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Digital-Health Investment Boom Speeds Ahead With First-Half Jump – Bloomberg

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Investment in digital-health companies continued to smash records with $14.7 billion pumped into the U.S. sector in the first half of the year, already more than in all of 2020.

The first two quarters of the year were the biggest ever for the country’s digital-health funding, according to a report from Rock Health. Almost 60% of the funding from 372 investments made so far were for $100 million or more, the report said.

Virtual health-care visits skyrocketed during the Covid-19 pandemic, with the rate of Americans who reported at least one telehealth appointment tripling to 60% by March from last year, according to a survey by marketing firm Sykes Enterprises Inc. Even as Covid-19 wanes in many regions and in-person health services reopen, investors are continuing to pour funds into digital health.

First-Half Lead

US digital health funding is up more than 1200% in the last decade

Source: Rock Health

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“The pandemic accelerated the rate at which consumers use digital-health solutions, and investors have followed in behind with increased funding,” said Bill Evans, chief executive officer of Rock Health.

Bigger Deals

Digital health offerings include services such as remote connections to doctors and nurses via smartphone, internet pharmacies and access to medical records. The pandemic accentuated interested in the field, which has been attracting increasing attention every, Evans said. Ten years ago, funding totaled $1.1 billion, which was roughly the amount raised in two weeks of 2021.

Noom Inc., which offers a behavioral weight loss app, raked in $540 million this year, while online pharmacy Ro raised $500 million. Some companies are using the funds from large funding rounds to acquire smaller, complementary firms, Evans said.

“It’s a natural thing for companies to do –– there’s a sizable cohort of companies founded in an earlier era that have built products that might fit better on a larger commercial platform,” he said.

Feeling Overwhelmed

Some customers have reportedly begun to feel overwhelmed by the variety of digital health offerings, feeding a rise in mergers and acquisitions among companies consolidating services. Big tech is in on it, too, as giants like Google and Microsoft Corp. continue adding digital-health services to their massive platforms.

Most big companies seeking to integrate digital health, like CVS Health Corp. and Walmart Inc., are looking to partner with or acquire existing companies rather than trying to innovate from within, Evans said.

“I don’t think that’s going to fade away,” he said. “They’re going to continue to look for ways to capitalize on these investment trends.”

Exits via capital markets rose to 11 so far this year, compared to seven in all of 2020. While investors are excited by the increased pace, many are especially cautious of early-stage companies with high valuations, Evans said.

“Companies that raise too much too quickly, or at too high a valuation, risk limiting their access to capital when that happens,” he said.

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    Poland Belittles Media-Law Impact as US Warns on Investment – BNN

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    (Bloomberg) — Poland played down the impact of a draft law ousting U.S.-based Discovery Inc. as a senior Washington official warned that a perceived erosion in media freedom could hit investment sentiment toward the nation.

    The ruling party wants to pass legislation that will force Discovery to sell control of its Polish unit TVN, the largest privately owned television group in the country. The media regulator has also for more than a year not extended the broadcasting license for TVN24, the group’s news channel whose award-winning investigative reports have unveiled corruption at various government levels.

    The draft law proposes to ban companies from outside the European Union, as well as the associated economic areas of Iceland, Liechtenstein and Norway, from directly or indirectly controlling television and radio stations. That would only impact Discovery, one of the biggest U.S. investors in Poland.

    “This law only imposes the obligation to find a capital partner in the European Economic Area, and does not infringe anyone’s freedom of expression,” Marek Suski, a ruling party lawmaker and promoter of the TVN bill, told public radio on Friday. “I think that great American lawyers will find a way to do this.”

    The legislation — which the ruling party wants to approve in parliament next month — has already prompted concern from the U.S. and the EU.

    U.S. companies have invested more than $62 billion in Poland, second only to Germany, and provide employment for 267,000 people, according to the American Chamber of Commerce.

    ”This is a very significant American investment here in Poland,” Derek Chollet, a counselor at the State Department, told TVN24 in an interview during his visit to Warsaw on Thursday.

    Failure to extend the Discovery unit’s broadcasting permit “will have implications for future U.S. investments. But it’s also a question of values” as “media freedom is absolutely crucial — a free press is important to empowering society,” he said.

    ©2021 Bloomberg L.P.

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    Martin Pelletier: How anti-vaxxers can impact your investment portfolio – Financial Post

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    Three things to watch for to gauge the sustainability of the post-COVID recovery

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    Equity markets appear to be taking a breather as we move from early to mid-cycle in the post-COVID recovery, with market participants trying to figure out what that means and where we go from here. Many are wondering if we have seen peak earnings and peak growth, and if the rise of the variant will cause another shutdown.

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    You can see this in the muted reaction to some recent impressive quarterly earnings reports in the United States, with some high expectations already priced into share prices. And then investors hit the panic button on Monday, taking the S&P 500 and S&P TSX down to 3.5 per cent from its recent high, while the Canadian dollar has now lost all of its gains and is now flat on the year.

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    During these times its important to remember that markets don’t always go up and near-term volatility doesn’t necessarily imply that a looming meltdown is on the horizon. For example, did you know that we’ve counted that the S&P 500 has fallen more than two per cent eight times this year alone?

    However, market corrections are quite common and can actually be quite healthy as they flush out those participants on the margin (excuse the pun) without the wherewithal to stand by their longer-term convictions. In that regard, looking ahead there are three main factors worth watching, not only as to the sustainability of this post-COVID recovery but also overreactions allowing for the opportunity to rebalance portfolios.

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    The bond market

    We continue to believe that this very much is still a central bank-driven market environment. Macro policy will weigh heavily as markets react to indications of where the Fed and other central banks are positioning. For example, markets corrected more than 15 per cent when Bernanke signalled tapering back in 2010, and some argue that the tech bubble was burst when Greenspan indicated hikes were coming in early 2000.

    That said, this time around central banks are in a bit of a pickle with rising inflationary pressures offset by the need to keep debt servicing costs down for massive government fiscal programs currently being funded by printing money. In addition, we’ve read that there are a record amount of job openings, but wages aren’t high enough to entice those unemployed going off government assistance.

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    This is where the bond market can be a good indicator and worth keeping a close eye on, but at the same time recognizing they don’t always get it right. More recently, long-term U.S. Treasuries (20 year +) have rocketed nearly 12 per cent from their May lows, nearly recouping all of their losses this year-to-date. For those overweight bonds, especially longer-dated ones, we wonder if they’re being given a rare second chance?

    Oil prices

    Don’t kid yourself. Despite the plethora of talk around the transition to clean energy, high oil prices still have a material impact on the economic recovery in the U.S. Five of the last six recessions have been preceded by a spike in the price of crude oil, with the only exception being the recession in 2020 caused by the COVID lockdowns.

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    The good news is that WTI oil prices have fallen from last week’s highs of nearly $75.50, down more than 11 per cent to below $67 a barrel on Monday. This couldn’t come at a better time as main street is in the midst of struggling with supply chain shortages causing inflationary pressures in key household staples such as food, clothing and gasoline.

    Household spending & anti-vaxxers

    We received some good news out of U.S. retail sales last Friday, showing a rebound month-over-month in consumer spending, which is a primary driver of GDP growth. People are tired of being locked up and have now been given a taste of what it’s like to experience a pre-COVID world again. This also appears to be in its early stages, as U.S. households are still sitting on quite the nest egg, having accumulated trillions in excess savings during the pandemic.

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    1. Suddenly, the mighty EV is our path to salvation. Yet in the U.S. 62 per cent of the country's electrical grids run on fossil fuels and are the second-largest contributor of GHG emissions at 25 per cent.

      Want to save the planet? Invest in oil and gas stocks instead of indirectly supporting OPEC and Russia

    2. A recent Abacus Data poll showed Prime Minister Justin Trudeau may finally get the majority government he so very much desires.

      Why investors should get their portfolios in order before an election is called

    3. It appears that investors have forgotten that return and risk go hand in hand.

      Investors want both sky-high returns and the comfort of safety

    4. The U.S. Federal Reserve is extremely limited in its ability to materially raise rates given the massive amount of debt being taken on by its government to fight the COVID-19 pandemic, writes Martin Pelletier.

      Martin Pelletier: Investors are overlooking this key reason why the Fed won’t rush a rate hike

    Looking forward, the trillion-dollar question, therefore, is if the stupidity of those choosing not to get vaccinated is greater than many expect, resulting in the rise of the variant this fall and forcing another lockdown. We hate to position portfolios around stupidity, but it is a risk nonetheless and worth keeping a very close eye on.

    In conclusion, pullbacks are signs of a healthy market and more so, given they present a great chance to reposition and rebalance portfolios. This can be a rather difficult thing to do in today’s headline-grabbing environment, but it helps to strip out the noise, have a long-term plan and deploy some form of near-term active risk-management.

    Martin Pelletier, CFA, is a portfolio manager at Wellington-Altus Private Counsel Inc. (formerly TriVest Wealth Counsel Ltd.), a private client and institutional investment firm specializing in discretionary risk-managed portfolios, investment audit/oversight and advanced tax and estate planning.

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    In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post.

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    Critical Minerals: A New Focus For Foreign Investment Review – Energy and Natural Resources – Canada – Mondaq News Alerts

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    The Canadian government has recently signalled that it will use
    it national security powers to scrutinize foreign investments in
    businesses involved in critical mineral production and
    supply chains.

    This is an important change, given the number of mining
    companies listed on Canadian stock exchanges, including many that
    have little nexus to Canada except for the listing.

    Critical minerals

    The Canadian government’s current views on the significance
    of critical minerals have been developed in two recent and
    important policy statements:

    • A Critical Minerals List, released on March 11,
      which includes 31 minerals considered critical for the sustainable
      economic success of Canada and its allies1. The list is
      largely consistent with a similar U.S. government list of 35
      critical mineral resources.
    • Updated guidelines on the national security review of foreign
      investments, which were released on March 24. The guidelines
      identify areas that could raise national security concerns, and now
      include acquisitions of Canadian businesses involved in producing
      critical minerals.

    Critical minerals are viewed as those that are: essential to the
    economy of Canada and its allies; and whose supply may be at risk
    due to geological scarcity, geopolitical issues, trade policy or
    other factors2. A
    key concern is with market dominance by suppliers that are state
    owned enterprises and the risk of politically motivated supply
    disruption. Canada is not alone in expressing concerns of this
    nature3.

    Investment Canada Act reviews

    Under the Investment Canada Act (ICA), the
    government has discretion to review virtually any foreign
    investment on the grounds it could be “injurious to
    Canada’s national security.” The review jurisdiction is
    broad and covers mining businesses with part of their operations in
    Canada, even if mines themselves are located overseas.

    To date, national security reviews have tended to focus on
    Chinese investments involving sensitive technology, critical
    infrastructure or personal data. Mining has not been an area of
    significant concern under the ICA.

    Acquisitions of Canadian-listed mining companies, even by
    Chinese investors, have generally been viewed as non-problematic.
    For example, Zijin Mining’s acquisition of Nevsun Resources,
    Continental Gold and Guyana Goldfields in 2018, 2019 and 2020 and
    Endeavour Mining’s acquisition of SEMAFO in 2020 were all
    approved under the ICA. Nevsun was involved in critical mineral,
    copper, although its acquisition pre-dates the identification of
    copper as a critical mineral in March 2021.

    The only mining transaction blocked on national security grounds
    was Shangdong Gold’s proposed acquisition of TMAC in 2020. But
    that investment was likely blocked because of TMAC’s strategic
    location and other factors, not its gold mining operations. (Gold
    is not on the critical minerals list.)

    Other mining-rich countries have also started to scrutinize more
    closely Chinese investments in the mining industry. Notably, the
    Australian government blocked two proposed investments by Chinese
    entities related to critical minerals in 20204.

    Practical implications

    The vast majority of mining investments will continue to receive
    ordinary course approvals under the ICA. However, this new policy
    highlights that some investments are likely to face significant
    scrutiny.

    The highest-risk investments will involve proposed Chinese
    acquisitions of Canadian mining companies involved in the
    production of critical minerals in Canada.

    Lower-risk investments will involve proposed Chinese
    acquisitions of Canadian-listed mining companies not involved in
    critical minerals, where their assets are located outside Canada,
    and/or where target businesses are not material producers of
    critical minerals.

    Non-Chinese investors should generally expect approvals to be
    processed in the ordinary course. Indeed, an added consequence of a
    more restrictive policy on Chinese investments will likely be
    opportunities for non-Chinese investors and possibly in the
    development of new and existing mineral projects in Canada.

    Finally, when considering potential investments where national
    security issues are expected to arise, investors and Canadian
    businesses alike should engage counsel and government relations
    advisors as early as possible in the transaction planning process
    given the complex and evolving nature of the national security
    review regime under the ICA.

    Footnotes

    1 The list comprises the following minerals: aluminum,
    antimony, bismuth, cesium, chromium, cobalt, copper, fluorspar,
    gallium, germanium, graphite, helium, indium, lithium, magnesium,
    manganese, molybdenum, nickel, niobium, platinum group metals,
    potash, rare earth elements, scandium, tantalum, tellurium, tin,
    titanium, tungsten, uranium, vanadium, zinc.

    2 A Canada-U.S. Joint Action Plan on Critical Minerals
    Collaboration
    , released in January 2020, which aims to
    facilitate development of secure supply chains for critical
    minerals that are key to strategic industries such as defence,
    aerospace and communications. Canada is considered to be
    well-placed to supply the U.S. with many of the critical minerals
    due to historically strong political and economic ties; a stable
    political, economic and regulatory environment; an extensive
    mineral endowment; and a robust metals and mining sector. Of the 35
    critical metals identified by the U.S., Canada is a sizable
    supplier of 13 of such minerals, including being the largest
    supplier of potash, indium, aluminum and tellurium to the U.S. and
    the second-largest supplier of niobium, tungsten and magnesium.
    Canada also supplies approximately one quarter of the uranium needs
    of the U.S.

    3 Most notably the U.S., European Union, Japan, South
    Korea and Australia.

    4 These investments were: (1) Chinese state-owned steel
    producer, Baogang Group Investment’s proposed A$20m investment
    in Northern Minerals Limited; and (2) Chinese lithium chemical
    producer, Yibin Tianyi Lithium Industry Co Ltd.’s proposed
    A$14.1m investment in AVZ Minerals Limited.

    The content of this article is intended to provide a general
    guide to the subject matter. Specialist advice should be sought
    about your specific circumstances.

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