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Dr Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, received his first dose of the Moderna Covid-19 vaccine at the National Institutes of Health, in Bethesda, on December 22. Photo: Reuters

Ever since Pfizer and its German partner BioNTech announced on November 9 last year that their Covid-19 vaccine was more than 90 per cent effective, marking a breakthrough in the battle against the pandemic, the world has been in a race between mass immunisation and the rapid increase in infections and fatalities.

In financial markets, particularly stock markets, the promise of a vaccine has been a crucial determinant of sentiment over the past several months, helping unleash animal spirits and brightening the outlook for the global economy.

As 2020 drew to a close, the overwhelming consensus among investment strategists was that the vaccine had set the stage for a period of stronger growth and rising asset prices.

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However, in Europe and the United States – which are suffering a resurgence of the virus that is by almost any measure more severe than the first wave, partly due to the emergence of a more infectious variant of the disease – the distribution of vaccines and the administration of doses are proving more difficult than investors had anticipated.

While it is still early days for immunisation campaigns, and problems are magnified by intense scrutiny of data on the deployment of vaccines, the conspicuous failure to meet targets is a cause for concern. It is particularly worrying since the slow pace of the roll-out is only partly attributable to well-flagged logistical challenges.

Heated debates over who should be getting the jab first, and whether dosing regimens should be changed to protect more people more quickly, risk undermining confidence in vaccines.

In a sign of the extent to which the US has fallen short of its target of vaccinating 20 million people by the end of December, only 5.4 million doses have been administered so far, a mere 1.6 for every 100 people, according to data from Bloomberg.

With 80-85 per cent of the population needing to be inoculated to reach so-called herd immunity, and both vaccines currently being distributed requiring two doses, 528 million doses need to be administered to achieve the desired level of immunity, which at the current pace would take a decade, noted Leana Wen, a public health professor at George Washington University, in a column in The Washington Post on December 29.

A shot of vaccine trust will really help in the fight against Covid-19

However, efforts to accelerate the roll-out of vaccinations face acute problems. One is the controversial decision by the British government around December 31 to lengthen the gap between the first and second doses from the recommended three weeks to as much as 12 weeks, to vaccinate as many as possible amid supply constraints and a surge in infections and hospitalisations.

While broader immunity is critical, effective inoculation is just as important. The decision has been criticised by Pfizer and BioNTech, and slammed by the Doctors’ Association UK, a group representing frontline doctors, as a failure to “follow the science”, which risks “undermining the public trust in the vaccine”.

Given the virulence of the new virus strain ripping through Britain, a partially protected population could increase the risk of vaccine-resistant mutations.

Still, at least vaccination campaigns in Britain and the US are making more headway than in the European Union, whose roll-out strategy has been a shambles. Germany has only vaccinated 367,000 people (compared with 1.3 million in Britain), while France, Europe’s second-largest economy, has administered a derisory 2,000 doses.

Taiwan’s coronavirus success holds lessons for struggling US

While production bottlenecks are part of the problem, so is excessive caution. The EU’s medical regulator only approved a shot developed by Moderna on Wednesday, almost three weeks after it was authorised in the US.

France, the most vaccine-sceptical nation, has been particularly wary of rushing the jabs in the hope of reassuring the public. Yet the approach has backfired, with the slow start fuelling concerns that the government itself has reservations about the vaccines, or is trying to cover up failures in deployment.

In the markets, delays and blunders in administering the shots are viewed through the prism of normalisation of economic activity. The longer it takes to roll out mass immunisation programmes effectively, the greater the need for lockdowns to remain in place to protect lives and health systems, prolonging a vicious circle of renewed restrictions and stop-start recoveries.

Asset prices, which continue to be buoyed by massive stimulus measures (and are set to benefit from further spending as the Democrats secure control of both houses of the US Congress), have yet to reflect disappointment over the sluggish roll-out of vaccines.

Yet, the fact that technology stocks, the main beneficiary of lockdowns, have been booming since late November is a sign that investors are hedging their bets.

The next few months will determine whether Europe and America, the epicentres of the latest wave of the pandemic, can bring the virus under control, not by extending lockdowns indefinitely, but by ramping up vaccinations. If significant progress is not forthcoming, the bullish forecasts for this year will soon be torn up.

Nicholas Spiro is a partner at Lauressa Advisory

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This article originally appeared on the South China Morning Post (, the leading news media reporting on China and Asia.

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