Monday, 29 June 2020

China Approved COVID-19 Vaccine For Military Use- Economic Impact And Upcoming Global Double Dip Recession?

This is earth shattering news. China is so far the fastest country that has released promising results from its Phase 2 clinical trial. CanSino Biologics reported that its vaccine developed jointly with the Beijing Institute of Biotechnology in the Academy of Military Medical Science, is safe and somewhat efficient. China has approved the use of this vaccine for its military personnel for 1 year. Of course, for mass commercial use by the general population, Phase 3 larger scale clinical trial will need to be concluded. From July'20 to Sep'20, we would also expect release of some results from the phase 2 and if lucky, phase 3 clinical trials results from USA Moderna and UK Oxford AstraZeneca. 

I think that the World Health Organisation and many government authorities repeated message that a successful vaccine will only be out in another 12 months time is too conservative an estimate. The main reason I reckoned is to temper expectations and keep nations on their toes to continue drastic preventive measures against COVID-19. Once the news of more and more successful vaccines development is announced possibility within this 2 to 3 months time, it will effectively mark the turning point in the fight against COVID-19 and a guarantee certainty to the end of prospective devastating economic lock-downs for 2nd COVID-19 waves. It will be back to the usual rule book on ensuring sufficient liquidity while the recession turn around into eventual economic recovery. 

I known of friends who have sold off most of their stock portfolio and are holding on to a few hundred thousand dollars since March'20 while waiting for the stock price to plunge even lower than the sharp decline in March'20 as they subscribed to the belief of a double dip recession. While I personally believe in another upcoming dip, at least we know that the global economies will not be sinking into a Great Depression if there is an upcoming working vaccine against COVID-19. The US government has poured around US$2.9 trillion into its economy which is a staggering amount that is substantially more than the US$2.1 trillion during the Global Financial Crisis (GFC) quantitative easing program spread over 3 main stages from late 2008 to 2010. Even in Singapore, the S$93 billion injected into our economy in 2020 is unprecedented relative to S$20.5 billion Resilience Package in January 2009.

The key question that I am pondering right now is whether the market has factored in the news of a successful vaccine development for commercial use? I believe that the next 3 months of July'20 to Sep'20 will be crucial and may bring about injection of further liquidity by global investors sitting on the sideline while awaiting more certainty about the COVID-19 situation and vaccine status.


  1. Good news,, for those vested, I believe we see a v shape recovery,, though that v on the right side may make it look like an "r",, but recover we will. And I do no think it is price in, The more good news come on to the market can only drive stock higher,

    1. Thanks for sharing your thoughts! Keeping my fingers crossed that next year will be a more rewarding one for investors.