Forget The Olympics, Investors Should Focus On The Other Race
The race is on. And it is not for Olympic gold medals. The race is on for a vaccine that will protect the rest of us from Covid-19.
At stake is not just prestige and scientific recognition, it is the ability to make more money than all the Olympic gold medals put together. On the same day that the Olympic flame landed in Japan, global stock markets had plunged about 35% from its peak. Tens of trillions of dollars had been wiped out.
With many countries in lockdown mode, and with no vaccine in sight, economic activity slowed to a crawl. If this economic inactivity continues, there is no floor that is too low before stock prices finally settle down. All is not lost though. Because when the dark clouds go away, the sky behind it is still blue. There is money to be made. The trick is to find out which wind will blow the dark clouds away.
In this pandemic, this wind is a safe and effective vaccine. There are scores of competitors in this race to find such a vaccine.
The latest competitor is a joint effort by a HongKong-listed company and China’s Academy of Military Sciences. They announced on Wednesday 18 March that their vaccine had been given regulatory approval to begin human trials. Normally, it takes at least 12 to 18 months for researchers to go through all the tests before a safe and effective vaccine is found. Even if such a vaccine is found, it will take as much time again to manufacture enough of the vaccine for a global immunisation programme.
In other words, using past experience as a guide, we can only expect a safe and effective vaccine to appear as early as March 2022. By which time, more damage would have been inflicted on human lives and the global economy.
Instead of throwing in the towel, there is hope. For there is a minor possibility that a vaccine could come to the market much sooner than March 2022. It will probably come out from one of the Chinese laboratories in the race. This is because the speed at which Chinese entities respond to the Covid-19 threat is nothing short of remarkable.
When the coronavirus struck Wuhan in January, there was a shortage of face masks for the whole country. Within two months, Chinese production of face masks had shot up 12-fold. No other industrial nation is capable of rallying its resources to achieve this feat.
Likewise, it is possible to expect a Chinese laboratory to come out with the vaccine, and Chinese manufacturers to mass-produce the vaccine for our consumption before year-end. It is easy to be stunned into disbelief by such speed. But we must accept that Chinese entities are not bound by normal humane and ethical research practices. One can argue non-stop on the principle of Utilitarianism – China will get it done at the expense of a few for the benefit of the many.
Leaving this debate aside, some of the trillions lost in the stock market plunge can be salvaged. This means that investors should prepare to buy into the market when the leaves start turning yellow in the autumn.