What’s Going On Here?With the fabled coronavirus vaccine starting to look like a reality, we looked into whether it’ll actually make investors feel better. What Does This Mean?The pandemic – and this is the kind of astute analysis you come to Finimize for – isn’t over yet: that much is clear from reports of rising coronavirus cases in Europe and the UK, and from the Federal Reserve’s calls for the US government to support the economic recovery with more spending. But investors are still betting a vaccine will be approved by the end of this year or early next, and that parts of the global economy will be back at pre-COVID levels by the end of 2021.
A vaccine, economists estimate, would boost US economic growth by 3% and the eurozone’s by 2%. That’d be great for stocks overall, but it’d be particularly good for stocks in a few specific industries… Why Should I Care?For markets: Stop being so defensive.
So-called “growth” stocks – whose earnings are expected to rise rapidly – and “defensive” stocks – whose earnings are relatively stable no matter what – have held up pretty well during the pandemic. But once there’s an economy-boosting vaccine, investors are likely to switch to cheap-looking “value” stocks, as well as to “cyclicals”, whose fortunes tend to rise and fall with economic growth (tweet this). Then again, there’s no pressure to chase those short-term trends: stocks geared toward themes like digitization and renewable energy will likely beat everything else in the long run.
The bigger picture: Doctor, who?
Now there’s more confidence in the timing of a coronavirus vaccine, investors’ focus is increasingly turning to who will be behind it: nine candidates of the original 170 are in the final stages of testing, with frontrunners including Britain’s AstraZeneca and America’s Moderna and Pfizer. Of course, it’s anyone’s guess which treatment will cross the finish line first – let alone how much it’ll ultimately earn the company. | 
