The coronavirus has claimed its first fund suspensions in the UK, with more than £500m worth of property funds run by the Kames group in Edinburgh closed today because of “exceptional circumstances”.
The asset manager has suspended the Kames Property Income fund and its Property Income Feeder funds – with some advisers predicting a possible chain-reaction leading to further fund suspensions. In a statement to investors, Kames, which is part of the Aegon group and manages £37bn globally, said:
“In the current turbulent market conditions the fund’s Standing Independent Valuer, CBRE, has advised that they are unable to accurately value the properties within our funds. Under these exceptional circumstances we believe it is in the best interests of our investors to suspend activity within our funds.”
The last fund update from Kames said the fund had £585m under management, with half the money invested in offices and around a quarter in retail premises.
Ryan Hughes of financial brokerage A J Bell said:
“With M&G Property Portfolio having been suspended since December last year, it raises serious questions about whether we’ll see a chain-reaction effect and see other property funds suspending.”
Steven Mnuchin has also revealed that the White House wants to send checks (cheques, for European readers!) directly to Americans, fast.
Speaking at the White House briefing, the Treasury secretary said this was a quicker way of getting cash into people’s pockets than a payroll tax holiday which Donald Trump favoured).
With the coronavirus hitting the economy hard, we need instant action, said Mnuchin - who will discuss the White House’s stimulus ambitions with Senate Republicans later.
The payroll tax holiday would get people money over the next six to eight months.
We’re looking at sending checks to Americans immediately.
What we’ve heard from hard-working Americans [is that] many companies have now shut down, whether its bars or restaurants.
Americans need cash now, and the president wants to get [them] cash. And I mean now in the next two weeks.
Mnuchin wouldn’t say how big these cheques would be, but suggested they could be a bit bigger than “that’s in the press”. There have been reports of $1,000 checks landing on American doorsteps.
We don’t have further details, but it sounds like this would be on top of the tax deferral plan Mnuchin announced earlier:
Back in Europe, the UK has been told it is eligible to take part in a European Union wide-scheme on buying ventilators and other medical equipment needed in the coronavirus crisis.
A European commission spokesperson confirmed the UK was “eligible to participate in these joint procedures” despite leaving the EU on 31 January.
Under David Cameron, the British government in 2014 signed a voluntary “joint procurement agreement”, which was drawn up after the H1N1 pandemic of 2009 showed some countries found it difficult to get medical supplies on the open market. The agreement allows EU countries to band together to use their combined purchasing power to get a good deal on vaccines and other medical supplies.
The EU executive is currently organising joint procurement of protective clothing for medics, including masks, as well as ventilators. The commission spokesperson said “a very big majority of member states [were] interested” in taking part in the joint procurement on ventilators. The British government has not revealed whether it intends to take part in any of the procurement schemes.
U.S. Treasury Secretary Steven Mnuchin is expected to seek a new round of coronavirus-related economic stimulus of $850 billion or more from Congress Tuesday, and is discussing the idea of combining it with a relief package the House passed over the weekend, according to people familiar with the proposal.
A combined bill would have to go back to the House to get approved before going to Trump for his signature. House members left Washington Saturday, and aren’t currently scheduled to return until next week at the earliest.
But.... such a stimulus package would need to be agreed by Congress. Democrats may not support the scheme, unless it includes targeted help for workers and poorer families.
The request marks a shift by the White House towards a more aggressive economic policy response as the disease has forced the closure of schools, bars, restaurants and manufacturing plants across the country. It has also led to a sharp decline in business in sectors ranging from airlines to hospitality.
Steven Mnuchin, the US Treasury secretary, has already agreed two smaller pieces of legislation to help the US confront the coronavirus crisis with Nancy Pelosi, the Democratic speaker of the House of Representatives. The $800bn-$850bn package, however, could be more contentious.
The Trump administration has proposed a cut to payroll taxes, which fund government pensions and healthcare programmes, and stimulus to stricken sectors of the economy. Democrats are pushing for measures that are more tailored towards low-income families, such as unemployment assistance and food aid.
Here’s a video clip of Steve Mnuchin speaking at the White House, telling Americans:
If you owe a payment to the IRS, you can defer up to a million dollars as an individual....and $10m to corporations, interest-free and penalty-free for 90 days.
All you have to do is file your taxes. You’ll automatically not get charged interest and penalties.
Mnuchin: "If you owe a payment to the IRS, you can defer up to a $1 million as an individual, and the reason why we're doing a million dollars is that covers lots of pass-throughs in small businesses, and $10 million to corporations -- interest-free and penalty-free for 90 days." pic.twitter.com/qdR8M6Pspm
The IRS is the Internal Revenue Service, which collects taxes, for non-US readers....
Treasury Sec Mnuchin: - “Looking at sending checks to Americans immediately” - File your taxes so that you can get refunds. And if you owe a payment to the IRS, you can defer up to 1M $ (individuals) penalty-free for 90days. - working with Senate on a "big bold stimulus package"
Mnuchin says they're deferring $300 billion in IRS payments. If you can file your taxes on April 15, do so, he says; don't miss out on refunds. But "if you owe a payment to the IRS, you can defer up to $1 million as an individual," $10M for corps., penalty-free for 90 days.
Mnuchin has also warned that the airline industry faces a deeper challenge than after 9/11 -- saying America must maintain “critical travel domestic capability”.
Mnuchin: "We don't need to send people who make $1 million a year a check....we'll be talking about details afterwards". Trump: "I think we're going to do something that gets money to people as quickly as possible". References a $1k check.
Marriott, the world’s largest hotel company, has just announced it is starting to furlough employees (give them temporary leave) as it ramps up hotel closings across the globe.
Marriott, which has nearly 1.4 million rooms worldwide, started closing some hotels last week and tens of thousands of employees are expected to be affected.
Top executives from Marriott, Hilton and other chains are due to meet Trump later today.
Bad news for any frazzled City traders (or reporters!) seeking a rest.
The London Stock Exchange says it has no plans to suspend trading, and will remain open for companies to access capital (though share sales) and for investors to buy or sell at a ‘transparent price’.
Shutting the markets would prevent shares falling, but it’s an extreme move. And unless leaders used the hiatus to devise a brilliant plan, stocks would surely resume falling when you reopened.
My colleague Nils Pratley makes a strong case for keeping them open, here:
First, the only guaranteed outcome would be more panic. There would be an immediate spill-over into markets that matter more for the functioning of economies in the real world, such as government debt.
Second, even if almost nobody is currently using stock markets for the traditional purpose of raising fresh capital, share prices are still giving useful price signals.
One of the most important came when stocks tumbled last week after President Trump tried to reassure the US public that his administration was on top of events. Investors’ verdict – that the president was still underestimating the size of the healthcare crisis – was brutal but necessary.
Over in Washington, Donald Trump is briefing the media on the crisis.
The US president is being typically upbeat - predicting the economy will “come back very rapidly” once the crisis is over. He also says Treasury Secretary Steven Mnuchin will discuss “additional stimulus measures” that could be rolled out to protect companies.
Trump is speaking now at a coronavirus briefing at the White House after a call with restaurant executives. "Wendy's, McDonald's, all of the big ones -- Burger King" he says.
"We discussed the important role that drive-thru and delivery service can play in the weeks ahead."
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