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On Monday, November 16, the CAC 40 further strengthened its gains with the announcement by U.S. biotech company Moderna that its investigational vaccine was 94.5% effective, one week after official statements by Pfizer and BioNTech. As a result of these recent discoveries, financial analysts are recommending European equities in the sectors that will benefit most from the arrival of a vaccine.
In the last two weeks, the CAC 40 has posted two gains of 7.98% and 8.45%. This momentum has been further strengthened by Moderna’s claim that its vaccine is 94.5% effective. This announcement by Stéphane Bancel‘s company triggered a cataclysm in Asia – where the MSCI index rose by more than 1%, an all-time high not seen since 1987 – as well as on the Paris Stock Exchange: up 1.1% shortly after 12:00 noon, the value of CAC 40 shares rose by 2.35% to 5,506.60 points at 1:20 pm, 20 minutes after Moderna’s revelation. It also caused a surge in trading volume to nearly 2 billion euros.
The detail of this surge in trading shows the domination of the CAC 40 by URW, whose share value was 12% at 12:35 pm on November 16. Renault shares climbed by 4.9%. Among the smallest companies listed on the stock exchange, Voluntis‘ share price soared 35% on the same date, as did Europcar (+29%) and Vallourec (+18%). According to UBS strategists Nick Nelson and Joao Toniato, the gap in stock market performance between the European companies that are most sensitive to the arrival of a vaccine and those that are the least sensitive fell from 30% last April to less than 10% on Tuesday, November 17.
According to these experts, the sectors most exposed to the discovery of a vaccine would be transportation and leisure, automotive, raw materials, industry, energy and construction materials. However, the most significant sector movements remain in the aeronautics and banking sectors, accentuating the rebound predicted by the discovery of a vaccine in the main sample (+3.9% for Thales, +3.5% for Safran, +3.4% for Société Générale, +3.1% for Airbus, +1.9% for BNP Paribas, etc.). After Moderna’s announcement of the reliability of its vaccine, Alstom’s shares are also 15% higher than on 4 November.
Finally, recent statements about a vaccine against Covid-19 have facilitated certain buyback policies, as evidenced by the acquisition – for a price reduced by 18% to $3.6 billion – of Taubman Centers by Simon Property. Like LVMH, which had long sued the American jeweler Tiffany, Simon had had claims on Taubman for years. And like the French luxury goods conglomerate, which renegotiated its terms after the lawsuits began, Simon was awarded only $43 per share in cash, instead of the $52.50 per share agreed to in February. So another question would be whether consumers will flock to shopping malls once the recovery begins.
Indeed, if “the market seems eager to jump on the second wave” to quote Hervé Goulletquer, strategist at the AM Postal Bank, the future of discounted stocks remains uncertain. It will depend, according to UBS, on the outlook for monetary and fiscal policy, inflation expectations and the evolution of long rates. In addition, the result of the American elections is less favorable to discount stocks, as the stimulus plan announced by future President Joe Biden is no longer assured, due to the lack of a majority in the Senate.
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