Investor decisions and analyst opinions are dictated by expectations for a recovery from the epidemic, not economic data and company disclosures


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London – News agencies: Forget the economic data and company disclosures, as progress in vaccination with the Covid-19 vaccine is what fund managers and analysts are monitoring to see the fastest markets recovering from the repercussions of the epidemic to guide their investment decisions.
Global economic growth is expected to rebound this year to exceed 5 percent, while Refinitiv IBES expects corporate profits to grow in 2021 by 38 percent in Europe and 21 percent in the United States.
But these expectations and investment patterns are almost completely dependent on the speed of vaccination campaigns, as the new Covid-19 strains and recent extensions of the closure procedures make official data and company disclosures about profits and losses too old to be reliable in investment decisions.
“The vaccine race is the main, unpredictable factor,” says Mark McCormick, director of exchange market strategy at TD Securities. He is the one who will model the expectations and assumptions in terms of driving global growth in 2021. ” “While vaccines may support a more simultaneous recovery in the second half of the year, the early numbers reinforce the fundamental disparity between the United States, the euro area and others,” he says.
The question is: which country will vaccinate 60 to 70 percent of the population – the threshold that is believed to achieve herd immunity, so that factories, bars and hotels can safely reopen. Any delay may require more stimulus measures from governments and central banks.
The lack of steady vaccination campaigns forced some to extend initial estimates of when to reach herd immunity. Deutsche Bank says that late autumn appears more realistic than summer, although spring in the northern hemisphere is expected to be a turning point, with vaccinations of 20 to 25 percent and the gradual lifting of restrictions.
But the winners of the race are not hidden from anyone, and at the forefront of all of them is Israel, where a rapid vaccination campaign attracted a flood of investments to its markets and pushed the shekel (the official currency) to its highest level in 25 years.
Others, like South Africa and Brazil, which are slowest, have been punished by the markets. Meanwhile, the British pound stands at an eight-month high against the euro, which analysts attribute to better vaccination prospects. More than 4.8 million people got the first dose, and the numbers doubled in the last week.
Shamik Dar, chief economist at BNY Mellon Investment Management, expects GDP growth in Britain and the United States to pick up double digits, against only slow progress for the eurozone.
“It is more difficult in the eurozone,” he says. “The horizon is a bit blurry there, as it seems that herd immunity will take longer because the vaccination programs are slower.” Indeed, the eurozone lags behind countries such as Britain and Israel in terms of per capita vaccination programs, which prompted Germany to extend a blanket lockdown to February 14, while France and the Netherlands are moving to impose a night curfew.
Jack Allen-Reynolds, chief European economist at Capital Economics, a consultancy in London, says the slow progress in vaccination and lockdowns has made him lower the forecast for GDP growth for the euro area in 2021 by a full percentage point to four percent.
“We assume that the GDP will return to pre-pandemic levels sometime in 2022 … We see that the recovery of the eurozone will be slower than the United States and Britain,” he added.
The United States began vaccinating the population last month, which is also ahead of most other major economies, with a vaccination rate of about five per hundred. Deutsche Bank said that, at the current rate, 70 million Americans will have acquired immunity by April, which is the limit of protection for the most vulnerable groups.
Some, such as Eric Bauermeister, director of fixed income instruments in emerging markets at Morgan Stanley Investment Management, shed light on the risks of trading from the reality of vaccination developments, saying that the markets seem to assume that things will return to normal, which could open the door to disappointment. .
But the prevailing view is that consumers will eventually re-inject pent-up savings in travel, shopping and entertainment, against a backdrop of generous stimulus.
Meanwhile, investors are trying to anticipate market moves when the closures begin to ease, according to Hans Peterson, Director of Asset Allocation at Seib Investment Management, who says, “(Market) moves are currently contingent on reducing infection rates .. If that trend relapses, it is inevitable. We can return to investing in US technology stocks.
On the other hand, data for the weekly flows from “Bank of America Merrill Lynch” on Friday showed that investors returned again to buy shares last week, as flows rose in the past three weeks to a record high of $ 255 billion, which prompted investors to warn of an imminent correction.
With the US Federal Reserve’s budget reaching 42 percent, and the US budget deficit falling to 33 percent of GDP, the bank says that the policy bubble is feeding the Wall Street asset price bubble.
Global stocks rose 77 percent from lows recorded in March, led by the United States due to an unprecedented economic stimulus.
Shares had attracted $ 21.6 billion in the week to last Wednesday, mainly driven by emerging markets.
In the business sectors, financial companies and the energy sector gained the most, as trades based on expectations of economic recovery thanks to expectations of the epidemic receding gained momentum thanks to expectations of more financial support from the new US administration led by Joe Biden.
“Excessive policies remain the best explanation for the excessive rise from lows in 2020, and the consensus for a macro-level boom in 2021 … We expect a peak position and a correction in the first quarter,” said Michael Hartnett, chief investment strategist at the bank.


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