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COVID-19 roundup: RBC CEO calls on policymakers to ‘incent risk capital’

CEO Dave McKay speaks at the Royal Bank of Canada annual meeting in Toronto in April 2017. The Canadian Press/Frank Gunn
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It’s day 107 since Canada’s 100th coronavirus case. The number of cases is 102,574 as of publication time, up 332 since yesterday—a 13 per cent increase from the seven-day prior average of 295 new cases. At its peak on May 3, the seven-day average was 1,603 new cases a day. 

The World Health Organization warned that hospitals are facing a shortage in oxygen concentrators, which are needed to support the breathing of COVID-19 patients, as one million new cases of the coronavirus are confirmed worldwide per week.

Don’t bank on it: RBC CEO Dave McKay is calling for policymakers to “incent risk capital” in the economic response to the pandemic, particularly foreign investment. “We’ve got good risk capital in Canada, but we need external risk capital to take advantage of the new supply chains if we’re going to build new companies [and] services … in the digital world,” he told a virtual audience tuning in to the Collision from Home conference on Thursday. McKay noted that governments have spent “10 to per cent of our GDP on … trying to keep our economies primed,” but should not attempt to “tax that back right away.” RBC spokesperson Rafael Ruffolo said McKay isn’t “putting a specific tax proposal on the table or a timeframe,” but is more broadly calling for policymakers not to rush any levies, since the economy will take some time to recover. 

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In April, Ottawa said it was watching for “opportunistic investment behaviour,” noting that foreign buyers might try to take advantage of pandemic-induced drops in Canadian firms’ valuations. Jim Balsillie, chair of the Council of Canadian Innovators, has called for a broader overhaul of the rules, including automatically reviewing deals in sectors like fintech and AI. RBC declined to address The Logic’s question about whether McKay shares the government’s concern about opportunistic foreign investment behaviour amid the COVID-19 pandemic.

In the markets: All major North American indices closed up around one per cent after the U.S. Federal Deposit Insurance Corporation indicated it would reduce the amount of cash that banks need to keep on hand to cover potential losses. Bank stocks led the rise, as did shares in energy firms, following a rise in oil prices. The increase was enough to offset an early slide in stocks, following Florida, Oklahoma and South Carolina reporting record increases in new cases and Australia marking its largest daily increase in two months. The Canadian dollar fell slightly, falling to 73.29 cents U.S. in late afternoon trading. 

Stocks sensitive to a potential lockdown slid after another 1.5 million people filed for unemployment benefits in the U.S. last week, while the total number of people on unemployment benefits hit 19.5 million. Both numbers are trending downwards, but remain at historic highs. 

“The pandemic was not only leaving a staggering toll of human suffering. It was having a global impact that we could document from space”: NASA, the European Space Agency, and the Japan Aerospace Exploration Agency have come together to create the COVID-19 Earth Observation Dashboard, which uses satellites to provide real-time data on the pandemic’s global impact on climate change and economic activity. Here is a tutorial

Ontario mulling matching VC fund: Ontario’s economic development minister said the province is considering a proposal to launch a fund to match venture capital investments as part of its effort to help startups and scale-ups survive the COVID-19 pandemic. Vic Fedeli spent the past two days participating in the Collision from Home conference in Toronto, meeting online with companies from around the world and encouraging them to invest in the province. In an interview with The Logic Wednesday, he said the province is not planning any further cuts to supports for the tech sector, and is reviewing a proposal from the Ontario Capital Growth Corporation (OCGC) to invest more money into emerging companies.

Bay Street to Main Street: Trade confidence among Canadian exporters dropped 19 per cent over the past six months to hit 56 per cent, the lowest level ever recorded by Export Development Canada. Sixty-four per cent of the 823 firms surveyed said they expect weaker sales to continue into 2021, while 69 per cent were concerned protectionism will increase within the year. The results come as the U.S. is threatening to impose aluminum tariffs on Canada. Tensions between the U.S. and Europe, as well as the U.S. and China, are also on the rise. 

  • Collision plans to license the technology it’s using to run its conference virtually.
  • Health experts are pushing back against a proposal from many of the country’s leading CEOs to loosen travel restrictions.  
  • Air Canada is offering refunds for some customers whose flights were cancelled due to COVID-19, but not those who were scheduled to depart from Canada.
  • Livescale has launched its live shopping platform for North America merchants on Shopify, seeing a 146 per cent spike in online retail orders.

Cross-country checkup: B.C. will not balance its budget for three years due to the pandemic, making an exception to a law prohibiting budget deficits. After today, Quebec will only publish statistics on daily COVID-19 cases and deaths once a week, rather than daily. Manitoba provided schools guidance for safely reopening under three scenarios in September: in-class learning under near-normal conditions; in-class learning with additional public health measures; and remote learning. A new national survey by University of British Columbia researchers and the Canadian Mental Health Association has found 46 per cent of Canadians are feeling anxious or worried as a result of the pandemic.

Postcard from Fogo Island: Like many small communities, Fogo Island was hit hard by COVID-19. The remote island in Newfoundland and Labrador is sustained by its fisheries and tourism—two sectors that nearly dried up during the pandemic, leaving 90 per cent of its residents out of work. Zita Cobb, a former tech CFO and now social entrepreneur and innkeeper at the Fogo Island Inn, spoke with The Logic’s David Skok about finding resilience in community and keeping sight of the most important thing:

“Resilience is about attitude, but it’s also about knowledge. Communities that possess a deep understanding of their assets—whether it’s a Fogo Islander who knows how to get a boat, or even build a boat, and go out on the North Atlantic ocean and catch a fish to sustain him or herself—that’s resilience. Social capital is so important, and the fact that in a community people have each other, can learn from each other, rely on each other, that is super important to resilience. When we build strong communities, people won’t fall out of their own story—at least not as far, because we can catch each other. It’s also about having a relationship with time. If there’s anything I’ve learned from growing up on Fogo Island, it’s a sense of continuity. Many people came before me and many more are going to come after me. We’re just here for a little time, and while we’re here, let’s create as much strength and resilience and knowledge, and share that knowledge for the people that come after.” 

In the lab: The U.S. National Institutes of Health reportedly may own “some particular stake in the intellectual property” behind Moderna’s potential coronavirus vaccine, setting the stage for a possible public-private ownership. The European Medicines Agency, the bloc’s health-care regulator, has recommended conditionally approving Gilead Sciences’ antiviral treatment, remdesivir. Brazil, which has the second-largest number of cases globally after the U.S., has become a key front in the discovery of a vaccine, with the Federal University of São Paulo in talks to test an Italian vaccine. Radiation therapy, once used to treat pneumonia, is being tested as a possible cure. British researchers have discovered that coronavirus antibody tests produce unreliable results. 

Building capacity to produce enough vaccines is “the biggest logistical challenge the world has ever faced,” according to one British technical expert, with companies trying to scale up their manufacturing processes in a manner of weeks—something that previously took years. Paul Stoffels, Johnson & Johnson’s chief scientific officer, agreed: “Never in history has so much vaccine been developed at the same time—so that capacity doesn’t exist.”

Drinking from the firehose: 

  • SoftBank’s CEO claimed the Japanese conglomerate has clawed back its losses with its investment holdings back at pre-pandemic levels. Masayoshi Son also announced his resignation from the board of Chinese e-commerce titan Alibaba, after Alibaba co-founder Jack Ma resigned from SoftBank’s board.
  • Google plans to offer credit to millions of merchants in India through its Google Pay app in a bid to retain and attract customers struggling through the pandemic. 
  • Pizza and entertainment chain Chuck E. Cheese has filed for bankruptcy protection. 
  • Rather than selling overstock of last season’s clothes at a loss, retailers like Columbia Sportswear, Ralph Lauren and Urban Outfitters are holding onto their inventory or selling it to outlet stores. 
  • Costco has started offering free food samples again—now individually sealed and kept behind plexiglass shields. 

The grand reopening: The relentless spread of the coronavirus is forcing countries that have relaxed restrictions to shut down again, at least partially. According to an analysis by The Guardian, of the 45 countries to have recorded more than 25,000 coronavirus cases to date, 21 have implemented relaxed responses, 10 of which are reporting a rising number of cases. Governments are being forced to adopt flexible strategies: South Korea calls its strategy “everyday life quarantine,” while China’s strategy involves “getting close to zero cases,” but never reaching zero. Last week, Europe saw an increase in weekly cases for the first time in months. Germany, Portugal and Italy have accordingly enforced “smart” lockdowns, which instructs regions to shut down in response to new outbreaks. 

With the U.S. reporting its highest-ever increase in cases Wednesday, some states took drastic measures, imposing face mask orders and internal quarantines. States like Arizona, Florida, California and South Carolina, which had relatively low numbers of cases early on, are now reporting the majority of the country’s new cases. New modelling suggests that 180,000 Americans will die by October. Meanwhile, Indian authorities plan to survey all 29 million residents in New Delhi and, by July 6, test everyone with symptoms, as they deploy drones to monitor an “absolute restriction of outward and inward movement of the population.”

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“Good responses outlast outbreaks”: Congo has declared an end to the Ebola outbreak after a two-year fight—one from which the WHO’s director-general urged the world to learn. 

* We’re emphasizing new cases, rather than running totals, because “flattening the curve” is when each day’s new cases are fewer than those of the previous day. The percentage increase is determined based on how today’s cases compare to a rolling seven-day prior average.

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