Post-Covid secret weapon comes out of the shadows

OVER the coming months, we are going to emerge from global lockdown into an economy over which the Covid-19 virus will cast its long shadow. But does that have to be the end of the story?

For there is yet another shadow that could go a long way towards neutralising the worst effects of this malignant virus on the global economy. A shadow cast by a colossal, multi-million-dollar edifice of unused private capital that stands ready, willing and able to be deployed into construction, infrastructure, energy and other projects worldwide.

To find the first stirrings of the tectonic capital market upheavals that brought us to this point, we need to look back to the Organisation for Economic Co-operation and Development (OECD) Global Pensions Report 2006. In this unlikely setting, we find the first mention of a "financial meltdown" from a recognised intergovernmental organisation (IGO). It analysed how family offices, hedge and private equity funds had become so awash with liquidity that it was proving impossible to generate any meaningful returns for the private capital they were trying to deploy into the market. A trend that had been underway, said that OECD report, since 2005. Nothing has changed.