Matthew Feargrieve is an investment management consultant with more than twenty years’ experience of advising managers of investment funds operating in the leading jurisdictions of the United Kingdom, Luxembourg, Ireland and the Cayman Islands. His extensive experience of advising fund managers makes Matthew a valued member of the boards of investment funds in various jurisdictions, on which he acts in a non-executive capacity.
Before becoming an independent financial services consultant, Matthew worked for leading financial services firms in the UK and in Switzerland. Learn more about Matthew Feargrieve here.
MATTHEW FEARGRIEVEexplains why the World Health Organization says Africa should prepare for the worst. And why the continent is not preparedfor what is coming.
AS AT 15 APRIL 2020 there are around 16,000 known cases of COVID19 in Africa, and 880 reported deaths (source: African Arguments). There is currently no model for projecting the extent of COVID19 mortality across the African continent: the continent is too vast, the African nations are too different, and so much is still unknown about the virus. Tragically, when you read this article, these numbers will be much higher.
So it is perhaps unsurprising that the director-general of the World Health Organization (WHO) should have erred on the side of caution, by advising the continent to “prepare for the worst”. Though the pandemic is in its early days on the continent, however, health experts have warned that even facilities in Africa’s richest nations could be overwhelmed by the spread of the virus.
Tedros Adhanom Ghebreyesus, the Ethiopian director-general of the WHO has said that the number of cases in the continent was likely higher and urged African countries to “wake up” to the increasing threat.
He uttered this warning as Nigeria, Africa’s most populated nation, barred entry to arrivals from 13 badly-hit countries. Other African countries have taken similar measures, and have enforced mandatory quarantine of passengers from affected regions. Others have closed their borders, but most countries in Africa remain, to varying degrees, open to the rest of the world.
Senegal, Rwanda, South Africa, Kenya, Ethiopia, Zambia and Tanzania have closed educational facilities, whilst Botswana, Ghana, Ethiopia and other countries have banned sporting events like football matches. Other nations such as the Democratic Republic of the Congo, Rwanda and Ghana have banned gatherings at places of worship.
The Kenyan government has urged employers to allow their staff to work at home, similar to what European governments have done. This, however, is unlikely to be replicated in poorer African countries, with unskilled workforces and frequent power cuts.
China and European countries have learned – the hard way – that the only known mitigatory measure that can be taken against the virus is to maintain separation between people. The virus is propagated by coughs and sneezes, and so many countries worldwide, including the United Kingdom and the US, are practising what has become known as “social distancing”, which is basically keeping your distance from other people. Those showing coronavirus symptoms or who have tested positive for the disease are required to self-isolate in their homes, if their symptoms are sufficiently mild not to require hospital treatment.
But how does a person maintain social distance from others in a slum, where he or she may share a toilet and a room with tens of other people? This is one of the big challenges that faces the African continent. Social-distancing is simply not possible for the majority of its population.
Although people are relatively dispersed in rural areas, communicating information about social distancing in order to change behaviour there will be challenging, if not practically impossible. And unlike the developed world, where ordering food deliveries to one’s home is easily achieved with an internet connection, the vast majority of people in Africa have to walk into a shop to buy food.
So the virus is likely, if it follows the same trajectory seen in China, Europe and the US- to spread quickly and easily in Africa. That brings us to the next problem.
Health-care systems on the continent remain weak and will not be able to handle a widespread outbreak. In addition, many people there have serious health issues—such as HIV, tuberculosis, or acute malnutrition—that make them vulnerable to other illnesses.
Many healthcare systems in the developed world – including those in the United Kingdom and the US- are overwhelmed with severe cases of COVID19. But African countries are even more vulnerable because they have significantly fewer hospital beds. For example, the most recent data available indicates that Ethiopia and Niger each have 0.3 beds per 1,000 people, and Tunisia has 2.3, compared to an average of 5.6 in Europe.
Africa has limited tertiary-care capacity, including critical care units, and limited medical supplies in many places. There are not nearly enough ventilators, or oxygen-giving equipment, which is absolutely crucial for the treatment of COVID19 patients. This lack of infrastructure is causing problems in Europe and the US. Its impact on Africa is not difficult to imagine.
HIV in Africa
Millions of adults and children in Africa have severely compromised immune systems, mostly because of HIV infection and related tuberculosis. Data on the fatality rate for immuno-compromised COVID19 patients is very limited, but early indications suggest that the death rate for individuals with chronic medical conditions is significantly higher than the overall case mortality rate.
There is widespread malnutrition in Africa the continent, particularly in infants. Given that the increased risk of mortality from diseases like pneumonia is up to 36 times higher for malnourished children, COVID19 puts this population at significant risk.
Data from countries that are further along in the pandemic, including China and Italy, consistently indicates a much higher fatality rate among older people (roughly, the over-60s). This could mean that Africa’s relatively young population could mitigate mortality rates. Over 80% percent of COVID19 deaths in China were in the over-60 group, which accounts for 16% of the population. In Africa, on the other hand, the same group represents 5% of the continent’s population.
This factor could therefore represent a glimmer of hope that the trajectory of the virus in Africa will not be as ravaging as some experts are predicting. But it is very much a case of wait-and-see. So what can African countries be doing to prepare, as best they can, for the coming onslaught of coronavirus?
Many, but not all, governments in Africa are moving quickly to implement a national response to the pandemic.
Governments in Africa, unlike those in the developed world, have a better understanding of pandemics, particularly after the 2014 Ebola outbreak, and have already implemented confinement measures, closure of borders and widespread handwashing stations.
Three critical steps to preparedness can be tabled as follows:
African governments must work together, as well as implement national strategies. Regional unions and the African Union can be powerful drivers of that cooperation.
Global groups working to support the pandemic response in Africa—including UN agencies, governments, donors, NGOs, and companies—must be yoked to the struggle by the governments of the richer African nations.
Other stakeholders must bring community leaders into the process from the start to build trust and to ensure that people and communities understand and adopt potentially challenging constraints.
So what are the continent’s prospects as coronavirus continues to spread and COVID19 cases rise?
If the virus does not, as is hoped, find it harder to spread in Africa’s relatively young population, then social-distancing, which is practically impossible in vast swathes of Africa, will not mitigate its spread. The only bulwark against the disease that will be available to African countries, rich or poor, will be their healthcare systems.
If those systems become overwhelmed, the consequences will be broadly as follows. First, deaths among patients with other illnesses could spike. Secondly, public distrust of hospitals and general unease could increase, leading patients who need treatment to avoid seeking care, a social phenomenon seen during the 2014 Ebola crisis. Thirdly, the capacity of healthcare systems could erode further if large numbers of healthcare workers fall ill with the virus. This is something now beginning to manifest itself in Europe, in particular Italy, Spain and the United Kingdom, where protective clothing has not been readily available to medical staff in hospitals.
A central lesson of the 2014 Ebola outbreak is that people MUST be educated, enabled and – if necessary – forced to take the mitigating steps that the government recommends, such as regular hand washing and avoiding unnecessary social contact. Governments in Africa must work hard to ensure that their people do not lose trust in community and health organizations that are there to help and support them.
Now the Developed World Must Look Africa In the Face
For a very long time, widespread, unstoppable disease and pandemics were something unknown in the so-called developed world. The previous pandemic to which much comparison is being made in social commentary in Europe and North America is the “Spanish ‘flu”, that infected around 500 million people (or one-third of the world’s population) in the early part of the twentieth century. Not since that time has a pandemic had such an impact on the whole world as the coronavirus.
Now the developed world may at last truly empathise with the plight of African countries throughout time, as the world – hopefully – now comes together in the face of a disease that is no respecter of sex, race, religion or other accidents of birth.
COVID19 is spreading in India. It is in wealthy areas and in the slums. Hundreds of thousands of workers are now unemployed, walking hundreds of miles across India to reach home, and spreading the virus. Modi मोदी does not know how to help his people. Bollywood बॉलीवुड celebrities need to help!
The health ministry official report (April 2020) says that there are 1,637 cases of coronavirus in India, with 38 dead.
A surge in cases in Delhi has been linked to a two-day convention of the Muslim sect Tablighi Jamaat तब्लीगी जमात when 3,500 muslims gathered in the Delhi neighbourhood of Nizamuddin. Almost 2,000 stayed in the area for days afterwards. The Nizamuddin area is now a coronavirus hotspot in India.
Across Indian media and social networks, Muslims are blamed for spreading the virus, and “Corona Jihad” (कोरोनाजिहाद) is trending on Twitter. The have triggered a series of COVID19 clusters across India. Health officials are now searching for them.
The muslim gatheringमुस्लिम समूह has caused a spread of the virus across numerous states in India, from Kashmir to West Bengal by those who returned home afterwards. So far, 10 people who attended the event have died while 1,800 people have been sent to nine hospitals and quarantine centres.
At least six regions have reported cases that can be directly traced to the two days congregation at the NizamuddinMosque मस्जिद.
Delhi officials are now clearing the mosque मस्जिद where more than 1,000 people have been stranded since the government imposed a lockdown last week.
They are among some 300 people who showed symptoms and have been moved to various hospital to be tested. Another 700 have been shifted into quarantine centres.
The first coronavirus case has been confirmed in Mumbai’s Dharavi slum, which is India’s largest and is home to almost one million people living in close quarters.
But the government is in denial about the spread of coronavirus in India. Lav Agarwal, an Indian government official in the health ministry, insists there is still no community transmission in the country.
The virus outbreak in the cities has caused employers and householders to throw out their domestic staff. Hundreds of thousands of workers are now walking all over the country, to try to reach their villages and families.
After Modi declared a national curfew, these people have been beaten with sticks by the police, and sprayed with disinfectant.
Bollywood Must Help बॉलीवुड मदद करनी चाहिए बॉलीवुड और कोरोनावायरस
Hell is other people, as the saying goes. But with virus spreading and stress rising, there are some types that you are going to find more hellish than usual. Here MATTHEW FEARGRIEVE presents you with a sample.
It was only a few weeks ago when coronavirus began to be mentioned on the news. Then it started cropping up as a topic on talk radio phone-ins. It had by that time killed only a few bat-eating foreign types, far beyond our shores. But that was more than enough for one of the UK’s rarely seen, genetic fringe-groups to emerge: the Panic Buyers.
At the beginning of March you should have been able to nip into your local supermarket for a sandwich and a can of Fanta. Something that normally takes only a few minutes, even in the largest of stores. Instead, you weren’t able to get near the shop, let alone in it, for the lines of people with empty shopping trolleys (the biggest they could lay their hands on) stretching around the building, staring ahead, awaiting admittance.
And there, spewing from the exit, the explanation: hoards of hulking fat chavs, pushing trolleys laden with toilet rolls back to their Vauxhall Astras. More kids and tattoos than you could shake a stick at. See their defiant expressions as they chaperone their purchases across the car park, with enough toilet paper for a year’s use. Although, looking at the size of their arses, this could well be their normal requirement for a week’s worth of wiping.
The chances are that, if you live in a normal part of the UK, you won’t see many people jogging. If you live in Stafford, say, or Huddersfield. If you live on a council estate, you certainly won’t be seeing jogging, or engaging in any form of physical exercise (with the exception of running away from the local constabulary, girlfriend and drugs still in the stolen car, behind you). Wherever you live, you won’t do or see much jogging at all. Unless you live in London or the home counties; in which case all you will see is joggers. Up and down the High Street. In the park. And on the pavement past your house. All day. Every day. Jogging.
Joggers, like Panic Buyers, are a nutjob group existing on the fringes of normal society. But, unlike Panic Buyers, joggers inflict themselves on us at all times, and their existence is particularly regrettable in times like these, when we are all kicking around with nothing better to do. You stroll out, during your permitted 60 minutes of fresh air. You might be walking a dog, or eating a Twix. You might want to look around you, take in the view. Breathe. Decompress.
Except that the joggers have other plans for you. We are told, mainly by sportswear corporations and narcissistic fitness-freaks, that jogging is healthy, wholesome and good for us. The image presented of joggers is usually something like this:
Young, fit, attractive types, of both sexes, participating healthily, harmlessly and not at all anti-socially in outdoor exercise.
Instead, as any normal person knows, your average jogger looks like this:
Yes, the sad reality of stepping outside your home, if you live in the South East of England, is that the person with whom you share the pavement or park is a testosterone-addled, lycra-clad, shaven-legged, snot-rocketing exercise psycho, who feels tearful unless he is running a half-marathon every day. And boy, does he want you to know it. Hear him barking aggressively behind you as he approaches at top speed, no intention of slowing down or making any concession to using a shared public space. But you’re the one at fault. Oh yes. You thought you were in a park, ambling around with the dog, but you’ve strayed onto an olympic racetrack, you witless idiot! Get out of his way!
In times of plague, the jogger’s existence as an organism is particularly dispiriting. Here he comes, surging down the middle of the pavement, limbs flailing and armpits exposed, panting, sweating, coughing and hawking his way along. Thought you were breathing fresh air? Think again. Social distancing? It’s your responsibility to get out of his way. You’ve forgotten that you are a slow-moving, unfit, useless arsehole, and you are holding him up: he, the younger, healthier-than-thou, professional jogger.
It is to be hoped that joggers, and indeed other fitness freaks given to desporting themselves in public, will be swept away by the coming tide of mortality.
High-ranking candidates for selection by the virus are, of course, your neighbours. It was bad enough having to see the mulish-faced bastards once a day and at weekends, but now most of us are book-ended with them on each side. And at the front and the back. All day long. For the foreseeable. This is truly when the maxim “Hell is other people” comes brutishly to bear.
We are told, as we face the prospect of months of enforced confinement, that we are not alone, that we are “all in this together”. Too bloody right, we are, and what an awful prospect that is. Months of your neighbours mowing their lawn, trimming that hedge, fannying noisily around in their yard. Their shrieking, mewling kids bouncing on that trampoline. Kicking that football against that wall. And the lovely warm weather is on its way!
It’s going to be a long haul, and your neighbours aren’t going to make it easy for you. As you close the windows, reach for the vodka and contemplate that bottle of 200 paracetamol you’ve paid twenty quid for, don’t forget that the social distancing rules should at least keep their lager-swilling, beefburger-guzzling mates away from that barbecue of theirs. This small consolation of being in lockdown with your neighbours should, of course, be balanced against the attractive proposition of them gathering, infecting each other and wiping themselves out.
Bollywood films have always featured fantasy sequences, moments in the middle of the narrative where a song playsover a scene set in a beautiful location.
The northern Indian region of Kashmir was a popular backdrop for these Bollywood song sequences, but political unrest in the 1990s forced Indian filmmakers to find an alternative location.
Legend has it that filmmaker Yash Chopra spent his honeymoon in Switzerland in the 1970s, and the Indian love affair with Switzerland began there.
Switzerland welcomed this surge in interest with open arms, and at the same time as the country was offering attractive tax incentives for Indian filmmakers, tourist hotspots like Interlaken, Lucerne and Zurich fast became the go-to honeymoon destination for many Indian couples.
Switzerland is the third largest centre in continental Europe for managers of alternative assets, with Sweden coming first and France second.
Switzerland holds certain attractions for hedge fund managers, too. Switzerland is the fifth largest global centre of alternative assets under management (AUM), after North America, the United Kingdom, Sweden and France. Around three times the size of Connecticut, the small, central European country boasts approximately 15% of global alternative assets under management.
FoHF Managers There is approximately US$300 billion of alternative assets under management in Switzerland and pooled in FoHF, representing around 30% of European FoHF assets. Switzerland is home to 5 of the world’s 21 largest FoHF managers.
Single managers Around US$120 billion of alternative assets is managed in Switzerland by single managers, most of which are based in Zurich, Zug and Pfäffikon.
Facts and Figures
The main local centres in Switzerland for alternative asset management are Zurich, Zug and Pfäffikon.
There is approximately US$120 billion of alternative assets under management in Switzerland by single managers, representing around 4% of global AUM held in single manager hedge funds.
Switzerland is the third largest centre in continental Europe for managers of alternative assets, with Sweden coming first and France second.
There is approximately US$300 billion of alternative assets under management in Switzerland by FoHF managers.
There are around 180 hedge fund management firms in Switzerland, the majority of which are based in Zurich, Zug and Pfäffikon.
The country is home to 5 of the world’s largest 21 FoHF managers.
CORONAVIRUS: pourquoi le Royaume-Uni ne peut pas maîtriser le virus COVID-19?
La propagation du coronavirus est particulièrement rapide au Royaume-Uni. En Chine déplore 17 nouveaux décès depuis ces dernières 24 heures, l’épidémie est en train de faiblir. Un signe encourageant pour les pays, comme l’Italie par exemple, où l’on prend des mesures drastiques pour limiter la propagation du COVID-19.
Mais pourquoi est-ce que le gouvernement du Royaume-Uni ne sait pas contenir la propagation du virus? Cliquez ci-dessous pour en savoir plus:
Le nombre de cas de coronavirus augmente toujours à grande vitesse dans le monde. En France aussi avec presque 3000 personnes touchées et 61 morts. Fermeture des écoles dans le pays, isolement des personnes âgées, villes les plus touchées.
Mais pourquoi est-ce que la France et son gouvernement ne savent pas faire face au coronavirus COVID-19?
Matthew Feargrieve considers the opportunities and challenges that the virus presents for alternative asset managers in Switzerland
With the COVID-19 pandemic representing a Black Swan event for fund managers worldwide, the onslaught of the virus will be a test of the hedge fund industry’s ability to deliver returns that are uncorrelated to the markets. In this article we consider how Switzerland, the world’s number 5 for hedge fund management, is positioned to help investors ride out the market turmoil.
According to a 2019 report prepared by the Zurich School of Management and Law (ZHAW), the two predominant investment styles pursued by hedge fund managers based in Switzerland in 2018 were long/short equity and CTA/managed futures, two discrete strategies that have had very different fortunes over 2018 and 2019.
Managed futures funds suffered huge outflows in 2018, and long/short equity funds experienced redemptions in 2019 that were four times the value of outflows in 2018, with managed futures seeing some inflows in the second half of 2019 as refugees from equity sell-offs sought alternative strategies and asset classes. Additional investment into CTA/managed futures in the latter half of 2019 was driven by investors anticipating the end of the long-running bull market.
In long/short equity and CTA/managed futures, investors may find some respite from the relentless downward trend of global markets following the rise of the coronavirus. Both strategies enable the manager to hedge against bear markets, through the use of stock shorting and financial instruments such as futures contracts.
The week ending 28 February 2020 saw the largest single-week outflow from global equity funds ever recorded: some GBP1.6 billion was withdrawn by panicked institutional investors, according to Calastone’s February Fund Flow Index, mainly from actively-managed funds, whilst passive index funds saw net inflows, mainly from retail investors.
These exiting institutional investors will need a new home for their investment monies, and long/short equity and managed futures seem set to benefit from increased allocations. Financial reports have shown long/short equity managers making significantly smaller losses than comparable benchmarks. In other words, whilst down overall on January returns, they have been outperforming the market.
This is welcome news not just for investors but for the hedge fund industry itself, which over the past decade has suffered reputational damage, prominent closures and asset outflows caused by under-performance in a bull market and notoriously high fees. According to Hedge Fund Research, equity-focused hedge funds in 2017 gained an average of 13.7%, whilst the S&P 500 stock index climbed 29%, a gap that has been fairly consistent since the 2008 financial crisis.
This consistent under-performing by hedge funds of soaring equity markets over 2017-2019 (to which equity long/short funds were a big contributor) has also been a bugbear of alternatives managers based in Switzerland. But this trend looks set to change as the crashing market opens up opportunities for managers to short virus-hit sectors (airlines, hotels) and go long on others (Netflix, internet gaming companies). Given that the most common investment strategy for alternatives managers in Switzerland is long/short equity, the sector seems poised to benefit from significant inflows for the duration of the coronavirus crisis.
The experience of CTA/managed futures managers in Switzerland could be more uncertain. The number of managers in Switzerland adopting this strategy increased significantly between 2012 and 2018 and, given the huge outflows from funds pursuing this strategy over 2017-2019, Switzerland as a financial centre has a significant over-exposure to managed futures, one of the biggest in the European alternatives industry.
It remains to be seen whether this exposure will be reduced by inflow of monies that are newly-exited from global equity funds; the recent poor performance of managed futures may well leave investors more willing to invest in long/short equity and other equity-focused alternative strategies. Swiss-based managers of funds pursuing CTA/managed futures strategies will be hoping that the market turmoil caused by the virus will be widespread and long-lasting enough to force investors to seek out managers with the skills to offer hedging through financial instruments like futures contracts, not just shorting and other equity-focused techniques.
Switzerland: a haven for flight capital?
As the country that is home to the second-largest number of hedge fund managers and investors in Europe (behind the UK), Switzerland’s alternative asset management industry seems set to meet the profound investment challenges being thrown down by the COVID-19 epidemic, by providing global investors with a dynamic universe of uncorrelated investments.
You can read more about Switzerland as a centre for alternative asset management in our article here:
Is the UK headed the way of Italy, because of government mismanagement of COVID-19?
The UK Government’s approach so far to the spread of COVID-19 does not bode well for the containment of the disease in the UK.
UK Prime Minister Boris Johnson and his chief medical officer, Professor Chris Whitty, are determined to keep the UK economy running and minimise the impact of Coronavirus on people’s lives. But is this the right approach? Is this a political stance, or a position grounded in medical science and best practice?
Speaking on the BBC’s Today Programme on February 28, Jeremy Hunt, the former health secretary, said that being a “mature” democracy means that Britain’s government does not need to act like China’s. Does this mean that the UK will ignore the lessons being learned about the virus in China?
A point which he and many others in Britain seem to have forgotten is that in China most families have elderly relatives living with them. If the coronavirus strikes, younger people will see their parents and grandparents suffer and, in all too many cases, die. Empathy, sympathy and common humanity more than any other consideration explain China’s willingness to sacrifice economic growth rather than the old and the vulnerable.
In Britain, elderly relatives are mostly put out of sight and left out of mind. It’s hard to tell how many avoidable deaths will be needed before younger people realize that it is their own elderly relatives who are being sacrificed. But only then, I fear, will the government and its medical advisers abandon the perverse and callous pride they take in putting economy and normality first, and in avoiding the decisions and expenditure which in China have saved hundreds of thousands of lives.
For now, people in the UK are being told to wash their hands frequently and for at least 20 seconds on each occasion. They are told to blow their noses into tissue and bin it. They are told not to touch their faces. They are told to stay at home if they are unwell. This will slow up the inevitable spread of the virus and buy time, though for what is unclear. Neither schools, universities nor places of work — including Parliament — will close. Trains and buses will stick to their routines. Under no circumstances will cities be closed off and their populations quarantined in their homes.
Downing Street has even overruled the Department of Health and decided not to remain part of the Early Warning and Response System through which members of the European Union coordinate cross-border action to prevent, control or mitigate pandemics. At the same time, 99% of UK doctors surveyed said the country was unprepared for the outbreak; just 8 of 1,618 shared the government’s optimism.
Normality at Whatever Cost
Normality is to be preserved, no matter what. People are told that the chances of any one person catching the virus are small. This may well be true for me or you, but someone will catch it. And for as long as each of us feels that the chances of infection remain small, the number of cases and deaths will mount. People are told that there will be “excess” deaths as if each death is merely a death foretold — a death moved from one accounting period to a marginally earlier one. People are told the mortality rate will be less than 1%, a figure based on the expectation that there are many more people with the virus than reported.
Meanwhile, the figure given by the World Health Organization (WHO) is 3.4%, a number that is holding up not just in China but in other major outbreaks around the world. The truth is no one will know what the death rate is until long after the outbreak has subsided. Yet the British government has already decided what “fact” it wants to put its faith in.
It is often said that only fools learn from their own experience. In Boris Johnson, we have the worst of fools. But he and his entourage — for that is what the government has become — will not even have that excuse, for they have been warned again and again about their lack of preparedness and the vacuity of their plans. “Act now, pull out all the stops, and learn from China,” cries out the WHO.
“Negligent” and “ridiculous” is how many GPs (general practitioners, in the UK the first port of call for people who feel unwell) describe the government’s response. There are insufficient beds and health workers even at the best of times, and beds for the critically ill and ventilators are in even shorter supply.