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When Is A Lockdown Not A Lockdown

Ireland’s Corona Virus Response & Vaccine 

October 2020


When Is A Lockdown Not A Lockdown & Ireland’s Corona Virus Response & Vaccine Update 


The whole of the Northern Hemisphere has seen a resurgence in Corona Virus cases after the summer holidays, which may or may not coincidentally tie in with the return of schools. The huge surge in Europe could be as a result of the too early relaxations of travel and holiday restrictions as European countries wanted to kick start their economies during the summer holiday season. With a lot of travel allowed, this may well have facilitated the spread of the virus and the change in weather in the Northern Hemisphere which has resulted in people mixing to a greater degree indoors is likely to have accelerated the spread of the virus.

Whilst the virus has not mutated there are various strains of it (a subtle difference) and some more virulent or contagious strains may have spread through the Northern Hemisphere because of travel. Countries whose borders remain closed, such as Australia, New Zealand, and much of Asia have not seen a so-called second wave of any significance. Australia reacted to the virus by hard closing its borders and without a lapse in quarantine regulations which occurred in Melbourne, Victoria, numbers would have remained exceptionally low. The outbreak in Melbourne was solely due to travel and the botched quarantine arrangements put in place by the Victoria government, and the New South Wales outbreak was linked to the return of a cruise ship from overseas. In Queensland there has only been one case in the last 4-6 weeks and this State has kept its borders closed to other parts of Australia for much of the year.

There is evidence severe lockdowns can work if held in place for 4-6 weeks with then a gradual re-opening, but for this to be successful, it really needs, according to evidence, be total rather than partial. Ireland has not put in place effective travel restrictions, especially with the border with Northern Ireland which remains one of the worst affected places within the UK. The situation in Northern Ireland is so severe it has been selected by some pharmaceutical companies as a suitable place, along with Brazil and South Africa, to conduct vaccine trials! The border issue can only be resolved if the Republic shuts the border to the north, or Northern Ireland shuts its border with the mainland UK and neither of these are politically acceptable, even if health arguments suggest they are necessary to make a severe lockdown successful.

In North America rural States such as Wyoming and Montana have seen an upsurge, and whilst these areas have not seen external tourists, they are popular summer retreats for American city dwellers who want to return to their wild west roots and this may also be a factor in the surge in cases in these States.

There is much debate about whether children are susceptible to the virus, and whilst the number of known cases in children remains relatively low, there is published academic evidence suggesting children can be asymptomatic carriers and therefore spreaders of the disease. A study in South Korea (Mi Seon Han JAMA network) suggested that whilst children younger than 10 transmit the disease much less than adults, the risk is not zero, but those aged 10 to 19 can spread the virus at least as well as adults. South Korean researchers conducted a study on over 5,700 people and found that the first person in a household to develop symptoms was not necessarily the first to have been infected. As a result, it is possible asymptomatic children have set off chains of transmission within their households. This view has also been reinforced according to Ontario’s Science Advisory Group who argue that school closures there were an important contributor to the containment of the pandemic. Victoria has had success with its hard lockdown which started in early August, although restrictive measures are still in place and it is only in the last week that households have been able to visit other households and travel limits have been extended to 25km. Schools there remained closed for over two months. All this has taken 10 weeks already and the programme for re-opening restaurants and cafés has a closure timetable of three and a half months. This suggests the government timetable of re-opening the economy by Christmas could prove to be optimistic. That is unless schools are closed and travel restrictions put in place.

There has been some positive news on the vaccine front, with Pfizer looking to apply for emergency US approval of its Covid-19 vaccine in the third week of November. This relies on novel mRNA technology which is administered in two separate shots and Moderna are also a long way down the track on securing trial data which should allow approval of their vaccine under the emergency use timetable this year. Pfizer are developing this with BioNTech and expects to produce 100m doses worldwide this year and at least 1.3bn next year. The US have signed an agreement with Pfizer to secure 600m doses, while the EU is negotiating a deal for 200m doses. The UK and Japan have also signed deals with the above companies.

One important factor about the mRNA vaccine is that it requires very cold storage which could prove a challenge in terms of rapid distribution among developing nations. This is a two dose vaccine, unlike the adenovirus candidate being developed by Oxford University and Johnson & Johnson with trials on this vaccine technology still paused by the FDA in the States. Sanofi and Novavax are also working on a vaccine with their candidate protein based and expected to be available in Q1 next year. There are also a number of other vaccine candidates, including an Australian one being developed by CLSA (who are also manufacturing other pharmaceutical companies vaccines), and expected to be ready by mid-year 2021.

In the not too distant future vaccine debate is likely to move on from whether there will be a vaccine as to the efficacy of the candidates. In other words, how well will they work, as a vaccine is considered successful at a 50% success rate. There are also different definitions of success with vaccines for some diseases 100% preventative, whilst other vaccines result in only relatively mild infections. So in the case of the Coronavirus a vaccine preventing hospitalisation and therefore significantly reducing mortality would be considered a success.

Markets are likely to see a further leg upwards, especially in hard hit value stocks on any successful vaccine trial announcement, but there will be nuances around this which will come into play and investors will then focus on whether vaccine candidates are effective in circumstances of high viral load, on older people, or those with compromised immune systems. Answers to these questions will determine whether stocks dependent on high levels of personal service or interaction can see a sustained rally in their share price, or whether after an initial rebound a rally in value names will be short lived. While markets will always look ahead, how far they look will depend on whether vaccines which successfully come through trials prove to be game changers, or just reduce the severity of the effects of the disease. Public confidence in vaccines will be necessary to ensure a sufficiently high take up rate to allow countries to develop herd immunity, so credible scientific data backing up trial results will need to be publicly available.

 G O’Neill 20.10.20