Pharmaceutical giant Pfizer and German manufacturer BioNTech said on Monday they had reached a breakthrough in the development of their Coronavirus vaccine.
Analysis so far suggests that the vaccine is more than 90 per cent effective in preventing Covid-19. Although studies are ongoing, the vaccine has already been tested on 43,500 people in six countries, with no major safety concerns being raised so far.
Despite Boris Johnson’s warning that people should not “rely on this news as a solution” to the pandemic, the scientific breakthrough will be welcome news for City firms and business owners across the capital.
Needless to say, businesses have been hugely affected by the pandemic over the past few months, and have had to remain resilient through rigorous lockdown restrictions, forcing many to temporarily close their doors twice, or even shut down altogether.
While the pandemic is far from over, Pfizer’s announcement led to an euphoric reaction throughout the Square Mile, and beyond. The company’s vaccine results led to one of the heaviest trading days since the height of the pandemic crisis, with nearly $2 trillion changing hands across global markets.
The FTSE 100 rocketed, with the blue-chip index climbing 5.53 per cent to 6,236.93, and the midcap FTSE 250 climbing 5.43 per cent to 18,890.32.
Luke Davis, CEO and founder of Mayfair-investment firm IW Capital, said “news of a vaccine rolling out early next year may signal a ‘light at the end of the tunnel’ for many firms.”
“Hopefully this will turn the tide with investment flowing back into businesses from both private and public resources,” Davis told City A.M.
However, the effects of the period since March have led investors to reconsider what they are doing with their investible assets, he added.
Increased appetite for risk
Research from IW Capital found that 45% of City investors feel that the pandemic has increased their ‘risk-appetite’ as traditionally safe investments in big companies are no longer viable, with 36% now looking to invest in sectors created by the Covid pandemic, such as PPE.
Moreover, 42% are now looking to back UK-based companies rather than global firms.
“This demonstrates the sentiment that already exists to help get the UK economy back on its feet and the role the City will play in this,” Davis said.
“After an initial period of fear and uncertainty, City investors are now looking to use their funds to help businesses across the UK,” he added.
Davis said it is paramount that the City is given free reign to fully recover.
“Investor sentiment in the Square Mile is fundamental in bringing the UK economy back to where it was pre-pandemic [because] The City is going to be hugely important to the UK’s economic growth over the next few months and years,” Davis concluded.