By Powerscourt on 03/02/2021
Powerscourt Coronavirus Briefing – 03 February 2021
More good news on vaccine development.
Russia’s Sputnik V vaccine is highly effective and safe according to a peer-reviewed study published in the Lancet, the prestigious medical journal. Sputnik V is one of the just three vaccines with efficacy above 90% and it is 100% effective at preventing severe COVID-19. Its makers, backed by Russia Direct Investment Fund (RDIF)*, plan to produce 1.4 billion doses this year.
The Wall Street Journal says the Lancet news has handed “Moscow a geopolitical coup and a potential slice of the multibillion-dollar vaccine market as it seeks to promote the Covid-19 shot abroad and curb the pandemic at home.” Kirill Dmitriev, CEO of RDIF, was more high minded describing his user-friendly dose (it can be stored in a fridge) as “a vaccine for all mankind”.
Mexico became the latest country to approve Sputnik V with an emergency use licence issued on Tuesday. It said it expected delivery of 7.4 million doses over the next three months with more to follow.
Emmanuel Macron, the French president, has over the past week repeatedly questioned the effectiveness of the AstraZeneca vaccine and raised doubts about the UK’s strategy of having a roughly three month interval between the first and second jabs. Ursula von der Leyen, the president of the European commission, joined in the scepticism early yesterday.
A study released yesterday evening shows that their concerns may be unfounded. The Oxford/AstraZeneca vaccine provides about 75% protection against Covid and significantly reduces its spread after only one jab.
Moreover, the single dose eliminates severe illness among those who contract the virus, raising hopes that an end to the lockdown is in sight in the UK. The Oxford vaccine also appears to have a substantial effect on transmission of the virus. The results show that not only are people less likely to become ill once they have had the vaccine, they are also less likely to get infected and pass on the virus.
However, all the UK papers are carrying a story that could potentially undermine the effectiveness of the Oxford jab and the rapid rollout so far. Mass testing has been ordered in Bristol and Liverpool as health authorities scramble to contain a mutant strain of the virus, which appears resistant to vaccines.
The benefits of exiting lockdowns early were underlined in an analysis piece by Bloomberg. The sluggish rollout of the vaccine across the EU will have significant costs.
Lockdowns mean the bloc’s economy is operating at about 95% of its pre-pandemic level, equating to about €12 billion a week of lost output, according to calculations by Bloomberg Economics.
Unless it can make up ground, the EU will be forced to keep lockdowns or similar restrictions in place even as other major economies get fully back to work. A delay of 1-2 months would amount to a €50-€100 billion hit.
The European Commission released a timetable yesterday of the supply of vaccines across the bloc. The 27 member states received 18.5 million vaccines in January. A further 33 million doses are expected this month, 55 million in March and 300 million in the second quarter. The commission projects that 50% of the EU’s population will be inoculated by the end of June and 70% by the end of the summer.
Asian markets and US futures gained ground in overnight trading as the roll-out of vaccines in many countries is gathering pace, earnings season in the United States and Japan has so far been favourable, and oil prices are at their highest in a year, which are all positive signs for the global economy.
*Powerscourt has advised RDIF in relation to Sputnik V since October.
WHAT ARE COMPANIES SAYING?
Swedish truckmaker AB Volvo reported fourth-quarter core earnings well above analysts’ expectations on Wednesday, raised its forecasts for some of its main markets and rolled out a hefty shareholder payout amid a broad recovery in demand. But Volvo also cautioned that the rebound, along with a global chip shortage, had left its supply chain under pressure which would lead to production disturbances and higher costs at least during the current quarter. Adjusted operating profit at the maker of trucks, construction equipment, buses and engines rose to 10.93 billion Swedish crowns ($1.30 billion) from 9.22 billion a year earlier, above the 8.77 billion seen by analysts according to Refinitiv data. “Both the transport activity and the construction business are back at levels on par with the prior year in most markets, which has improved the confidence in the future among our customers,” Volvo Chief Executive Martin Lundstedt said in a statement.
The miner and commodities trader said that output of copper and cobalt production fell in 2020 after the closure of its Mutanda mine in Democratic Republic of the Congo, but said the ramp up of another mine in the country was progressing well. The company, which also mines coal, nickel, silver and zinc, said copper production fell by 8% while cobalt production dropped by 41%.
Financials & Real Estate
The eurozone’s largest retail bank, reported its first ever annual loss on Wednesday, but said it was optimistic about this year should inoculation campaigns be successful. The bank was expected to report a loss due to writedowns and loan provisions that had been announced in the first half of the year, but the figure was exacerbated by a further €1.1bn charge related to a planned restructuring in its British and European businesses in the fourth quarter. However, its preferred underlying measure of profitability was slightly above its own forecast, at €5.1bn, and the bank predicted a rebound in profitability in 2021. “We will not let down our guard, but I define my view as one of realistic optimism,” said Ana Botín, Santander executive chairman. Santander said it expects to generate an underlying return on tangible equity of between 9 per cent and 10 per cent this year, compared with 7.4 per cent in 2020. Santander’s Latin American and North American units showed the strongest performance, offsetting weakness in Spain and the UK. Revenues in the fourth quarter held up better than expected, climbing 1 per cent year on year after excluding the impact of currency movements. Santander said it will pay a dividend of 2.75 cents per share, the maximum allowed under limits introduced by the European Central Bank in December.
Amazon.com Inc founder Jeff Bezos will step down as CEO and become executive chairman, naming the head of its lucrative cloud computing division as successor in a sign of the company’s transformation from web retailer to internet conglomerate. This summer, Bezos, 57, will hand the keys of the world’s largest online retailer to Andy Jassy, head of its cloud division Amazon Web Services known as AWS. The announcement on Tuesday settles a long-running question about who would replace the world’s second-richest person at the company’s helm. Bezos is ending his role as CEO on a high note: the business he began as an internet bookseller 27 years ago is now one of the world’s most valuable companies and posted three consecutive record profits after losses in decades prior. On Tuesday, Amazon reported quarterly sales above $100 billion for the first time. Jassy, 53, joined Amazon in 1997 after Harvard Business School, founding AWS and growing it to a cloud platform used by millions of customers, the company’s website said. He had been a clear contender for the top job since Amazon created two CEO roles reporting to Bezos years ago, the other held by recently retired consumer CEO Jeff Wilke.
Sony boosted its annual guidance for the second time in three months as a pandemic-driven gaming boom led to a blockbuster launch for its new PlayStation 5 console. The Japanese entertainment group revealed on Wednesday that it had sold 4.5m units of the PS5 since its November 12 release, which led to a 40 per cent year-on-year increase in quarterly revenue for its gaming division. The figure put it well ahead of an estimated 2.4m units of the Xbox Series X sold by rival Microsoft since its November 10 release, according to market research firm GamingSmart. While the PS5’s initial marketing costs weighed on profits, families with more time on their hands increased spending on gaming software. Boosted by the strong performance of its PlayStation division, Sony said its operating profit rose 20 per cent from a year earlier to ¥359.2bn ($3.4bn) for the October to December quarter. Sony also raised its operating profit forecast for the full year ending in March by 34 per cent to ¥940bn.
Vodafone Group’s sales rose unexpectedly for the first time since March after German consumers stuck at home during the pandemic spent more money on mobile and broadband services. The mobile carrier said third-quarter organic service revenue rose 0.4 per cent, compared to the 0.2 per cent decline expected by analysts. It stuck to its guidance for full-year adjusted earnings before interest, taxes, depreciation and amortisation of between €14.4 billion and €14.6 billion. Cable customers in Germany upgraded to costlier plans during the quarter, helping to vindicate Chief Executive Officer Nick Read’s purchase of Liberty Global’s German fixed business Unitymedia. The sales gain follows two quarters of declines, which Vodafone blamed mainly on the pandemic. Revenue had grown in the last full year thanks partly to cost savings and efforts to keep customers loyal. The centerpiece of Read’s strategy to streamline Vodafone, cut costs and pay down debt was the initial public offering of its mast business, Vantage Towers. It’s expected in the coming months and could be one of the biggest European IPOs of 2021. “We have made further progress on our strategic priorities, including the IPO of Vantage Towers in early 2021, which remains firmly on track and will now include our 50 per cent shareholding in the UK towers joint venture with Telefonica,” Read said on Wednesday.
GlaxoSmithKline Plc and CureVac NV have joined forces to create next-generation Covid-19 messenger RNA vaccines that could help protect against multiple variants of the pathogen as infections continue to rise. The companies aim to have a candidate approved by 2022 as part of a 150 million euro deal, according to a statement Wednesday. Glaxo will also manufacture as much as 100 million doses of CureVac’s current mRNA Covid-19 vaccine, which is still in late-stage trials. Drugmakers are looking to accelerate the development of shots as new variants emerge, sparking fears some vaccines could become less effective. In also helping CureVac manufacture its current shot, the British pharma giant joins Sanofi, Novartis AG and Bayer AG in throwing its weight behind another company’s Covid vaccines, potentially accelerating the rollout. In a statement to the stock exchange, GSK said: “The increase in emerging variants with the potential to reduce the efficacy of first-generation Covid-19 vaccines requires acceleration of efforts to develop vaccines against new variants to keep one step ahead of the pandemic.”
IN THE NEWS
Oxford jab does reduce spread of coronavirus – The Times
Amazon’s Jeff Bezos to step aside as chief executive this year – Financial Times
Kwarteng hails ‘dynamic’ state aid system to replace EU rules – The Telegraph