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PM signals tough new COVID-19 vaccine rules for international travellers to Australia


International travellers who fly to Australia without proof of a COVID-19 vaccination will be required to quarantine at their own expense.

That’s if they can get on a flight, after Qantas signalled anti-vaxxers will be banned from flying on their aircraft fleets.

Prime Minister Scott Morrison signalled the tough new rules on Melbourne’s Kiss FM radio on Wednesday.

“We’re obviously working through those issues now, but look, where people have the choice of two weeks of quarantine or being vaccinated, I think that will be an incentive, unless there’s a genuine medical reason why,” Mr Morrison said.

The cost of quarantine can run to several thousand dollars for the fortnight in a hotel, depending on what city you quarantine in.

“We’ve got a lot of those issues to work through and so do all the other countries,” Mr Morrison said.

RELATED: Australians could be travelling overseas by 2021

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RELATED: Are these vaccines safe and will they be available in Australia?

Health Minister Greg Hunt has also hinted at the vaccination passport plan but stressed the policy was still under discussion.

“So there’s been no final decision, but we’ve been clear, and I’ve given guidance previously that we would expect that people coming to Australia while COVID-19 is a significant disease in the world will either be vaccinated or they will isolate. That’s early guidance,’’ he said.

“The likely course of events during 2021 is if somebody comes to Australia and a vaccine is widely available, either they’ll be vaccinated with verification or they’ll have to quarantine.”

Qantas CEO Alan Joyce has signalled that proof of COVID-19 vaccination will be a non-negotiable condition of international air travel.

On Monday night, he told A Current Affair host Tracy Grimshaw that as soon as a vaccine becomes available it will be a condition of travel.

“For international travellers, we will ask people to have a vaccination before they get on the aircraft,’’ he said.

“Certainly, for international visitors coming out and people leaving the country we think that’s a necessity.”

If anti-vaxxers want to try alternative airlines, Mr Joyce predicted they won’t be travelling far.

“I think that’s going to be a common thing talking to my colleagues in other airlines around the globe,’’ he said.

Prime Minister Scott Morrison has previously suggested vaccination will be “as mandatory as you can possibly make it” before walking those comments back in recent months.

“There are always exemptions for any vaccine on medical grounds, but that should be the only basis,” he said in August.

But just hours later, Mr Morrison told listeners on Sydney radio station 2GB that the Government would not make vaccination mandatory.

“It’s not going to be compulsory to have the vaccine,” he said.

“I mean, we can’t hold someone down and make them take it.”



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Investors bank on vaccine as ASX recoups COVID losses


“I think this could be our Santa Rally,” Mr Dawes said.

“We are doing it now and we will end the year flat, I think we will pretty much end the year between 6600 points and 6700 points.”

The S&P/ASX 200 has, according to Refinitiv data, added more than $200 billion to its market cap so far in November and is on track for its best month since it launched in 2000.

It is now just 40 points shy off where it started the year. After a strong start to 2020, the index was hit hard as the pandemic hit Australian shores, falling more than 30 per cent in March. While it remains below the February 20 record high close of 7162.5, the ASX 200 is now out of correction territory.

The banking and mining titans dominated gains in the market on Tuesday, while energy companies soared as the Oxford University/Astra Zeneca vaccine trials further lifted hopes for global travel, sending oil prices surging to their highest in months. All sectors closed higher.

The trials showed the vaccine had an average 70 per cent success rate in preventing the coronavirus, with efficacy rising to as high as 90 per cent in some tests. Further sweetening the result was the fact that the vaccine does not need to be kept at extremely cold temperatures like the recent candidates developed by Pfizer and Moderna.

“Vaccine news over the last few weeks has given markets renewed confidence that there is light at the end of the tunnel,” Nomura Australia investment strategist Andrew Ticehurst said.

”Global activity could pick up and global travel could pick up.”

Energy firms – among the most beaten-down sectors in 2020 – rose on Tuesday, easily outpacing the wider index as oil prices jumped on a buoyant outlook for fuel demand.

Beach Energy was the market’s best performer, up 8.2 per cent to $1.86, while Origin Energy rose 5.2 per cent to $5.05, Santos climbed 3.9 per cent to $6.36, and Woodside Petroleum climbed 3 per cent to $22.64.

Westpac’s chief economist Bill Evans said the banks and travel sectors have boosted the ASX in recent weeks as the economic recovery and vaccine timetable appears to be better than expected.

The economic and jobs data has been encouraging, he said, which was making economists optimistic the economy could avoid a ‘fiscal cliff’ as government and debt support winds back.

“There is optimism about the positive flow of data that we have seen, particularly around labour and spending,” Mr Evans said.

“The cliff is a December quarter effect rather than September quarter. We are now starting to see December quarter data look quite strong as well. Banks were the ones that suffered the most when the economy (went down) and if the economy is going to recover more quickly, that would support banks.”

The big four lenders each hit eight-month highs, with ANZ leading the pack.

It rose 3.1 per cent to $22.97, followed by a 2.6 per cent gain for both Westpac and NAB, and a 2 per cent leap for Commonwealth Bank to $81.16.

Gold miners suffered as soaring risk appetite whacked precious metals prices, but iron ore giant BHP climbed 3.4 per cent to a near three-month high of $38.30. Rio Tinto added 2.2 per cent to $103.13 and Fortescue Metals rose 2.7 per cent to $18.09.

Additional risk was removed from the table on Tuesday when Donald Trump took to Twitter to all but concede defeat in the US presidential election, backing the transition of power to the incoming Biden regime despite his recent efforts to overturn the result.

“It is hardly a surprise,” Mr Ticehurst said, “but if market participants sense that this transition will be smoother, that is positive for sentiment.”

Markets also applauded news that President-elect Biden plans to name former Federal Board chair Janet Yellen as his Treasury Secretary.

The cherry on top came in the local news that the border restrictions between NSW and Queensland would be lifted on December 1, pushing Qantas stocks up 3.9 per cent to $5.57.

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When the COVID-19 vaccine will be ready for Australians


As scientists across the world race to produce a COVID-19 vaccine, many Australians are eagerly waiting for the groundbreaking jab to become available commercially.

The process has raised many questions not only about the timeframe but also where it will be available and who will get it first.

Here are some of the most common questions answered.

WHAT POTENTIAL VACCINE OPTIONS HAS AUSTRALIA SECURED?

There are several potential vaccine options being produced right now that could serve the Australian community.

The federal government has secured 134.8 million doses through agreements with The University of Queensland, AstraZeneca-Oxford University, Novavax and Pfizer.

Oxford University’s vaccine is in the most progressed stages, and if successful, 3.8 million doses will be delivered to Australia early next year, while another 30 million doses will be manufactured by CSL in Melbourne in monthly batches.

“I have this evening been briefed by the Australian CEO who has confirmed that AstraZeneca is now looking to proceed with Australia regulatory approval in the coming weeks, if not sooner,” Health Minister Greg Hunt said.

“Subject to approval, this means that Australians are very much on track for the first vaccines in March.”

In September, Novavax launched phase 3 its clinical trials in the UK, with large-scale trials planned for other countries later this year.

If successful, 40 million doses of the Novavax will be made available in Australia next year, and the federal government has the option to buy another 10 million.

Another option is the Pfizer vaccine, but before that is approved for use in Australia it must pass the Therapeutic Goods Administration (TGA) rigorous assessment and approval processes.

If it does, 10 million doses will be available to Australians from early 2021. Those doses will be produced internationally, and the government has the option to buy more.

Back on home soil, scientists at the University of Queensland are working around the clock to make their potential COVID-19 vaccine a reality.

If successful, 51 million doses will be available from mid-2021 and manufactured in Australia by CSL.

Mr Hunt said it was likely different vaccines would be used in different circumstances, but what those “circumstances are” still remains unknown.

WHO WILL GET IT FIRST?

Earlier this month the federal government revealed who would take priority on the basis of advice from the Australian Technical Advisory Group on Immunisation (ATAGI).

Three priority groups were identified including “those who have an increased risk, relative to others, of developing severe disease or outcomes from COVID‑19, and those working in services critical to societal functioning”.

On Tuesday Mr Hunt said the nation’s vaccination timeline was “beginning to strengthen”.

“The news from overseas is that we are on track for first vaccines in March. That will obviously start with the health workers and, if approvals are granted, for the elderly,” he said.

“It is common sense in Australia but also around the world (that) health workers and the elderly (were identified) as our priority.”

IF WE GET JABBED CAN WE GO OVERSEAS?

The Department of Health did not comment on this query specifically but was adamant that the vaccine was not mandatory.

“While the government fully supports immunisation, it is not mandatory and individuals maintain the option to choose not to vaccinate,” the health department said.

On Tuesday Qantas boss Alan Joyce revealed passengers would have to be vaccinated against COVID-19 before they could travel internationally with the airline.

He also told A Current Affair he was not ruling out extending that to domestic flights.

“We are looking at changing our terms and conditions, to say for international, that we will ask people to have a vaccination before getting on the aircraft,” Mr Joyce said.

“We think for international visitors coming out, and people leaving the country, we think that’s a necessity.”

WHERE WILL PEOPLE BE ABLE TO GET THE VACCINE?

Australians will be able to get vaccinated at GPs, hospitals, respiratory clinics and state and territory vaccinations clinics.

It will not be available at your local pharmacy “due to the targeting of priority populations, cold chain storage requirements and the use of multi dose vials”, the health department said.

HOW MUCH WILL IT COST TO GET JABBED?

The vaccine is free and will be accessible to every Australian.

The federal government has purchased more vaccines than what is needed for the entire population.

Mr Hunt said the expectation was that all Australians would be given access to a free vaccine on a voluntary basis during the course of 2021.

HOW LONG BETWEEN JABS?
All vaccine candidates require two doses, administered about one month apart.



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US dollar falls to 2018 lows as vaccine optimism damps haven demand


The US dollar dropped to a 2 1/2-year low as the prospect of vaccine rollouts added to headwinds for the world’s reserve currency.

The Bloomberg Dollar Spot Index fell as much as 0.2 per cent to an April 2018 low after US officials said vaccinations may start in less than three weeks. The pound and the Norwegian krone led gains against the greenback, while the yield on 10-year US Treasurys rose three basis points to 0.86 per cent. The Australian dollar is also benefiting from the US dollar weakness, rising to around 73 US cents. In March, it was below 58 US cents.

Pressure is building on the US dollar.

Pressure is building on the US dollar.Credit:Phil Carrick

“The vaccine news is favouring the view of a sooner-rather-than-later global economic recovery with the USD losing its safe-haven appeal along the way,” said Rodrigo Catril, a currency strategist at NAB. “This is a risk-positive, USD-negative backdrop, especially with the Fed likely to remain ultra-dovish for some time.”

An inoculation that offers adequate protection against infection could help power a rebound in global growth and add momentum to a rally in equities and other riskier investments. That outlook is undermining the greenback, which tends to benefit in times of heightened uncertainty.



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Qantas to require coronavirus vaccine before travel, Alan Joyce confirms


Proof of COVID-19 vaccination will be a non-negotiable condition of international air travel, according to the Qantas CEO Alan Joyce.

Anti-vaxxers will be grounded in the brave new world, with Mr Joyce confirming vaccination will be a requirement to fly internationally.

Mr Joyce has repeatedly warned that international air travel won’t resume until there’s a vaccine available for staff and travellers, but on Monday night he went a step further, telling A Current Affair host Tracy Grimshaw that as soon as a vaccine becomes available it will be a condition of travel.

“For international travellers, we will ask people to have a vaccination before they get on the aircraft,’’ he said.

“Certainly, for international visitors coming out and people leaving the country we think that’s a necessity.”

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RELATED: Hint when Australia’s international air travel could open again

If anti-vaxxers want to try alternative airlines, Mr Joyce predicted they won’t be travelling far.

“I think that’s going to be a common thing talking to my colleagues in other airlines around the globe,’’ he said.

The revelation prompted ABC presenter Tracey Holmes to ask on Twitter: “Hello all my legal friends … is this legal?.”

Another journalist, The Australian’s cricket writer Peter Lalor, replied, “I hope so.”

Prime Minister Scott Morrison has previously suggested vaccination will be “as mandatory as you can possibly make it” before walking those comments back in recent months.

“There are always exemptions for any vaccine on medical grounds, but that should be the only basis,” he said in August.

But just hours later, Mr Morrison told listeners on Sydney radio station 2GB that the Government would not make vaccination mandatory.

“It’s not going to be compulsory to have the vaccine,” he said.

“I mean, we can’t hold someone down and make them take it.”

The Qantas boss Alan Joyce is hoping to be back up to 60 per cent of the old business by Christmas as domestic flights resume between Sydney and Melbourne.

“If we can get Melbourne and Sydney back to where it was pre-COVID that will be 3000 people that didn’t have a role, were stood down, were working at Woolworths, somewhere else that are working for the airline again,’ he said.

Mr Joyce revealed 25,000 seats sold within 48 hours as soon as travel between NSW and Victoria opened up this month.

But it could be a long time before travel resumes to COVID-19 hot spots.

“Unfortunately with the levels of the virus in the United States and in Europe, we’re not going to see operations to those destinations in any real strength until we see a vaccine being rolled out, which is likely towards the end of 2021,” Mr Joyce said.





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When Australia will see a COVID vaccine


Hopes for a speedy coronavirus vaccine have been boosted with announcements that two potential candidates are more than 90 per cent effective.

The results have exceeded the expectations of experts and could mean doses of the vaccines may be available in the US by the end of the year.

But one of the reasons these vaccines have been produced so quickly is because they use an experimental technique for producing a new type of mRNA vaccine, which has never been approved before.

Both the Moderna and Pfizer vaccines use mRNA technology and the novel nature of the vaccines have raised questions about how safe they are.

Up to now vaccines have been developed using a weak or dead version of a virus, or by using a laboratory-made protein.

For example, the development of a flu vaccine can involve creating a diluted form of the virus by incubating it in chicken’s eggs.

However, mRNA vaccines can be created entirely by scientists in a laboratory using chemicals, enzymes, bacteria or live cells.

RELATED: Aussies who could prolong the pandemic

Essentially the scientists make a synthetic version of the virus’s messenger ribonucleic acid (mRNA). Once this is injected into the body, the mRNA prompts the body to make a particular protein, which is detected by the immune system and this causes the immune system to make antibodies to fight against it.

The vaccine basically trains the body what to do if it comes into contact with the protein again.

Traditional vaccines also coach the body on how to fight a virus but this is done through injecting tiny amounts of the virus or the protein into the body, rather than triggering the body to make the protein itself.

ARE THE VACCINES SAFE?

Professor of Immunology, Magdalena Plebanski of RMIT University, told news.com.au that the nice thing about mRNA vaccines is that they don’t last long.

“After it is used to make the protein to induce the immune response, that’s it, it disappears,” she said.

“It’s not something that hangs around for a while so it’s expected to have a high safety profile,” Prof Plebanski said.

However, Prof Plebanski said while scientists did understand parts of how the mechanism worked, they didn’t understand 100 per cent why the vaccines were so effective.

“We still don’t know how it activates such a strong immune response,” she said.

This is why careful testing of the vaccines’ safety is important and Prof Plebanski said this was happening. Participants in final Phase III trials of both the Moderna and Pfizer vaccines will be monitored for up to two years.

RELATED: Coronavirus could ‘fight back’ against vaccine

Prof Plebanski said the reason why the vaccines were developed so quickly is because of the massive injection of funding and attention on finding a treatment for the coronavirus.

Prior to the pandemic, mRNA technology was already quite reasonably advanced and was being developed for use on other diseases. The process for developing the vaccines had also been through initial safety trials.

“As far as I can see there is no skimping on any monitoring safety,” Prof Plebanski said.

She said every single vaccine was being put through the process set out by peak regulatory bodies in the US and Europe, which considered safety their most important factor.

“There are benchmarks they have to hit before they can be considered safe,” she said.

“They are being put through the wringer and they have to be, there should be no shortcuts.”

MODERNA VACCINE

US biotech firm Moderna announced on Monday that its vaccine mRNA-1273 is 94.5 per cent effective.

Out of 30,000 people who participated in the Phase III trial, just five people caught the coronavirus among the vaccinated group, while 90 people in its placebo group were infected.

Two doses were given to the participants 28 days apart.

Adverse reactions to the vaccine were generally mild or moderate in severity and included injection site pain in 2.7 per cent of people.

The only other adverse reactions seen in more than 2 per cent of participants were recorded after the second dose and included fatigue (9.7 per cent), muscle pain (8.9 per cent) joint pain (5.2 per cent), headache (4.5 per cent), pain (4.1 per cent) and redness at the injection site (2 per cent).

These symptoms generally didn’t last long.

RELATED: Moderna announces vaccine breakthrough

One advantage this vaccine has over its rival Pfizer version is that it doesn’t have to be stored in extremely cold temperatures.

The vaccine can be stored for 30 days between 2C to 8C, which is within the temperature range of a normal fridge. If it is stored at -20C it can last for up to six months.

In comparison the Pfizer vaccine needs to be stored at -70C, which requires a special freezer only found at major hospitals.

Moderna plans to apply for emergency approval in the US and the world within weeks.

When will it be available? Moderna expects to have about 20 million doses ready to ship in the US by the end of the year. It says it’s on track to produce 500 million to a billion doses globally in 2021, however, Australia has not secured supply of this vaccine yet.

PFIZER VACCINE

Not to be outdone, the US-German collaboration between Pfizer and BioNTech announced on Wednesday further trial results showing its vaccine to be 95 per cent effective.

This is good news for Australia as Prime Minister Scott Morrison revealed this month that the government had signed an agreement for 10 million doses of the Pfizer/BioNTech vaccine if it was successful.

The BNT162b2 vaccine also requires two doses, given 21 days apart.

The trials showed that of the 43,000 participants in the Phase III trial, only eight people in the vaccine group got the coronavirus, compared to 162 in the placebo group.

The vaccine was also found to be more than 94 per cent effective in people older than 65 years.

The only adverse reactions seen in more than 2 per cent of participants were fatigue (3.8 per cent of people) and headache (2 per cent).

RELATED: Pfizer announces vaccine is 95 per cent effective

The main limitation of the Pfizer vaccine is that it needs to be stored at -70C, which requires a special freezer only found at major hospitals.

Pfizer is developing GPS-tracked shipping containers with dry ice to try and get around this problem.

The company applied for emergency use approval from the US Food and Drug Administration for its vaccine on Friday (local time). The FDA said its vaccines committee will meet on December 10 to discuss the request.

When will it be available? About 1.3 billion doses are expected to be rolled out by the end of 2021. About 10 million doses are expected to be available in Australia from early to mid 2021 – subject to approval by the Therapeutic Goods Administration.

OTHER VACCINES WITH POTENTIAL

As well as the Pfizer candidate, Australia has also bought doses of three other promising vaccines.

This includes the University of Oxford vaccine, which is being developed by AstraZeneca based on a chimpanzee adenovirus.

This is currently in Phase III trials and if successful, it could be available in Australia from early 2021 and would be manufactured locally by CSL.

On Thursday, the makers said trials showed it safely produced a robust immune response in healthy older people, while producing fewer side effects than in younger people.

Earlier this year the trial was put on hold while there were investigations into a suspected adverse reaction in one participant but the trial has since resumed.

If it’s successful Australia will get 3.8 million doses delivered in early 2021, with a further 30 million doses to be manufactured in Australia throughout the year.

Another vaccine in Phase III trials is Novavax and the Morrison Government has signed an agreement to buy 40 million doses.

It will be available as early as the first half of 2021 if it is successful.

The University of Queensland is also developing a part-taxpayer funded vaccine. Although it is still in Phase I trials, Federal Health Minister Greg Hunt said this month the trial had shown promising signs and it could be available by late 2021.

Both Novavax and the Queensland University vaccines use innovative molecular clamp technology.

The World Health Organisation (WHO) has identified 48 “candidate vaccines” at the stage of clinical trials in humans, up from 11 in mid June.

Twelve of them are at the most advanced Phase III stage, during which a vaccine’s effectiveness is tested on a large scale, generally involving tens of thousands of people across several continents.

Russia claims to have developed a vaccine that is more than 90 per cent effective and several state-run Chinese labs also have promising candidates.

However, WHO’s emergencies director warned Wednesday that vaccines would not arrive in time to defeat a second wave of the COVID-19 pandemic that appears to be sweeping across the United States and Europe.

“I think it’s at least four to six months before we have significant levels of vaccination going on anywhere,” Michael Ryan said during a public question and answer session live on social media.

charis.chang@news.com.au | @charischang2





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Could a vaccine shift markets from COVID-safe to COVID-normal?


“It was stark in terms of previous winners: the ‘stay at home stocks’ were getting dramatically sold off, whereas stocks that had previously been completely unloved, like in the travel sector, shot up,” says Burns. “For example, we own Amadeus [a travel technology business] out of Spain, which at one point was up 30 per cent.”

It was a similar story in Australia, with local tech market darlings falling and beaten-down stocks in the travel sector such as Qantas and Flight Centre soaring, and some of the pandemic’s stronger performers such as JB Hi-Fi and Afterpay taking a hit.

Making the market moves even harder to decipher was the fresh and ferocious new wave of coronavirus infections in the US and Europe, forcing a new round of lockdowns and inflicting more damage on major northern hemisphere economies.

Nevertheless, the market shift of the past fortnight has led many global investors to ask the same questions: will this herald the long-awaited return to value investing after a golden era for growth stocks? Is the ‘great rotation’ in markets finally here?

Recovery question marks ‘kicked into long grass’

There has been plenty of upbeat news about vaccine candidates over the past fortnight. US biotech Moderna upped the stakes with its interim trial results this week, which showed a 94.5 per cent efficacy figure.

Drug giant Pfizer followed up with another update this past Thursday on its candidate, confirming it had rounded out its phase 3 trials on the product, with data now showing its vaccine was 95 per cent effective. It plans to apply to US authorities for emergency use authorisation for the vaccine before month’s end.

Australia now has four supply deals for vaccines: 10 million doses from Pfizer and its partner BioNTech, 40 million from Novavax, 30 million from AstraZeneca/Oxford and 51 million from the University of Queensland’s project when it is completed. The data dumps over the past two weeks put some of these biotech giants in the box seat for delivering products by early next year.

Investors agree that’s great news for society, but how it might affect the markets is still open to debate.

“My view is it is too early to call this an inflection point. Many of the themes that people have said are [the reason] why growth has had such a good run are still in place,” says cross-asset specialist at Fidelity International, Anthony Doyle.

There is good news about vaccines at the moment but it all feels very speculative to me.

Pengana fund manager Ed Prendergast.

The reality is that while a vaccine is on the way, many economies are likely to bear COVID scars for years. And some of the structural shifts – for example in the greater use of technologies at home – appear to be permanent.

“There’s a lot of good news around, and I think people want to make hay while the sun shines,” Doyle says. “But US COVID rates are still at record highs. I talk to friends in London, they are obviously in lockdown… The technology adoption we’ve seen this year will continue and it’s too early to call this [the] age of value over growth.”

Burns says global markets continue to seem confused about where to place their focus.

I think things will swing back and forth, depending on the news. One night it [the market] is focused on vaccine news, the next night it’s the coronavirus case growth in Europe and the US.”

Doyle says investors should also be questioning whether a stock can survive against a tough economic backdrop once global economic stimulus measures wears off.

“The question marks over the recovery have been kicked into the long grass,” he says.

Randal Jenneke, the head of Australian equities at T. Rowe Price, says the challenges with the rollout of the COVID vaccine have made his firm “cautious about the sustainability of the market’s rotation into lower-quality cyclicals, or heavily-impacted sectors such as travel”.

“Prior to the release of vaccine data, we have been repositioning in favour of quality cyclical growth (James Hardie) and recovery names (IDP) albeit still holding a healthy exposure to defensive growth (Healthcare) and some extreme growth (Xero),” Jenneke wrote in an email.

Mind the structural shifts

Embattled shopping centre landlords have also shared in the vaccine rush, seeing rare good news over the past fortnight including $2 billion pumped into local property stocks after Pfizer’s encouraging update.

Listed property operators breathed a sigh of relief at the prospect of foot traffic returning to CBD locations. Pengana Capital portfolio manager Amy Pham warned retail investors must keep in mind many property investments, like trusts exposed to shopping centres, were under pressure prior to the pandemic and may never trade back at their net tangible asset backings even with a COVID recovery.

News of positive vaccine results was cause for optimism that foot traffic would return to shopping centres.

News of positive vaccine results was cause for optimism that foot traffic would return to shopping centres. Credit:

“Even before COVID hit, the discretionary malls were trading at a discount to NTA [the net value of their assets]. I think mums and dads that look and this and think, ‘we’re gonna have a vaccine, it’s going to go back to normal’, well they have to keep that in mind,” she says.

Pham believes property-exposed investments will be an attractive option during the recovery as investors struggle to find strong yields elsewhere. However, discretion must be taken and investors must think about the structural societal shifts they are seeing, whether that is more people working from home or a greater demand for childcare and social housing, she said.

A rising tide will not lift all boats, and differences between winners and losers will be more pronounced.

T. Rowe Price’s global asset management team

“We think that even through COVID, sectors like the data centres, logistics, affordable housing, all of that is going to be driven higher. No matter whether you’re going through COVID or not, and no matter whether the economy is going through a recession,” she said.

Pham’s high conviction property securities fund had seniors communities operator Ingenia and logistics facilities firm Goodman Group among its top five holdings in October.

Uncertainties over vaccine rollout remain

Investors and governments have thrown tens of billions of dollars at the development of vaccines, and healthcare stocks have been thrust firmly into the limelight as an investment opportunity for the next decade.

Sentiment was further buoyed this week when company filings for Warren Buffett’s Berkshire Hathaway revealed the legendary fund had recently taken stakes in biotechs including Merck & Co., Bristol Myers Squibb Co and Pfizer.

When it comes to the actual rollout of the vaccine, however, many remain sceptical.

“We try to avoid risky situations… and there is good news about vaccines at the moment but it all feels very speculative to me,” said Pengana emerging companies fund manager, Ed Prendergast.

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“In markets, there has been a massive switch away from those companies that have benefited [from pandemic conditions],” he says.

Despite this, it’s still not known how effective a vaccine will be and whether the mammoth task of distribution will go smoothly, he added. “The second level of uncertainty is what if one, two or three vaccines [launch] and then cases still continue? What do governments then do?”

In this environment, Prendergast says his team are avoiding any stocks that “rely heavily on one outcome”.

In the travel industry, there are some businesses with valuations that look cheap even without a vaccine, he says. New Zealand motorhome and tourist business Tourism Holdings is one example. Meanwhile, his emerging companies fund has backed the recently merged telcos Uniti and OptiComm.

“It doesn’t matter what happens with the virus, you have to have data. People have to do a lot more than lose their jobs to stop using the internet,” Prendergast said.

T. Rowe Price’s global equities team told investors in a briefing this week its managers were “closely monitoring the potential for a great rotation from growth to value”. “We believe investors should remain diversified between growth and value,” the firm said.

With central banks looking unlikely to raise interest rates for several years, however, the search for yield will continue to be the priority. Not all companies will be winners in that equation, its global asset management team, led by Sébastien Page, warned.

“Investors must lower their expectations with regard to stocks and bond returns for the next 10 years. A rising tide will not lift all boats, and differences between winners and losers will be more pronounced.”

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ASX set to open higher as Wall Street gets another vaccine boost


Earlier this week, Moderna also gave encouraging early data about a vaccine it’s separately developing. The improved prospects for a vaccine have some investors focusing on next year, when a vaccine or two could have the global economy operating closer to normal again.

That has investors embracing stocks that were beaten down by the weakened, closed economy of the pandemic. United Airlines gained 4.2 per cent for one of the stronger gains in the S&P 500, and American Airlines climbed 3.4 per cent.

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“That story seems to be moderating a little bit here as the coronavirus news has now mostly been digested by the marketplace,” said Tom Martin, senior portfolio manager with Globalt Investments. “The vaccine news immediately captures the imagination because you see an endpoint.”

Financial stocks, which stand to gain from a healing economy as workers get jobs and make good on their loans, were climbing 0.8 per cent for the biggest gain among the 11 sectors that make up the S&P 500.

Optimism about the economy’s prospects also has investors less enthusiastic about piling into the companies that dominated the stay-at-home economy of the pandemic, such as Big Tech. Apple rose 0.2 per cent and Amazon ticked down by 0.2 per cent.

Because these companies are so massive in size, their stock movements have an outsized effect on the S&P 500 and other indexes. Even though it was down just 0.2 per cent, Microsoft was among the heaviest weights in the S&P 500 out of all the stocks within the index.

Of course, many risks still remain for the market. Chief among them is the pandemic, which is accelerating so quickly that governments across the United States and Europe are bringing back varying degrees of restrictions on businesses. Coronavirus counts and hospitalisations are up in states across the country, and health experts are warning about the possibility of a brutal winter.

Even with the encouraging figures from pharmaceutical companies about their potential vaccines, there’s also still no guarantee one will be approved or how long it will take for it to be widely distributed.

Federal Reserve Chair Jerome Powell on Tuesday warned of the potential economic damage in the next few months because of the pandemic. Additional lockdown orders would keep customers away from businesses. But even if the strictest stay-at-home orders don’t return, fear alone of the virus could keep consumers hunkered at home.

Powell and other economists have said another big financial-support program from Congress could help tide the economy over. But bitter partisanship in Washington has prevented any deal to renew extra unemployment benefits for laid-off workers and other stimulus efforts that expired earlier this year.

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In Europe, a coronavirus relief package is being held up by a diplomatic dispute between Hungary and Poland and several other major EU countries.

In European stock markets, France’s CAC 40 rose 0.5 per cent, and Germany’s DAX returned 0.5 per cent. The FTSE 100 in London added 0.3 per cent.

The yield on the 10-year Treasury ticked up to 0.88 per cent from 0.85 per cent late Tuesday. A report showed that home builders broke ground on more new houses last month than economists expected.

AP

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World’s top bankers say vaccine not enough to rescue global economy


“We’re still in the teeth of the pandemic,” he said on Tuesday. “We’re going to be in the teeth of it in the fourth quarter, at least the first quarter, and there will still be social distancing and all the protocols through a good part of 2021.”

Stocks soared around the world and bonds declined after Pfizer and BioNTech’s interim analysis showed their vaccine prevented more than 90 per cent of COVID-19 infections, the most encouraging scientific advance so far. The results still need to be cleared by the US Food and Drug Administration.

The governor of Sweden’s Riksbank, Stefan Ingves, said it’s extremely difficult to assess how long the recovery from the pandemic will take even after that encouraging news.

“We humans want to be optimistic,” he said in an interview in Stockholm. “So far, however, it has taken a very long time, longer than many had expected” to fight the virus.

The pandemic has killed more than 1.2 million people around the world since late January and sent the global economy into the worst recession in living memory.

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Central banks responded by cutting interest rates and buying trillions of dollars in bonds, pushing borrowing costs to record lows. That allowed governments to unleash some $US12 trillion ($16.5 trillion) of support, according to International Monetary Fund estimates.

The Reserve Bank of New Zealand delivered extra stimulus on Wednesday even as it gave a less pessimistic view of the economy. It said the road ahead remains largely reliant on containing the virus, and signalled it’s ready to do more to help the economy if needed.

Stimulus debate

Still, the impact of positive vaccine news will be “core to the policy debate globally,” Krishna Guha and Ernie Tedeschi of Evercore, a New York-based investment bank, said in a report to clients.

The possibility of a vaccine being developed as early as this year is already complicating tense talks on a second round of fiscal stimulus in the US Senate Majority Leader Mitch McConnell, a Republican, said “targeted” relief should be sufficient.

"While the latest news on a vaccine looks encouraging, we could still face recurring cycles of accelerating viral spread and tightening restrictions until widespread immunity is achieved,": ECB President Christine Lagarde.

“While the latest news on a vaccine looks encouraging, we could still face recurring cycles of accelerating viral spread and tightening restrictions until widespread immunity is achieved,”: ECB President Christine Lagarde. Credit:Bloomberg

Klaas Knot, an ECB policy maker who heads the Dutch central bank, said a vaccine discovery and a smooth distribution could at least reduce uncertainty.

“It would allow us to have an end point. That would be light at the end of the tunnel,” he said, but “it would not immediately change the outlook” for 2021.

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The ECB, which assumes a “medical solution” next year in its economic projections, said two weeks ago that it’s preparing to boost its emergency bond-buying program in December. In her latest appearance, Lagarde gave no sign she’s changing her tune.

“The second wave of COVID-19 presents new challenges and risks, but the blueprint for managing it is the same,” she said. “The ECB was there for the first wave, and we will be there for the second wave.”

Bloomberg

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Vaccine prompts analysts to call end of COVID retail boom


“We continue to view the 2020 Christmas season as likely to be a record-breaking year. However, the prospect of a COVID vaccine is highly likely to see these early gains revert over 2021.”

The share price of electronics retailer JB Hi-Fi fell 4.4 per cent on Wednesday to a three-month low of $44.42. The stock had outperformed the ASX this year with a gain of 121 per cent between March and October, helped along by consumers flush with government stimulus.

Morgans analysts on Wednesday dropped their JB Hi-Fi target price by 15 per cent to $41.30 while Macquarie analysts dropped their target price by nearly 10 per cent to $49.50, cutting their rating to ‘neutral’ from ‘outperform’.

“While our earnings are largely unchanged at this stage, we have lowered multiples or valuations for those likely to suffer from a return to some sense of normality (redirection of spend); and vice versa for those who have been negatively impacted by COVID. This is a call on a material shift in sentiment towards COVID winners,” Morgans analysts said in a client note.

They also lowered their rating on Accent Group, Baby Bunting, Beacon Lighting, and Super Retail Group from Add to Hold.

Macquarie’s team noted Domino’s Pizza has been a COVID winner but believes sales will normalise as Australians get out of their house more and restaurants reopen. Domino’s shares were currently trading at 45 times earnings, putting them at risk of a correction. The stock has been downgraded to Underperform and the target price was cut from $84.30 to $72.10.

Similarly, IGA supplier Metcash benefitted from Australians visiting their local supermarket and bottle shop rather than travelling to large malls. But this trend was also expected to end as shoppers stop fearing larger crowded supermarkets, leading to a downgrade in Metcash’s target price to $3.05 and in rating to Neutral. It closed 0.3 per cent lower on Wednesday at $2.94.

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