People will be lifted off against Singapore Airlines Airbus aircraft at Changi International Airport in Singapore on October 24, 2020.
ROSLAN RAHMAN | AFP via Getty Images
SINGAPORE – The stocks of airlines and casinos in the Asia Pacific rose sharply during Tuesday’s trading after their counterparts on Wall Street reacted overnight when investors reacted to a Main development of the coronavirus positive vaccine from Pfizer and BioNTech.
Travel restrictions have hit the airlines and entertainment sectors, both of which depend on tourism revenue. News of a possible vaccine fueled optimism that the global economy could recover and “return to normal” earlier than previously expected.
“Your hotel stocks, casinos, airlines, all of this is really … back in the game now,” David Bailin, chief investment officer at Citi Private Bank, told CNBC’s “Squawk Box Asia” on Tuesday.
Airlines across the region increased with Australia Qantas Win 8.44%. Over in Hong Kong shares of Cathay Pacific popped 11.57% during China Eastern Airlines increased by 8.54%. Japan Airlines rose 19.26% during ANA Holdings advanced 16.71%. Korean Air Lines gained 12.84% Singapore Airlines Stocks rose 13.99%.
The oil sector has also seen strong rally, a departure from the uncertainty that has plagued the demand outlook for much of this year. Santos Australian stocks were up 11.88% Japan Petroleum Exploration’s Share rose 4.31%. Hong Kong listed shares of PetroChina and CNOOC popped 6.01% and 12.47% respectively.
Bailin said he expected an “incredible rotation” away from defensive and “stay home” stocks to cyclicals.
“This is a very big change, it will probably be three to six months before you play,” said Bailin.
Shares in the Japanese video game company NintendoSales rose 4.47% due to strong demand for its Switch console. Sony Stocks also fell 2.93%. In Hong Kong, Razer’s shares were down 4.76%. South Korea’s Kakao Games also fell more than 2%.
Other big losers on Tuesday were gold companies with shares in Newcrest Mining and Evolution mining in Australia they fell by 4.94% and 10.08%, respectively. The precious metal is often viewed as a safe haven for investors to venture into during times of economic uncertainty like the pandemic.
With other vaccine candidates who will be sharing their results in the coming weeks, Bailin said, “If any of them, you know, come out with … very big and positive results like we saw (Monday) at Pfizer, I think this is a particularly good time to switch your portfolio. “
Pfizer and BioNTech announced on Monday that their The coronavirus vaccine was more than 90% effective in preventing Covid-19 among those with no evidence of previous infection.
The reported effectiveness rate was higher than expected as scientists were hoping for a coronavirus vaccine that was at least 75% effective, while White House coronavirus advisor Dr. Anthony Fauci, said this 50% or 60% effective would be acceptable.
While Pfizer’s coronavirus vaccine development has been positive for the global economy, Agathe Demarais of the Economist Intelligence Unit (EIU) warned in a note that “caution remains”.
“We are still a long way from being out of the woods. There will likely be bottlenecks in the actual manufacturing processes of the vaccine and rolling out the vaccine worldwide will be both difficult and expensive,” said Demarais, global forecasting director at EIU.
“We continue to expect the global economy to recover slowly and bumpily. Global GDP will not recover to pre-coronavirus levels until late 2022, with a longer period likely for several countries including Japan, Italy and Mexico is. ” Said Demarais
– CNBC’s Sam Meredith contributed to this report.