Alternative Investments: CoronaVirus Roundup for Thursday, March 12, 2020

March 12, 2020 | Alternative Investments, News

Coronavirus has paralyzed the global markets, with Europe experiencing its worst one-day downturn in history. The FTSE shed 10.8%, the DAX was off 12.2%, and the CAC shed 12.5%. Here in the United States, the New York Fed loaded more than $1 trillion and fired it into the Repo markets. If you remember that scene in Independence Day where the world fires a nuclear bomb at the alien space ship, only to see it bounce off with no impact… it was a lot like that.

Coronavirus Roundup in the Alternative Investment Market

Let’s look at several headlines in the coronavirus space and how it impacts the alternative investment world.

  • Hedge fund Solus Capital has shuttered its flagship fund, raising concerns about the economic impact of the virus. The company is a lender to distressed borrowers and is most famous for its investment in Toys “R” Us. It told investors it will hold redemptions until it is able to sell off its holdings.
  • QQQ Capital founder Zhou Wang says that the outbreak selloff is overdone and has started covering his short positions in airlines and hotels. His fund had made 77% during the first two months of the year after he shorted companies in China. “After Wuhan was closed you could feel the panic,” Wang told Bloomberg. “Normally for Chinese New Year there would be people everywhere queuing for restaurants and going to the beach, but this year there was no one — everything was empty.”
  • The world’s largest hedge fund is telling its employees to work from home. Bridgewater hasn’t said that any employees have been impacted by coronavirus. However, the firm said it was taking precautionary steps. This comes just days after Point72 reported its first case of the virus.
  • Morningstar has released its view on the impact of the virus on the U.S. economy. “Overall, we see a weighted average hit of 1.5% to 2020 global GDP and 0.2% to long-run global GDP. We forecast a muted long-term impact because damage to productive capacity will be small, plus economic confidence should quickly return once the virus subsides.”

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