Coronavirus vaccinations are fast becoming a reality, as the UK prepares for the rollout of a recently approved Covid-19 shot from Pfizer and Germany’s BioNTech next week.
UK Health Secretary Matt Hancock has described the oncoming vaccination programme as “one of the biggest civilian logistical efforts that we’ve faced as a nation”.
The rest of the world is not far behind, as 100,000 people are currently hospitalised with Covid-19 in the US, and President Donald Trump is said to be “livid” that the US was not the first country to approve the Pfizer vaccine. American health experts have accused British regulators of not examining the vaccine data carefully enough.
With Moderna and AstraZeneca also returning positive trial data for their vaccines, many are hopeful that next year could bring a return to pre-pandemic normality, putting economic growth and international travel back on the map.
Meanwhile, global markets have surged, lifting everything from airlines and hotel groups to junk bonds and bitcoin. Out-of-favour value stocks have shot up, prompting some managers to hope for a sustained rotation out of growth and into value investing as the economy recovers.
Emerging markets look set to be another beneficiary of investors’ rosy outlook, as the favourite asset class for 50 per cent of fund managers going into 2021. However, Eaton Vance warns that the countries classed as emerging markets are not a monolith, and will diverge sharply in the post-pandemic environment.
However, the world’s mounting debt pile – already USD15 trillion greater than it was at the start of the year – and a degree of uncertainty over the success of a vaccine at containing the pandemic are making some asset managers nervous.
Investors could be at risk of being swept up in short-term volatility and market shake-ups, and Fidelity International’s CIO warned recently of his concerns that “this optimism will not always be matched by the economic reality of 2021”.
Instead, regulators say it is time to think about long-term reform. The pandemic has been a wake-up call on a par with the global financial crisis in 2008, say policy-makers, setting their sights on reforming money market funds. This has kicked off an argument in the money market industry over their role in March’s turmoil.
Editor, Institutional Asset Manager