A mammoth USD1.9 trillion coronavirus relief package was signed into law by US President Joe Biden this week, one of the largest economic stimulus initiatives in US history. The programme includes USD1,400 payments for American adults, an extension of unemployment benefits, and tax credits for children.
Nancy Pelosi, the Democratic House speaker called it “one of the most transformative and historic bills any of us will ever have the opportunity to support” before the vote on Wednesday. The political and economic consequences of the stimulus are likely to last for years, and are already rippling through buoyant global stock markets.
Previous rounds of government support have allowed US households to save an estimated USD1.6 trillion more than they would have done otherwise, according to Oxford Economics. Many are expecting a tidal wave of pent-up demand and savings to be unleashed later in the year, with consumers ready to spend again.
This provides an attractive economic backdrop for US activist investor Legion Partners. Legion took advantage of low asset prices one year ago to build up stakes in ‘value’ companies, leaving the asset manager primed for a rebound in 2021.
A major proxy fight is already underway at department store chain Kohl’s, but the activist says that many companies are set to be more profitable than ever thanks to government stimulus and companies’ own restructuring in the face of the pandemic.
Gender and ethnic diversity is set to take centre stage in 2021’s proxy season. Major asset managers BlackRock and State Street have already disclosed their intentions to consider voting against company boards lacking in women and ethnic minorities.
However, the finance industry needs to scrutinise its own diversity record if it wants to make real change. More than one in 10 financial institutions still have no women at all in their executive teams or on their boards, according to a recent survey by OMFIF.
The think tank also found that fewer than 1 per cent of central banks, sovereign funds, public pension funds and commercial banks have achieved gender balance within their workforces.
Madeleine Taylor
Editor, Institutional Asset Manager