Opportunities After Lockdown?

Looking back through these blogs and comments I’ve noticed something a little strange - not unlike the elephant in the room - there’s been little or no direct reference to the ‘pandemic’ or ‘the Covid 19 virus’ other than somewhat oblique mentions of the impacts on other stocks of this global problem.

The race to provide a successful coronavirus vaccine was the main story in pharmaceutical laboratories from about 10 months ago when, according to the London School of Hygiene and Tropical Medicine’s vaccine tracker, some 218 vaccines against Covid-19 were currently being developed across the world.

Various big pharma companies started hitting the headlines as they proclaimed previously unheard of speedy development targets being reached. Such as Moderna (MRNA), BioNTech (BNTX), Pfizer (PFE), CureVac and Novavax (NVAX) were seen as the key players as they received various government reinforcing contracts.

In tandem with this a few development platforms also received the backing of other pharmaceutical companies such as GlaxoSmithKline (GSK) and attracted wealthy entrepreneurial organisations such as the Bill & Melinda Gates Foundation and the German billionaire Dietmar Hopp of German software giant SAP (SAP) fame and Elon Musk of Tesla also developing add-ons such as molecule printers.

It was clear at these early stages the biggest opportunity lay within the best value stocks for investors still looking for ways to capitalise on the soon to emerge rollout of COVID-19 vaccinations.

The markets saw broad momentum shift in the last quarter of 2020 as the leading contestants announced their respective effective coronavirus vaccine candidates, with the partnership of Pfizer and BioNTech being one of the first. As a result the global equity markets rose to all-time highs on the promise of successful vaccines to act as the underpinning for then much needed economic recovery.

Now that the dust has settled over the great initial ‘gold rush’ – because, let’s not kid ourselves here this was primarily a race for profit with altruistic reasons very much taking second place regardless of how the picture was painted - clear winners have been established and vaccination programmes are fully underway.

There are a number of vaccines still undergoing trials around the world, but only three have been approved for use in the UK so far. In late 2020, as mentioned, the Pfizer/BioNTech vaccine was the first to be approved for use in the UK. The Oxford University/AstraZeneca vaccine was next to be approved, followed by the Moderna vaccine in early 2021.

With vaccinations being administered across the UK, the government has so far placed orders for 367 million doses of Covid vaccines, from seven different developers. Five final contracts have been signed, with AstraZeneca, Pfizer, Moderna, Valneva and Novavax - with the expected cost being £2.9 billion.

A further 40 million doses of ValnevaS’s vaccine, which is being produced in Scotland, will bolster long-term vaccine production in Scotland and brings the total UK vaccine portfolio to 407 million doses over the next two years.
It would seem that there is a clear intent for repeat vaccinations to be given for some time or even indefinitely, but I’ll try not to stray into the increasingly controversial nature of that argument on here.

In the US markets we have seen shares of Novavax rose over 5% just last week after the biotech firm said it will supply 1.1 billion doses of its COVID-19 vaccine candidate to the Global Alliance for Vaccines and Immunization (GAVI), an international organization that provides vaccines in poorer countries.

Novavax also announced last week that it had signed a memorandum of understanding with Gavi to provide 1.1 billion doses of NVX-CoV2373, Novavax’s recombinant protein-based COVID-19 vaccine candidate, for COVID-19 Vaccines Global Access (Covax) the larger global organization funded largely by Western governments and charities to provide vaccines to developing countries. Covax plans to provide free shots to at least 20% of the populations of 92 low- and middle-income countries by the end of 2021.

Additionally, there should also be opportunities to be gained by the wise investor in the peripheral industries such as testing, storage and logistics companies. Following on from this we should expect a relaxing of the restrictions that have been in place in many other market sectors offering opportunities sub-sectors like airlines, commercial real estate, cruise lines and hotels, which are still down 20%-30% from pre-pandemic levels.

If the economic recovery emerges I would suggest you should be looking to get in early with growth of plant-based meat alternatives, food delivery, tele-medicine, genetic therapies, warehouse automation, online shopping, e-commerce, energy and beverage sectors. General segments beyond that should include cybersecurity and sustainable investments.

So, with my optimistic hat on, there are opportunities to be had in the near future at all levels for the wise investor.