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Chinese M&A Activity Plummets During COVID-19

Source: Rhodium Group

China’s outbound M&A activity contracted by two-thirds between January and May, 2020, according to a report from Rhodium Group, compared to the average monthly count between 2016 and 2018. For the first time in 10 years, foreign investment deals into Chinese firms are outpacing those coming out of China. 

Companies have braced for investment activity from China amid the economic recession, but “there are no signs of a Chinese outbound investment boom, like the one seen after the global financial crisis a decade ago,” the report notes. “Instead, takeovers are headed in the other direction: into China.” Foreign investors are pursuing Chinese assets as the country’s consumption has risen along with its middle class. Policies that previously limited foreign investment in the country have also been lifted, and Chinese firms are seeing increasing maturation. 

Although China is the second-largest economy in the world, its fate as a global investor is not certain. Moving forward, China will need to succeed in certain domestic policy reforms and gain the trust of foreign investors, the report says — neither of which is guaranteed.

Climate Risk Costs Increased by $60 Billion in 40 Years

Source: Brookings analysis of NOAA National Centers for Environmental Information data

Note: Climate disasters refer to droughts, floods, freezes, winter storms, severe storms, tropical cyclones and wildfires costing at least $1 billion each

Climate disasters in the United States have accounted for over $1.8 trillion in economic costs since 1980. The country has endured over 285 climate-related catastrophes in the past 41 years that cost at least $1 billion each, according to Brookings Institute. These disasters are becoming more frequent and intense: In the 2010s alone, they cost $81 billion per year — up from $18 billion per year in the 1980s. 

Flooding is emerging as one of the most frequent threats, impacting coastal communities more severely than other communities. Brookings states that “mitigating and adapting to these pressures will require more resilient infrastructure systems.”

Brookings laid out a three-part framework for the federal government to address urgent climate risks: measuring infrastructure needs, modernizing physical assets and experimenting with new technologies. And President Joe Biden recently released a $2 trillion plan for improving infrastructure and shifting to green energy over the next eight years. 

Climate Summit Leaders Set Out Largest Emissions Cut Since 2015

Source: CAIT, Climate Action Tracker, Marsh McLennan Advantage

Note: 34 parties including the U.S. were analyzed from the 40 World Leaders invited to the Leaders Summit on Climate. Leaders from the European Commission, European Council, Denmark, France, Germany, Italy, Poland, and Spain were aggregated into one party—the “European Union”—for analysis. Total emissions data from 2018 was used and includes Land use, land-use change, and forestry (LUCF) and all greenhouse gases (CH4, CO2, F-Gas, N2O, etc.). Other parties not listed make up 1.9% of global emissions including, Chile, Jamaica, Antigua and Barbuda, Norway, Israel, Kenya, Gabon, Vietnam, Bangladesh, Singapore, Bhutan, Marshall Islands. The horizontal length of each region in the chart represents the share of total emissions of participants.

The Climate Leaders Summit last week set out the single biggest reduction in the global emissions gap since Paris, shaving off around two gigatonnes of carbon dioxide equivalent from 2030 emissions. (See footnotes 3 and 4 below.) Nevertheless, the emissions gap remains enormous — with around 29 gigatonnes of carbon dioxide equivalent left to address before the world can be on a 1.5 degree-Celsius pathway.

The summit’s participants are responsible for 81% of global emissions, with the 10 largest emitters accounting for two-thirds of the global total. Their key objective was to announce revised 2030 emissions reduction targets ahead of COP26.

Of those attending, the U.S., Canada and Japan announced new 2030 targets. The U.S. pledged to reduce emissions by 50-52% below 2005 levels by 2030 and is responsible for almost 80% of the combined 2030 savings pledged at the summit.

1. Announced plans to strengthen NDC at Leaders Summit on Climate. 2. Strengthened or announced plans to strengthen NDC before the Summit. 3. For the calculation of US emission savings, we assumed for the baseline, the emissions reduction trend from 2025 to 2030 would have been a continuation of the 2005-2025 trend. 4. For countries which proposed a new emissions reduction target range, the midpoint was used.

 

Trust Remains the Key Determinator for Happiness During COVID

Source: World Happiness 9th Report

Finland ranked highest in overall happiness between 2018 and 2020, followed by its Nordic neighbors Denmark and Switzerland. The 2021 World Happiness Report tracked 95 countries daily on three main indicators of citizen wellbeing: life evaluation, positive emotions and negative emotions. 

Finland’s ranking was buoyed by its successful management of the pandemic early on. It was able to contain the virus and saw mild economic changes in 2020 compared to its European neighbors. Citizens in Finland had a lower fear of catching COVID-19 and were more likely to wear masks. Both Finland and Denmark saw small changes in unemployment rates in 2020, with young and low-skilled workers less likely to lose their jobs.

Unsurprisingly, negative emotions in 42 countries were more frequent last year, while positive emotions remained unchanged. As countries continue to recover at different paces, the report notes that trust — in institutions and government, but also social trust, or trusting in the benevolence of others — is most important to individuals when determining their level of happiness.

Brazil Falls Further Behind Other Countries in Recovery Efforts

Source: Morning Consult

Economic conditions in Brazil are worse now than during the first wave of the pandemic. Consumer confidence also continued declining in April 2021, according to Morning Consult. While other countries are reporting a rebound in their economies, Brazil is falling further behind. 

The global demand for Brazilian goods rose as two of Brazil’s largest importers — the U.S. and China — saw growth in their economic activity, resulting in increased costs for Brazilian goods. However, these price increases are making it more difficult for Brazilians to pay for basic necessities, such as food. In March, the country reported a surge in food shortages and insecurity. “If price pressures continue,” wrote Morning Consult, “the 9.8% of Brazilians who lacked adequate food to eat could rapidly suffer from frequent hunger.”

COVID-related deaths in Brazil reached an average of 3,000 a day, as of April 17, and hospitals are running out of critical medical supplies. Complicating the country’s response to COVID, vaccine distribution rollouts remain slow, and a more contagious strain has begun to circulate across the country.

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