A Covid-19 mass vaccination center in Rabin Square in Tel Aviv, Israel.
Photographer: Kobi Wolf / Bloomberg
Photographer: Kobi Wolf / Bloomberg
So far, the race to deliver the punch to the world’s populations has been led by a handful of smaller nations, and now they also surpass some of the richest countries in the eyes of traders.
The world’s fastest Covid-19 vaccination launches, in Israel and the UAE, boost their actions to some of the world’s top gains. Israel’s benchmark index has advanced 7.6% this year, surpassing both the S&P 500 and the Euro Stoxx index. It ranks 12th among the leading capital indicators. Meanwhile, Dubai’s overall financial market index has risen 9%, reversing the 10% drop in 2020 and giving investors the sixth best return of the year. The Abu Dhabi general stock market index is the third best performer in the world.
Traders are rushing to quote the global vaccine launch and bet that the most advanced nations will be the fastest to recover from the crisis, raising their stocks, currencies and bond yields. According to JPMorgan Chase & Co. strategists, a country’s proportion of inoculated population could be “the most important statistic to follow over the next year.”
Israel and the United Arab Emirates have administered more doses per 100 people than any other nation.
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To date, Israel has vaccinated about 30% of its population and the United Arab Emirates about 20%. If maintained, they could reach the herd’s immunity threshold by mid-year, JPMorgan says.
“Will there be enough divergence regarding the immunity of the herd between countries to make this issue marketable among the markets? Probably, ”wrote strategists led by John Normand in a January 8 note. “Those countries that return to pre-crisis activity levels more quickly due to a combination of stimulus and vaccine distribution should witness the most upward pressure on their interest rates and currencies.”
While Israel and Dubai are tempting examples, the case for vaccine-driven growth in larger economies is murky, according to Michael Herzum, who heads macrostrategies at Union Investment in Frankfurt.
“It is difficult to isolate these effects from other engines in the market and therefore makes it difficult to reproduce them at the country-by-country level,” Herzum said. However, it is incorporating vaccination rates into its asset allocation decisions.
In Britain, where the first citizen out of a trial received the coronavirus vaccine on December 8, the FTSE 100 benchmark has surpassed its peers in Europe, although its population suffers a third national blockade to stifle the resurgence of the virus and a new fast -diffusion variant. Vaccinations could pave the way for the recovery of the economy and further increase the country’s stocks, according to Herzum.
“UK stocks could be in a good position very soon, as the UK is likely to reach herd immunity much faster than the mainland due to much better progress in vaccinations,” he said. “This could lead to a major shift in economic activity once Covid-19-related restrictions are lifted.”
– With the help of Farah Elbahrawy
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