restriction-free. "If you look at the progress of vaccinations that the UK and the US have made, they're almost neck and neck," he said, speaking to an online industry conference. I think the U.S. is a great opportunity to get up and running again. Travel between Europe and the United States is also on the cards.
Brief: The total value of UK private equity club deals hit GBP19.7 billion last year, a fourfold increase from the GBP4.5 billion last year, says Pinsent Masons, the multinational law firm. The number of these ‘club deals’ has reached a three-year high (see graph below) – there were 56 deals last year, up 30 per cent from 43 the year before. A ‘club deal’ is when two or more private equity or trade buyers jointly acquire a company. One of the biggest club deals of recent years was the GBP6.8 billion acquisition of ASDA, in October last year by the Issa brothers and TDR Capital. Alasdair Weir, Partner at Pinsent Masons, says by pooling their fire power, club deals allow groups of investors to buy bigger targets and share risk. In some cases this can reduce the amount of leverage needed, allowing deals to be equity funded more quickly and with more certainty. The impact of Covid-19 on the economy has caused some lenders to exercise more caution on leveraged buyouts in those sectors most affected by the lockdown. By increasing the equity slice, club deals allow buyers to use lower levels of debt financing.
Brief : A gauge of output at U.S. manufacturers and service providers reached a record high in April, adding to evidence of stronger demand that’s fueling inflationary pressures. The IHS Markit flash composite index of purchasing managers at manufacturers and service providers increased to 62.2, the highest in data back to 2009, from 59.7 a month earlier, the group reported Friday. Readings above 50 indicate growth. An easing of Covid-19 restrictions and robust sales are driving faster growth in business activity, including a record pace of expansion in orders placed with the nation’s factories, the group’s data showed. However, supply shortages and shipping challenges are complicating manufacturers’ efforts to meet demand while driving up materials costs at the same time. Factories and service providers are having greater success passing along higher input costs. The IHS Markit’s composite gauge of prices received rose to a record in March. “The worsening supply situation is a concern for the outlook, especially in relation to prices,” Chris Williamson, chief business economist at IHS Markit, said in a statement.
Brief: As I speak to senior executives in financial firms, I hear a lot of concerns about the difficulties of maintaining corporate culture in an era of remote work. Employees used to absorb the organization's culture by coming to the office and observing the behavior of its leaders — how they dress, how they talk and how they treat their subordinates. But subtle nuances of body language and voice intonation can easily be lost on remote workers facing a day of back-to-back video calls. The cultural paradigm of remote work is still being defined. However, if you follow the four steps below for remote work, plus periodic requirements for in-person meetings, you can create a vibrant culture well designed for your organization. While company culture is hard to define, it is clearly different from organization to organization. Some companies put a high priority on spending time with family. Other companies encourage employees to be entrepreneurial and take calculated risks. Still, other companies are dedicated to building long-term relations with their customers, even at the expense of lower quarterly profits. As companies recognize that remote work is here to stay, either full or part time, managers need to proactively take actions to preserve and reinforce the key elements of their corporate culture.
Brief: “As hedge funds continue to adapt to changes caused by Covid-19, the infrastructure firms employ will have to continue to be relevant and sufficient. Alongside this, firms will have to keep up with the increased levels of reporting and regulatory requirements that institutional investors expect,” comments Craig Stanley, CFA, Chief Operating Officer, Enko Capital. In fact, from an operational standpoint, the firm has deepened and extended its operational and IT infrastructure to ensure the team is able to work remotely for as long as necessary. Although Enko made a seamless transition to remote working, it has posed challenges to capital raising. “In-person meetings and due diligence are now conducted virtually. This has caused a decline in progress with certain investors who wish to complete their due diligence in-person. Having said this, Enko was still able to onboard a number of new investors, including a NYSE-listed US corporate pension fund, in 2020,” observes Stanley. From an investment perspective, Enko adapted to the uncertainty caused by the pandemic. In terms of strategy, the investment team sought new ways to navigate the ever-changing market conditions and took advantage of the opportunities resulting from these changes. In 2020, this led to the Enko Africa Debt Fund producing its best annual return since inception.
Brief: Managers of listed property vehicles have spied an opportunity to flag the benefits of the closed-ended structure as two open-ended property funds remain frozen and the industry awaits the outcome of the Financial Conduct Authority’s consultation on liquidity. Earlier this week, the authorised corporate director of the M&G Property Portfolio announced the fund will reopen on 10 May after almost 17 months of being frozen. The fund was shut to trading in December 2019 due to liquidity reasons after its independent valuer slashed the value of its retail holdings, prompting a wave of redemptions. M&G’s fund reopening leaves just the Aegon Property Income and the Aviva Investors UK Property funds still closed – the only two out of the raft of funds forced to suspend trading last March as the Covid pandemic made it difficult to value underlying assets. Aegon Asset Management says the fund remains on course to reopen in Q2 and the managers continue to make good progress with asset sales in order to raise liquidity. Aviva Investors says the fund remains closed while it takes action to ensure a flow of liquidity. “We are mindful that the fund could experience a higher-than-usual volume of redemption requests if it was to reopen for dealing,” it says.
Brief: Despite the outbreak of the COVID-19 pandemic, global real estate investment managers raised at least €123 billion (US$150.7 billion) of new capital for non-listed real estate in 2020, according to the Capital Raising Survey 2021, published today by ANREV, INREV and NCREIF. However, total capital raised in 2020 fell relative to the record high of €196 billion (US$220.3 billion) attained in 2019, largely as a consequence of the pandemic. Nearly a third of managers said they hadn’t raised any new capital in 2020, with many citing a lack of available product as the main reason. The number of vehicles raising capital also dropped year-on-year from a record 982 in 2019 to 699 in 2020. Despite this slowdown, on average the capital raised by individual vehicles was higher than in 2019 except for those with a North American regional strategy. The average capital raised for each vehicle with a global strategy was €0.8 billion (US$ 1 billion) versus €0.5 billion (US$0.6 billion) in 2019. Similarly, investment activity remained robust with 52%% of capital raised in 2020 already deployed. Furthermore, more than two thirds (76%) of investment managers expect an increase in capital raising activity over the next two years.
Brief: But despite the UK’s strengths, Research & Development (R&D) spending lags many peers and draws attention to the opportunity to invest smarter and benefit from the economic recovery. Government support, eg, through R&D tax credits, is a timely lever to help drive higher returns. The economic benefits of R&D can be sizeable and persistent. For example, every pound spent on medical research delivers an annual return of about 25 pence, forever. These benefits flow through the economy, and so the government policy is to support R&D. But businesses benefit too, for example the UK government’s Innovation Report estimated that firms that consistently invest in R&D are 13 per cent more productive. So the opportunity is for investors to leverage this as part of their investment thesis. Currently, the UK only invests the equivalent of just 1.7 percent of GDP on R&D – well below the OECD average of just over 2.3 per cent. The British government has set a target of 2.4 percent by 2027. But even then, the UK would still fall short of leading nations Israel (4.9 per cent), South Korea (4.3 per cent) and even the US (2.7 per cent). The UK needs to set its sights higher to deliver more economic benefit.
Brief :Informed Portfolio Management, a Swedish hedge fund that had relied on statistical models to devise its strategies, is set to shut its doors and return investor capital after losing roughly $4 billion during the pandemic. IPM, whose main owner is Stockholm-based investment firm Catella AB, had assets under management of close to $5 billion in late 2019, before the pandemic hit. A year later, that amount had more than halved to $2 billion, with the investor exodus since then depleting assets to about $750 million. “The recent investment market for systematic macro-funds has unfortunately been very challenging and IPM has had weak returns and large capital outflows,” Catella said in a statement on Thursday. “IPM will ensure that all investors are treated fairly. This includes that all investors will be able to redeem their capital in the coming months according to each fund’s specific liquidity rules.” IPM had used quantitative strategies, which rely on mathematical models instead of on-the-ground analysis of portfolio assets. But the historical statistical models the fund built proved unequal to the task of predicting how markets would move during the volatility brought on by the coronavirus pandemic. IPM joins a growing list of hedge funds shutting down in recent years as investors rethink their allocations to the industry. More hedge funds have closed than started in the last six years, with 770 of them shuttering in 2020, according to data compiled by Hedge Fund Research Inc.
Brief: JPMorgan Chase (JPM) CEO Jamie Dimon says the post-lockdown economic boom has "absolutely" begun. On a client webcast on Wednesday, the long-time bank CEO echoed his upbeat views on the U.S. economy that he recently outlined in his annual letter to JPMorgan shareholders in which he predicted an economic boom that "could easily run into 2023." Pointing to the vaccine rollout, Dimon said on the webcast we are "lucky to have it" and people "should be happy to go back to work," both factors that are "critical" to a stronger economy. Dimon, who has been vocal about raising the minimum wage, acknowledged that many have lost their jobs and are suffering from the pandemic, but he believes that the economy today is "very different" from 2009. "For the rest of Americans, their savings accounts are up $2 trillion," Dimon said. "Home prices are up. Asset prices are up. They're anxious to get back to work. There's a little bit of euphoria in places that have opened up. Even driving in today, to New York, driving down the streets, you have a lot more mothers and schools are open. Companies are in very good shape." Dimon added that JPMorgan sees higher spend in cities that have opened up and that spending on travel and leisure is higher than pre-COVID.
Brief: Global hedge fund industry assets swelled to a new record high of USD3.8 trillion in the first three months of 2021, as managers recorded their strongest quarter since 2000 and investors duly poured more capital into a broad selection of strategy types, with the biggest hedge funds still taking the largest slice of client money. Hedge Fund Research estimates that net asset inflows from allocators reached about USD6.1 billion between the start of January and the end of March. That brought total net new inflows since Q3 2020 to USD22.1 billion. Overall, hedge funds added a total of USD201 billion during the three-month period, as HFR’s main Fund Weighted Composite Index spiked 6 per cent in Q1 – its strongest quarter since 2000. Assets managed by event driven hedge funds have now topped more than USD1 trillion for the first time ever, only the second hedge fund strategy type to hit the USD1 trillion mark after equity-focused funds surpassed that milestone in Q4 last year. Total event driven capital grew by USD85.4 billion in Q1, bringing this sector’s assets to USD1.05 trillion. Event driven sub-strategy capital increases were led by special situations, which saw USD46 billion of performance-based capital gains in the quarter, bringing sub-strategy assets to USD483.3 billion. Overall, HFR’s Event Driven index surged 8.2 per cent in the three-month period.
Brief: McKinsey & Company today published its Global Private Markets Review 2021 – A year of disruption in the private markets – maps out a tumultuous year for global private markets, as Covid-19 wrought havoc on fundraising and deal activity, but finds that private equity rebounded vigorously in the second half of 2020, as buyout fundraising nearly doubled in Q3 and Q4 relative to the first half of the year in North America, and more than tripled in Europe. The report also concludes that, by nearly any measure, private equity has still outperformed public market equivalents – with net global returns of over 14 percent. Overall funds raised fell slightly year-on-year due primarily to an apparent short-term discontinuity in the early months of the pandemic, but, the pre-pandemic pace of fundraising returned by Q4. AUM growth and investment performance in most asset classes eased off in the spring as the industry adjusted to new working norms, then came back strong in the latter half of the year. Private equity purchase multiples kept climbing and dry powder reached another new high, standing at USD1.4 trillion (60 percent of the private markets total), having grown 16.6 per cent annually since 2015.
Brief: Blackstone Group Inc. is doubling down on a post-Covid 19 economic recovery, investing heavily in businesses that will benefit from a world that’s gradually reopening. New York-based Blackstone invested $17.7 billion in the first three months of the year, buying hotels including Extended Stay America Inc., private-jet operator Signature Aviation Plc and U.K. travel company Bourne Leisure. Investors continued to bet solidly on Blackstone, which saw its assets under management swell to a record $648.8 billion, the company said Thursday in an earnings report. Even as credit markets recovered and the stock market kept soaring, travel- and entertainment-related assets were struggling as people continued social distancing and local restrictions limited capacity at hotels and other venues. Blackstone says the firm is now seeing signs across its portfolio of companies that people’s behavior is shifting: At the Cosmopolitan hotel of Las Vegas, money going into slot machines was at record levels. Forward bookings for travel in the U.K. were also at a high. “This should be good time for the real world,” Blackstone President Jonathan Gray said in an interview.
Brief: The airline industry’s chief lobby group widened its estimate for losses this year by about a quarter, saying new COVID-19 flare-ups and mutations have pushed back the timeline for a restart of global air travel. Carriers will lose about $48 billion in 2021, the International Air Transport Association said Wednesday in an online presentation. It had earlier forecast a $38 billion deficit. “This crisis is longer and deeper than anyone could have expected,” said Willie Walsh, the former chief of British Airways owner IAG, who is now IATA’s director general. “Losses will be reduced from 2020, but the pain of the crisis increases.” The downward pivot comes as airlines contend with new travel bans and restrictions arising from outbreaks in large aviation markets such as India and Brazil. Governments of countries that have ramped up vaccinations most quickly have become cautious about restarting travel to prevent the import of new variants that could prove resistant to jabs. This week, the U.S. State Department said it would declare about 80% of the world’s nations no-go zones. In Europe, the U.K. has held off on confirming a plan to restart travel in mid-May, saying it will decide closer to the date.
Brief : Financial markets around the world are waking up to the risks of another coronavirus flare-up. Asian markets, blighted by rising cases from Japan to India, have underperformed their global peers since the start of March, just when they looked set to benefit from an acceleration in the global recovery. Currencies of nations stung by the virus have been underperforming those where vaccinations are surging ahead. And now the angst is starting to spread, with recovery trades under pressure and U.S. stocks sliding for two successive days. “Markets that have become too comfortable with the re-opening trade and have loosened social restrictions can be in jeopardy with any Covid spike and variants,” said Paul Sandhu, head of multi-asset quant solutions Asia Pacific at BNP Paribas Asset Management. “Markets with high vaccination rates somewhat circumvent this downside risk.” The World Health Organization said Tuesday that cases are rising in all regions except Europe, with the largest increase last week seen in Asia as India battles its biggest wave. Japan moved closer to declaring a virus emergency as infections spread in its two-biggest and economically important urban areas, Tokyo and Osaka, while health authorities in Toronto will order workplaces across Canada’s biggest city to close if they have more than five confirmed cases.
Brief: Neuberger Berman Group employees have been asked to return to the office in September yet they will still be allowed some flexibility to work remotely, Chief Executive Officer George Walker said. The New York-based firm “asked folks to find a way to start to reconnect with the office,” Walker said in a Bloomberg Television interview on Wednesday. “That can be team meetings, that can be coming in a day a week. And we’re starting to see that as more folks come back in,” he said. “Work from home has worked really well,” he said. “Our performance has never been better, our flows have never been better. But there’s going to be a new normal that’s in between, and that’s going to be trickier than people realize.” Neuberger is not mandating that returning workers obtain vaccinations, just that they have been tested for Covid-19, he said. The company manages $429 billion for institutions, advisers and individual investors.
Brief: The majority of wealth management platforms are failing to live up to customers’ demands when it comes to digital features, according to recent research from data provider Refinitiv. In its wealth management report, “The Race for Digital Differentiation”, Refinitiv found that only 37% of the 1,030 investors surveyed gave their platforms top marks for the digital experience. The study also found that investors are placing greater importance on digital capability with 72% calling for better integration of news updates and 80% asking for real-time data to enhance their analysis. In addition, 20% of investors are not receiving alerts they would find helpful. In response to the findings, Refinitiv called on wealth managers to accelerate their digital initiatives in order to meet customers’ heightened expectations. “The consequences of Covid-19 have emphasised just how vital it is to have a robust, customer-centric digital experience enriched with deep insights and analytics,” said Charles Smith, head of digital solutions, wealth at Refinitiv.
Brief: It was the kind of moment that would normally sink a hedge fund: Dan Sundheim was on Zoom, apologizing to clients for losing $4 billion in a single month. He ticked off strategy changes, noted he wasn’t going to dock his team’s pay and then headed back to work. Now, mere weeks later, the episode is behind him. Sundheim has recouped about 90% of what he lost in January when retail investors attacked his short bets on the likes of GameStop Corp. That recovery has put his D1 Capital Partners back into one of the most rapid ascents ever seen in money management. His presentation that February day fit what investors have come to expect from the 44-year-old billionaire -- unemotional yet sincere, supportive of his 51-member team, and unfazed by risk -- attributes they say helped him amass $20 billion in less than three years since setting up shop. Sundheim, who’s posted annualized returns of nearly 30%, is among stock pickers helping to reanimate an industry hit by client defections over mediocre returns.
Brief: Saudi Arabia is hoping to speed up privatizations to narrow a budget deficit that ballooned last year due to the pandemic and a slump in oil revenue. The kingdom aims to strike around 15 billion riyals ($4 billion) worth of infrastructure deals with private investors this year, the head of the National Center for Privatization, Rayyan Nagadi, said in an interview. That would be the most since the body was established to accelerate privatizations in 2017. It also aims to complete several asset sales this year, he said, declining to give a value for how much could be raised. Progress on Saudi Arabia’s privatization plan has been much slower than anticipated when Crown Prince Mohammed Bin Salman launched his economic transformation plan in 2016 and outlined plans to sell stakes in utilities, soccer clubs, flour mills and medical facilities. Since then the government has managed to sell stakes in assets including Saudi Aramco and flour mills. It has also signed deals with private investors to build new schools, but it has fallen short of hopes of raising $200 billion in the first few years of its privatization push.
Brief: Insurers plan to increase the overall risk in their investment portfolios as they emerge from the precarious market environment of the pandemic, according to Goldman Sachs Asset Management. The firm’s annual insurance survey, expected to be released on Wednesday, found a 34 percent increase in insurers looking to take on more portfolio risk. This year’s survey aggregated the views of 286 CIOs and CFOs representing over $13 trillion in global balance sheet assets, a study sample which, according to GSAM, accounts for about half of the global insurance industry. “We have not seen the kinds of readings that we have in the survey since the last time we came out of the Great Recession in 2012 and 2013,” Mike Siegel, global head of insurance asset management, said at a virtual press conference held on Tuesday. In the survey, insurers indicated an inclination to increase risk across all types, including equity, credit, liquidity, and duration. While plans to increase risk are trending positive across the globe, insurers based in the Asia Pacific region expressed the most risk-on views, with a net 58 percent of Asia Pacific respondents planning to take on more credit risk over the next 12 months.
Brief : M&G Investments will reopen the M&G Property Portfolio and its feeder fund at midday on 10 May 2021, more than 17 months after it first pulled down the shutters. Over the course of the suspension, the managers have exchanged or sold 38 properties for a combined discount to net asset value of 0.1%, of which more than a third were retail properties. This has brought the cash level to 33.2%, which the authorised corporate director and depositary of the fund believe is a "suitable liquidity position" to meet redemption requests and protect investors who wish to remain invested. Due to the rebalancing caused by an attempt to raise liquidity, the fund is now overweight to industrials and has seen its retail exposure fall from 38.4% to 28.1%. From 25 June, the portfolio will change to dual pricing on a full spread basis to "provide greater clarity, reduce the potential for large price fluctuations and provide stronger alignment with the fund's long-term horizon". It will also seek to maintain a 20% cash weighting during normal market conditions to "enhance liquidity management".
Brief: Hedge funds and asset managers must design portfolios to successfully weather volatile markets, and “invest heavily” in technology, rather than focus on predicting the next downturn, says Man Group chief investment officer Sandy Rattray. Rattray – who has co-authored a new book on strategic risk management along with Man Group strategy advisor Professor Campbell Harvey, and Otto Van Hemert, director of core strategies at quant-focused Man AHL – believes the upheaval of the past 12 months have rendered tail event predictions “nearly impossible.” Their new book, titled Strategic Risk Management: Designing Portfolios and Managing Risk, explores how risk management should be incorporated into the core design of investment portfolios, and examines how portfolio balancing and balanced return streams can be achieved through volatility targeting of higher-risk asset classes, and which defensive strategies offer capital protection. In the book, Harvey, Rattray and Van Hemert argue that risk management is “inextricable” from alpha generation.
Brief: Availability of cheap credit has masked distress, but it’s still out there, says BlackRock managing director Mark Kronfeld. You just have to know where to look. “Just because you’re not seeing bankruptcy filings doesn’t mean there isn’t distress,” said Kronfeld, a member of the global credit platform at BlackRock Inc., which manages $9 trillion in assets. There will be fewer traditional bankruptcies -- besides pre-packaged filings -- as long as there’s enough liquidity to ride out the pandemic, according to Kronfeld, who focuses on special situations and distressed investments. Still, there may be more bankruptcy filings in the sectors most impacted by the pandemic, including retail and energy, Kronfeld said. “Companies, even with increased leverage, are able to get cheap financing,” but risks remain, he said on a virtual panel hosted by SierraConstellation Partners. There was about $90 billion of distressed debt trading as of April 16, down from almost $1 trillion in March 2020, according to data compiled by Bloomberg. That includes nearly $5 billion in retail bonds and loans, and $15 billion from oil and gas companies.
Brief: Cybersecurity fundraising activity is on track for another record year, according to ICON Corporate Finance’s April 2021 cybersecurity sector report, which reveals that sector valuations have hit historic highs over the past 12 months. In Q1 2021 USD3.7 billion was invested by VCs globally, an increase of +35 per cent. That looks set to shatter 2020’s record USD8.3 billion (+22 per cent). The resilience of the market was demonstrated as more than USD22 billion in M&A deal value was transacted, despite the challenges of a global pandemic Public cybersecurity stocks have traded at all-time highs, seeing the sector more than double in value since lockdown restrictions began in March 2020. ICON’s Cybersecurity Sector Index, meanwhile, shows that the sector is now trading at 11x revenues and company is predicting that a wave of cybersecurity businesses are ready to capitalise on the extraordinary market opportunity, boosted by VCs flooding the industry with necessary funding.
Brief: Money has been pouring into the logistics sector from a variety of different sources, including US banks, institutions, private equity, and firms in the Middle East and Far East. “That has driven down yield considerably over the last six months,” according to Legal & General Investment Management senior fund manager Jonathan Holland, speaking to Funds Europe for the April issue. A lot of the new capital can come with a lack of knowledge, according to Thomas Karmann, head of logistics at Axa Investment Managers’ alternatives division, Axa IM Alts. “Risk is often not correctly priced anymore and there is hardly any differentiation of location and market depth for (re)letting. There seem to be less single asset sales and more portfolios, containing some less attractive buildings which would almost be unsellable on a standalone basis,” he said.
Brief: The budget unveiled by Canadian Prime Minister Justin Trudeau’s government on Monday includes a tax provision that could affect enterprises that rely heavily on debt financing, including private-equity firms and natural-resource companies. The change affects tax deductions that certain businesses can take for the interest they pay on loans. Trudeau’s government wants to limit those deductions to an amount equal to 40% of a company’s earnings starting in 2023, and 30% after that. It estimates the measure would raise C$5.3 billion ($4.2 billion) in additional revenue over five years. The measure is meant to prevent companies from minimizing their tax burden by having their Canadian units hold a disproportionate amount of debt. Several other countries in the Group of Seven and European Union are introducing similar limits on interest deductibility as part of a tax-fairness plan by the Organization for Economic Cooperation and Development.
Brief : Health care is too large a part of the economy for private equity investors to ignore, but a burning spotlight on how managers run some hospitals and nursing homes is prompting a few asset owners that generally prefer to quietly engage with general partners to speak up. Demand for health care is rising: In the U.S., health-care spending grew 4.6% to $3.8 trillion in 2019, amounting to 17.7% of gross domestic product, according to the Centers for Medicare & Medicaid Services. In an attempt to ride the wave of this growth, private equity investment in health care has grown, to $120.1 billion in 874 deals in 2019 and $95.6 billion in 938 transactions in 2020, from $58.2 billion in 2007, according to PitchBook Data Inc. At the end of the first quarter, private equity firms had invested $20.2 billion in 182 deals. Private equity health-care funds outperformed the internal rate of return of all private equity for funds raised between 2006 and 2017, PitchBook data shows. The median IRR for health-care fund vintages 2006 through 2008 was 10.3% compared with a 9% IRR for all funds of the same vintages. Health-care funds raised from 2015 to 2017 earned a 16.8% median IRR, out- performing the median IRR for the same vintages of all private equity funds of 13.1%.
Brief: The world’s governments took on eight years’ worth of borrowing in 2020 to fight the global pandemic, increasing their debts by over a sixth (17.4 per cent) according to the first edition of Janus Henderson’s Sovereign Debt Index. As eight in ten countries in the index slipped into recession, governments added USD9.3 trillion to their tab. This is equivalent to one seventh (14.8 per cent) of the world’s GDP, a bigger slice than was needed to shore up the economy in the aftermath of the global financial crisis. The world’s government-debt tally ended the year at a record USD62.5 trillion, almost four times its 1995 total (+273 per cent) and equivalent to USD13,050 per person. The biggest economies took on the biggest debts in 2020, but the UK had the highest budget deficit Some countries have taken on more debt than others to meet the challenges of the last year. In absolute terms the biggest economies naturally borrowed most. The US, Japan and China alone accounted for more than half of the world’s new government borrowing in 2020. Compared to the size of its economy, the biggest borrower was the UK with a government budget deficit worth one fifth of its GDP, but the US, Brazil, South Africa, Spain, Canada, Japan and Singapore all ran deficits at least one eighth the size of their economies too.
Brief: ICD-Brookfield has had to ride Dubai’s economic roller-coaster since opening the largest standalone office tower in the city last September when the worst of the coronavirus outbreak appeared over. More than half a year and another spike in infections later, regular office life remains a way off. Even without the pandemic casting a shadow over commercial real estate, the $1.5 billion high-rise arrived at a time when about a quarter of all offices stood vacant despite rental prices dropping by over 35% in the past six years. After initially halting lease negotiations, many multinationals are now coming back and looking to conclude deals, according to Rob Devereux, chief executive officer of ICD-Brookfield. Seven firms finalized contracts in the first quarter of this year, following agreements with 11 companies including UBS Group AG in the previous three months. Julius Baer, Natixis and EY signed before the tower opened. The building’s occupancy rate is approaching 55% in terms of signed leases, Devereux said. For Devereux, who leads a venture equally owned by Brookfield Asset Management Inc. and Dubai’s sovereign wealth fund, the outlook is upbeat as firms look to rebuild their work culture, with the vaccination rates suggesting the city could be near herd immunity.
Brief: Regtech industry experts have spoken out in support for the FCA’s recent call for ‘purposeful’ AML controls and financial fraud action. Speaking at the AML & ABC Forum 2021 at the end of March, Mark Steward, Executive Director of Enforcement and Market Oversight and a member of the Executive Committee at the FCA addressed some of the investigations, legal cases and challenges facing recent money laundering activity in the UK, and called for better systems and controls that are “purposeful, efficient and courageous in identifying suspicious activity.” Steward went on to state that system and controls currently in place are flawed. Reference to the GBP37.8 million fine imposed on Commerzbank AG’s London Branch and the GBP96.6 million fine against Goldman Sachs for systematic AML failures were used to showcase inadequate screening and fraud detection systems. No comment was made towards the most recent criminal case against NatWest due to ongoing investigations. Interestingly, Mark Steward also stated that AML systems are at significant risk of becoming overly complicated, bureaucratized, vulnerable to gaming by less scrupulous players, and expensive. He therefore suggested that AML systems and controls “must be focussed explicitly on the activating purpose and function of those controls, to ensure the system is not just a bureaucratic process and to ensure it cannot be gamed.”
Brief: As the nation’s banking giants steer their way out of the pandemic, they’re focused on a key category of clients: wealthy people. Citigroup Inc. plans to “double down on wealth” and concentrate its efforts on international hubs popular among high earners: Singapore, Hong Kong, the United Arab Emirates and London, the company said when it announced earnings last week. At Bank of America Corp., affluent clients’ account balances surged 31% to a record $3.5 trillion, lifted by a buoyant stock market, and it added more than 7,000 households in the first quarter. New assets at Morgan Stanley jumped. “I could talk for hours on this one -- I think we’re incredibly well-positioned in wealth,” Jane Fraser, Citigroup’s new chief executive officer, told analysts last week. Focusing on major markets means “our capital, investment dollars and other resources are better-deployed against higher-returning opportunities in wealth management,” she said. The world’s 500 richest people added $1.8 trillion to their combined net worth last year, lifting the total to $7.6 trillion, according to the Bloomberg Billionaires Index. In the U.S., the economic resurgence has affected people in wildly uneven ways, with many Americans growing wealthier amid roaring stock and home prices even as almost 10 million people remain unemployed. Some are calling it a “K-shaped recovery.”
Brief: After a collapse in cross-border dealmaking in the first half of 2020 in the wake of the pandemic, foreign investment into the UK has risen considerably in recent months, according to the latest UK M&A data from Mergermarket. Inbound M&A reached GBP58.7 billion (196 deals), over 3x higher than during the first quarter of 2020 (GBP18.6 billion). This also represents the highest quarterly inbound deal count since 3Q17 (200 deals). Private equity buyouts in the UK grew to highest quarterly deal count on Mergermarket record in the first quarter of 2020, with sponsors spending a total of GBP20.5 billion across 132 deals. As a result, private equity firms have now spent at least GBP10 billion in six of the last eight quarters. After a significant decrease in the first half of last year, private equity exits have also increased considerably. There were 75 exits worth a combined GBP10 billion in 1Q21, the highest number of exits seen in a quarter in the UK on Mergermarket record. As a result of the GBP14.2 billion tie-up between National Grid and Western Power Distribution, energy, mining and utilities was the most active sector by value at GBP20.7 billion across 28 deals. Investment in tech, meanwhile, continues to grow. The GBP20.4 billion deployed in the sector accounts for just over a quarter of UK dealmaking in 1Q21. Business services remains the most active sector by deal count, recording 100 deals (GBP2.3 billion) this year – up from 93 (GBP1.4 billion) in the equivalent period last year.
Brief : The U.S. struggled to emerge from the pandemic, and its biggest bank broke an earnings record. JPMorgan wasn’t alone -- Citigroup and Morgan Stanley did the same. And Goldman Sachs? Yes, Goldman too. Wall Street thrived during 2020’s year of global catastrophe, and it’s doing even better in 2021. JPMorgan Chase & Co.’s soaring investment-banking fees boosted profit to US$14.3 billion, the most the centuries-old firm has ever earned in a single quarter. Citigroup Inc., where fees from underwriting shares quadrupled, saw record quarterly profit of US$7.94 billion. And Morgan Stanley posted its highest net revenue yet. And Goldman Sachs Group Inc.’s US$17.7 billion of revenue and US$6.84 billion of earnings both set records in a quarter of Reddit-fueled stock-market mania. Fees from putting together deals for companies helped lift investment-banking revenue to a record US$3.77 billion, while revenue for Goldman’s asset-management arm reached a high of US$4.61 billion. Other lenders had records too. Bank of America Corp.’s investment-banking fees climbed more than 60 per cent to a record US$2.25 billion. It also helped that banks released money from the stockpiles they had set aside for loan losses. Even at Wells Fargo & Co., plagued for years by scandal, profit soared sevenfold -- but not to a record.
Brief: Fewer than 200,000 businesses in the United States may have failed during the first year of the COVID-19 pandemic, a lighter toll than initially feared and one that may have had relatively little impact on unemployment, according to Federal Reserve research. The figure contrasts with the early forecasts that the pandemic would leave America’s “Main Street” desolate as well as with polls that continue to show large percentages of U.S. small business owners are worried about their survival. Perhaps 600,000 businesses, most of them small firms, fail in any given year, and U.S. central bank researchers estimated that from March 2020 through February of this year the figure has been perhaps a quarter to a third higher. That included 100,000 “excess” failures among firms engaged in close-contact services such as barbershops and nail salons, a sector described by the Fed research group as the sector hardest hit by the economic fallout from the pandemic. While potentially devastating for the owners and employees of those firms, “relative to popular discussion … our results may represent an optimistic update to views about pandemic-related business failure,” the authors wrote.
Brief: Major alternative asset managers will rake in higher fees over the next couple of years as investors continue to flock to alternative investments, according to Morgan Stanley equity analysts. In their preview of publicly-traded alternative asset managers’ first quarter earnings on Friday, the analysts predicted fundraising will drive 17 to 18 percent of average fee-related earnings growth in 2021 and 2022. In addition, they anticipated an increase in gross realized performance fees of 56 percent in 2021 and 33 percent in 2022. According to the Morgan Stanley analysts, alternative investment firms are better positioned to benefit from the economy recovery compared to traditional asset managers, given the acceleration in mergers and acquisitions, initial public offerings, and SPACs, or special-purpose acquisition companies. “The structural growth story of alts weathered the pandemic much better than feared, and now as the economy transitions into a growth stage, demand for alternatives remains intact driven by a low-rate backdrop and asset owners struggling to meet return targets that’s leading to an increasing willingness to trade liquidity for returns that could drive fundraising above our base case,” wrote analysts Michael Cyprys, Peter Kaloostian, and Ian Buchanan.
Brief: The U.S. central bank should continue to maintain monetary stimulus even as the U.S. economy is starting to experience rapid growth, said Federal Reserve Governor Christopher Waller. “Just because the growth rates are really good and everything’s looking like we’re heading out in the right direction, we’re still trying to make up a lot of ground,” the most recent addition to the Fed’s board told CNBC in an interview on Friday. “We’ve got a long way to go. There’s no reason to be pulling the plug on our support until we’re really through this.” Waller, the former research director of the St. Louis Federal Reserve, was sworn onto the board in December after the U.S. Senate confirmed his nomination by former President Donald Trump. Waller’s remarks follow comments earlier this week by Chair Jerome Powell that have reinforced the message that policy makers will not be in a hurry to withdraw support even as the economy rebounds. They enter their blackout on public comment at midnight Friday ahead of the April 27-28 meeting of the Federal Open Market Committee.
Brief: Polar Capital has bounced back from its Covid lows with assets surging to a record £20.9bn in the last 12 months. In an update ahead of its final results the Aim-listed manager said assets under management had jumped 10% over the quarter to 31 March and 71% from £12.2bn a year ago after the Covid crisis wiped £2bn from its total. It has now doubled the size of its business over three and half years which chief executive Gavin Rochussen said was “ttestament to our strategic focus of offering a diversified range of funds whilst maintaining a rigorous focus on performance and active management”. Polar’s shares were up 1.6% at the time of writing, hitting a record high of 734p. The £8.7bn boost to AUM over the past 12 months was driven by £2.1bn in net flows, a stark contrast to 2019’s £1.2bn worth of redemptions, as well as £5.2bn from market movement and fund performance and £1.7bn from acquisition-related activity. This more than offset the £301m loss from the closure of the Polar UK Absolute Equity fund which was wound down due to the poor health of manager, Guy Rushton, who subsequently passed away.
Brief: Apollo Global Management Inc. is considering opening additional offices in Florida and elsewhere as it seeks to lure and retain talent in a world upended by the pandemic. The private equity firm is weighing outposts in Miami and West Palm Beach, as well as an office elsewhere in the U.S., and another in Europe, said spokeswoman Joanna Rose. Apollo, which will retain its New York headquarters, recently surveyed employees about where they prefer to work as part of a strategy to attract a broader talent pool, she said. Apollo, with 1,729 employees at year-end, has been gathering feedback over the past year as the pandemic forced companies to rethink how their employees work. Many are relocating or experimenting with more flexible work arrangements. Apollo is among those to test giving employees the option of working remotely two days a week. The pandemic has also prompted Wall Street firms to consider moving staff to locales with no state income taxes, such as Florida and Texas. This year, Goldman Sachs Group Inc. asked managers to identify employees who wish to relocate to West Palm Beach. Several hedge fund firms, including Elliott Management Corp., Citadel and Point72 Asset Management, announced plans to establish offices in Florida.
Brief : Investors are signaling fresh concern about when the largest U.S. banks will get back to their bread-and-butter business: lending money. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon’s statement about “challenged” lending -- a word he quickly said he regretted using -- pressured share prices, as did shrinking quarterly loans across banks. Bank of America Corp. reported a 14% decline in loan balances in the first quarter from a year earlier, while Citigroup Inc. said Thursday that loans tumbled 10%. Those dropoffs followed the 4% slump in loan balances at JPMorgan and the 9% decrease at Wells Fargo & Co., reported Wednesday. Executives from all the companies struggled to provide precise targets of when they expect loan balances to increase or by how much, while expressing optimism about economic growth coming out of the pandemic. At the four largest U.S. banks, the lending slump and low interest rates combined to sharply cut net interest income -- what lenders make from borrowers minus what they pay depositors -- even as their trading and investment-banking businesses sent earnings soaring.
Brief: Just over a year from the first UK lockdown, Covid-19 has upended day-to-day life and financial markets on an unprecedented scale. And the gold market was not immune. The last twelve months have been a rollercoaster for the asset class, categorised by a series of records triggered by the pandemic. Despite this, the benefits of gold have been borne out. Clearly, at a time of such market turmoil, gold has spent much of the last 12 months fulfilling its traditional role as a hedge against uncertainty. In many ways, the pandemic drove gold to new heights as it put the asset class front and centre of investors’ minds as they sought refuge from the financial fallout. As such, investors flocked to gold-backed ETFs in 2020, with a record 877 tonnes added to global holdings, the equivalent to US$48 billion (€40 billion). Heightened risk and uncertainty weren’t the only drivers of higher investment demand. Ultra-low interest rates, which reduced the opportunity cost of holding gold over competing assets such as bonds and fiat currencies, and fiscal expansion drove investment flows higher.
Brief: Credit portfolio managers feel their portfolios are stabilizing thanks to the liquidity provided by government stimulus programs, according to the first-quarter survey from the International Association of Credit Portfolio Managers. Rising liquidity has helped allay fears of rising corporate credit defaults, particularly in North America. In the first quarter, 25% of surveyed managers forecast rising credit defaults in the region over the next 12 months, well down from 63% in the fourth quarter. Som-lok Leung, IACPM's executive director, said in a phone interview the new positive outlook is due to government stimulus. "It's definitely a significant shift, and I think the comments from our members are certainly that the default situation has been pretty good," Mr. Leung said. "Defaults have been relatively low with some exceptions here and there, but overall, I think government stimulus — not only in the U.S., but in multiple countries — has had its predicted effect."
Brief: Scott Minerd, the chief investment officer of Guggenheim Investments, is moving to Miami, the latest high-profile finance executive drawn to a state with no income tax. Minerd, who has lived in the Los Angeles area for years, purchased two penthouses for $12.5 million and plans to combine the properties. That would create a 22,547-square-foot condo that would be the largest in Miami-Dade county, according to Jonathan Miller, president of Miller Samuel. Minerd will keep his mansion in Marina del Rey, but plans to become a Florida resident, according to a person familiar with the matter. The move comes as Guggenheim Investments shifts toward a flexible work arrangement. “We are planning to have flexible use of all our offices to permit people to work and live where they want,” a representative for the firm said in a statement. “This also includes facilitating people living where they wish to live while continuing to serve our clients with excellence.” Finance titans have increasingly been drawn to Florida to escape high taxes in the northeast and California and Wall Street firms have been looking south for office space.
Brief: At this point in the pandemic, institutional investors are ready and willing to make additional investments in private markets, particularly through venture capital and growth equity investments, according to Eaton Partners. The fund placement agent, which is part of Stifel Financial, on Wednesday released its latest limited partner pulse survey, which questioned LPs about their views on alternative investments. When asked about how soaring public market valuations have impacted their opinions of private market investments, over half of participants reported that private markets look more attractive to them now. This figure indicates a shift from the firm’s September 2020 pulse survey, which found that nearly half of investors were not currently looking to make changes in their capital market allocations. According to the new survey, investors are increasingly looking to buyouts, growth equity, and venture capital above other private asset classes. Sixty-one percent of survey respondents reported plans to up their buyout allocations, roughly consistent with the proportion who planned to do so in September.
Brief: Employers risk creating an unhealthy working culture in the post-pandemic world by embracing remote work without true flexibility, a survey led by King’s College London found. Businesses need to avoid giving the illusion of flexibility while still expecting staff to put in long hours and be responsive at irregular times, according to research by the Global Institute for Women’s Leadership at KCL and employee advisory firm Karian and Box. Almost all organizations polled said they are planning for a future involving hybrid work -- split between home and office locations -- though just 36 per cent are redesigning job roles with more flexibility in mind. Without more targeted support, parents and carers in particular risk erasing the boundaries between work and home life and seeing their workload increase, the survey said. Workers and employers around the world are grappling with new ways of operating after a year that has seen many step away from the office to slow the spread of COVID-19. About a third of working adults in the U.K. are currently operating full-time from home, according to Office for National Statistics data. Of the 254 organizations surveyed by King’s College, 90 per cent said they had increased support for working at home, with about three quarters doing more to help their staff work flexibly.
Brief :Corporate landlords backed by private-equity firms are seeking to evict thousands of cash-strapped tenants despite a federal moratorium, a group tracking the companies said. Firms controlled by Pretium Partners LLC have sought evictions for unpaid rent against 1,300 residents in seven states, the Private Equity Stakeholder Project, an advocate for industry accountability, said in a report issued Wednesday. Pretium rental companies Progress Residential and Front Yard Residential Corp. moved to oust tenants after the Centers for Disease Control issued a halt to evictions in September, with a disproportionate number of filings in majority Black areas, according to court filings tracked by the non-profit. The companies operate more than 55,000 rental units. “Progress and Front Yard comply with the CDC eviction moratorium and have not evicted any individual who is covered by a valid CDC declaration,” a Pretium spokesperson said in a statement. “We work with our residents and seek to avoid eviction, but if a resident declines to pay rent and will not constructively engage to find a resolution, we reserve the right to proceed in accordance with applicable law.”
Brief: The European Commission plans to borrow around 150 billion euros annually until 2026 to finance the bloc’s unprecedented plan to make its economy greener and more digitalised, making it the biggest debt issuer in euros, the Commission said on Wednesday. The amount of the EU economic plan was agreed at 750 billion euros in 2018 prices, but now totals around 807 billion euros in current prices. The money is split into 338 billion euros in grants and 386 billion in loans for the 27 EU countries and the rest is for joint EU programmes. It will be distributed over the next five years with a third to be spent on reducing CO2 emissions in the EU’s 27 economies. Each of the 27 EU governments can get 13% of its share of the money this year in pre-financing before projects paid for by the scheme reach agreed milestones and targets. If EU governments focus on the grants component of the pre-financing this year, EU borrowing in the third quarter could be around 45 billion euros, Budget Commissioner Johannes Hahn said.
Brief: French asset managers have been warned that they could be nurturing a false sense of security over their management of cybersecurity risks. The warning comes from the industry watchdog, the Authorite des Marches Financiers (AMF) following a thematic review. The regulator noted that while cybersecurity practices have improved, there remains a lack of preliminary work on mapping the most sensitive data. Based on the principle that only what is well-known is well protected, the regulator stated that this could “allow significant vulnerabilities to persist in the systems inspected, nurturing a false impression of security”. The AMF is also concerned about insufficient coordination between asset managers and their third party providers. The thematic review involved spot inspections of five asset managers between 2017 and 2020 and included specific analysis of cybersecurity practices during the first phase of the lockdown between March and May 2020.
Brief: U.S. stock indexes rose on Wednesday after upbeat earnings reports from Goldman Sachs and JPMorgan boosted investor expectations of a strong rebound for corporate America amid swift COVID-19 vaccinations. Goldman Sachs Group Inc rose 3.3% after it reported a massive jump in first-quarter profit, capitalizing on record levels of global dealmaking activity. JPMorgan Chase & Co’s shares fell 1.1% even as the largest U.S. bank’s earnings jumped almost 400% in the first quarter, as it released more than $5 billion in reserves it had set aside to cover coronavirus-driven loan defaults. “It certainly is a solid quarter (for banks) ... often the stocks run up into news and then at least initial reaction is some profit taking and we were seeing that this morning in JPMorgan,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey. “I think investors who have invested in the banking sector will feel good about the results and which are likely keep them invested in the sector.”
Brief: New money is flowing to low-cost airlines in the U.S. as they take on giant carriers racing to recover from the unprecedented collapse in travel during the pandemic. Two established carriers that had already been flying sold shares in the past month, while two new airlines managed to raise more than $100 million each in a little over one year to cover startup costs. All four share a common trait: low operating costs and a customer base seeking affordable flights after more than a year of hunkering down close to home. They’re striking as the domestic leisure business is rapidly returning, even though industry revenue from corporate and international travelers — the domain of bigger carriers — remains depressed. “Low-cost, leisure-focused, domestic-oriented air travel has been in vogue like it’s never been in vogue before,” said Barry Biffle, chief executive officer of Frontier Group Holdings Inc., which held an IPO in March after withdrawing a previous effort to sell stock seven months earlier. The airline industry has never been particularly kind financially, with more than 200 failures or bankruptcies since 1978. But consolidation among the largest players since the 2008 recession set the stage for a comeback. U.S. carriers had $103 billion in net profits from 2010 through 2019, before the pandemic drove $46 billion in losses.
Brief: It turns out it’s not just some of Extended Stay America Inc.’s top shareholders who oppose its proposed $6 billion takeover. Two of the company’s own directors are against it as well. Extended Stay disclosed in a regulatory filing late Tuesday that while the majority of the board approved the deal with Blackstone Group Inc. and Starwood Capital Group, Neil Brown and Simon Turner opposed it, saying the $19.50-a-share price was insufficient, and below similar transactions in recent years. They were also concerned about the timing of the deal in light of a recent rebound in hotel stocks, and the potential for further recovery with the U.S. stimulus plan and increasing Covid-19 vaccinations, the filing shows. Turner was of the belief a transaction below $20 a share was inappropriate, and also was concerned about changes to the termination fee that were made in order for the buyers to raise their bid to $19.50 a share from $19.25, according to the filing. Extended Stay has two boards, one for the C-Corp and one for the real estate investment trust. Both Brown and Turner sit on the REIT board, according to the company’s website.
