Powerscourt

By Powerscourt on 25/01/2021

Powerscourt Coronavirus Briefing – 25 January 2021

ANALYSIS

The annual World Economic Forum (WEF), which is usually held in Davos, Switzerland, will be held online this year and opens today.

The pandemic will dominate the agenda. Oxfam, the development charity, released a report to coincide with the start of the WEF which claims that global inequality has widened over the past year as the number of people living in poverty has doubled to 500 million, while the wealth of billionaires has surged during the crisis. It says the increase in wealth amassed by the ten richest billionaires would pay for vaccinations of the world’s poorer nations.

The World Health Organisation also releases a report today tapping into the same theme. It says that the world’s richer nations cannot begin to recover from the pandemic until poorer countries have been given equitable access to vaccination programmes, because of damage to trade links and the ever-present threat of new variants of the virus spreading.

However, gaps are developing among OECD countries that could have significant consequences. The EU is lagging well behind the UK and the US as its vaccination program has been hit by a number of setbacks. The latest was the bombshell dropped by AstraZeneca on Friday night that scheduled deliveries to the bloc could be 60% lower than planned over the first quarter. The European Medicines Agency is expected to authorise the Oxford jab this week. The vaccine was central to the European Commission’s pledge that 70% of adults will be vaccinated by the summer.

The move inevitably prompted a furious backlash among member states with Italy, among others, threatening legal action. Commission officials will hold talks with AstraZeneca today with a statement expected later providing clarity on future supplies.

If the botched rollout of vaccines is delayed further, then the economic and societal costs for the EU will increase.

Element, the hedge fund, is warning that investors and policymakers are underestimating the economic impact of the pandemic on the EU, particularly the new strain of the virus which will require member states to impose stricter lockdowns for longer than originally expected. Christine Lagarde, the President of the European Central Bank, said on Friday that its 3.9% growth forecast for the EU remained “broadly valid.” Colin Teichholtz, the Head of Markets at Element, told the Financial Times that the ECB’s forecast is too optimistic and should be cut by a quarter.

Last night there were riots in Holland as protesters mobilised against the new curfews. Politicians have warned that frustration is growing in France at the slow rollout of vaccines which could also erupt in widespread unrest.

In the UK, the debate about when schools should reopen is intensifying. However, an analysis piece in the New York Times warns that the new variant of the virus means Britain could be entering a severe new phase of the pandemic and that easing lockdown rules could be calamitous.

Over the past week markets have surged to record highs on hopes that the $1.9 trillion fiscal stimulus package unveiled by the Biden administration combined with the strong performance of the Chinese economy, will lead to a global rebound in the second half of the year. These gains have been checked by concerns over new variants of the virus emerging combined with the slow rollout of vaccines. Asian shares climbed to near all-time highs in overnight trading as optimism over China and the US fiscal stimulus eclipsed concerns over vaccine supplies.

 

WHAT ARE COMPANIES SAYING?

Industrials 

TI Fluid Systems plc
TI Fluid Systems, a leading global manufacturer of highly engineered automotive fluid storage, carrying and delivery systems and thermal management systems for light vehicles. issues this morning a trading update ahead of publishing FY20 Results. Despite a significant decline in light vehicle production and the ongoing COVID-19 pandemic, the business has shown resilience due to cost flexibility, free cash generation, balance sheet strength and liquidity. The Group has repaid all COVID-19 related UK furlough payments it received and reinstated pay levels for all employees who participated in temporary pay reductions in 2020.

Financials & Real Estate 

JTC PLC
JTC, the global provider of fund, corporate and private client services, today issues a trading update ahead of its full year results. The Group has performed resiliently delivering strong new business growth and trading in line with expectations. Despite the ongoing COVID-19 pandemic, new business performance was strong with the annualised value of new business won increasing approximately 20% on a YoY basis. JTC’s EBITDA margin remained stable in H2 with the Private Client Services Division continuing to perform strongly. Nigel Le Quesne, CEO of JTC PLC, said “JTC is a highly resilient business that is able to adapt and grow on a consistent basis even during periods of challenging external conditions.”

Sirius Real Estate Limited
Titanium, the joint venture between AXA IM ALTS, and Sirius Real Estate have acquired the Sigma Technopark in Augsburg, Germany for a total of approximately €80 million. The acquisition is subject to approval by the German completion authority, but will be rebranded as a Sirius business park comprising of 113,000 sqm of space across a range of uses. Head of European Transactions at AXA IM Alts John O’Driscoll commented “It is a high quality asset in a sector that has proven to be robust and resilient throughout the COVID-19 crisis both in terms of occupancy and rent collection.”   

 

Consumer & Retail

boohoo group plc
One of the leading online fashion retailers boohoo, has announced this morning that it has acquired all the intellectual property assets of Debenhams Retail Limited, which is currently in administration, for £55 million. Boohoo intends to rebuild and relaunch the Debenhams platform with the development of an exciting online marketplace, capitalising on the sector’s structural shift to online triggered by the ongoing pandemic. CEO John Lyttle commented “The acquisition of the Debenhams brand is an important development for the Group, as we seek to capture incremental growth opportunities arising from the accelerating shift to online retail.”

 

IN THE NEWS

Covid vaccine booster delay will help to save lives, says science chief – The Times

Covid impact leaves more parts of UK in need of levelling up – Financial Times

Cabinet row as ministers consider plans to bus arrivals to hotels for quarantine – The Telegraph




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