In my opinion, a vaccine probably won’t be a quick fix for the S&P/ASX 200 Index (ASX:XJO) or any share market across the world.
On the healthcare side of things it’s very promising that American biotechnology company Moderna has seen promising initial phase 1 data in its participants. My colleague James Mickleboro covered the news here.
But there are two reasons why I don’t think investors should get too excited yet. (I readily admit I’m not an expert on vaccines at all though.)
The first is that the vaccine itself is still going to take time to go through the R&D process even if this is the fix for the situation. It may not prove to be the dream fix for the situation people are hoping. The company is aiming to start a phase 3 trial in July, so we’re still months away from seeing if it can be successful for the population. There’s going to be a lot more economic damage between now and potential final approval.
The other problem is how long it will take to get to the global population. It takes a lot of time to ramp up production of vaccines to the point where millions of people can receive it. And Moderna is a for-profit business – how much will it charge per dose? Will it be prohibitively expensive for most countries to be able to afford to give it to their citizens?
How much is a vaccine worth to the share market?
International share markets jumped overnight in response to the news. The ASX is also expected to rise by more than 1% today.
Hopefully the healthcare side of things will be sorted sooner rather than later. However, there’s several issues in economies that may not be fixed quickly. A global recession seems unavoidable at this stage, the damage may already have been done. It just depends on whether it’s a small recession or a large one.
If it is the fix that people are hoping for then some beaten up shares could be very good buys today.
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More reading
- 2 millionaire-maker ASX internet growth shares
- ASX 200 expected to rocket higher on Moderna COVID-19 vaccine news
- 5 things to watch on the ASX 200 on Tuesday
- ASX 200 climbs 1% in positive start to the week
- Why this overlooked ASX 200 stock just got upgraded by 3 leading brokers to “buy”
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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