Hedge fund manager Dmitry Balyasny says stock markets are expecting a Covid-19 vaccine this year that is only 50% to 60% effective, “leaving room for some unloved equities to rally” if efficacy is higher. This according to a recent Bloomberg article.
Balyasny, co-founder of the Chicago-based fund Balyasny Asset Management, reportedly said that faster and stronger progress on the vaccine front could bring buyers back to stocks that have been overshadowed by the tech stock surge. “if there is a solution where the markets are confident that, well, OK, this is a real solution to the problem, whether it takes three months or six months, the stocks will move ahead of that,” he said at a recent conference.
Earlier this month, several pharma giants suffered clinical setbacks on therapeutics and vaccines seen as “key to curbing the pandemic and improving a tough outlook for the global economic recovery,” the article reports. According to Balyasny, if an 80% to 90%-effective vaccine emerges, “markets will start to look through the current weakness for the companies that have really been affected,” signaling that it would help equities outside the large-cap tech sector. “As soon as there is light at the end of the tunnel for that, you can get a rotation,” according to Balyasny.
“The bigger issue,” he concluded, is whether people will take the vaccine. He explains, “Because we’ve politicized the issue, unfortunately, As you get enough efficacy and evidence, hopefully people will actually take it.”