Markets expect any COVID-19 vaccine approved this year to be only 50% to 60% effective, asset manager Balyasny says

• The hedge fund manager Dmitry Balyasny has said markets expect any COVID-19 vaccine approved this year to be only somewhat effective, Bloomberg reported.
• Expectations for an effectiveness rate of 50% to 60% would allow some recovery stocks to rally should a vaccine shot turn out to protect a greater share of people, Balyasny reportedly said at a virtual discussion hosted by Citigroup.
• Once a vaccine shot is 80% to 90% effective, markets will start to look through the current weakness for companies that are badly affected, he said.
• Bloomberg said he did not name specific stocks and sectors but suggested the sentiment would drive equities outside Big Tech.
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Stock markets are pricing in chances of any COVID-19 vaccine approved this year to be only 50% to 60% effective, Bloomberg reported Balyasny Asset Management's Dmitry Balyasny saying.

That would allow for some unpopular equities, or recovery stocks, to rally should a vaccine shot turn out more effective, he reportedly said at a Citigroup virtual conference.

According to Bloomberg, Balyasny, whose firm manages about $118 billion, said that once a vaccine proved to be 80% to 90% effective, markets would start to look through the current weakness for stocks that have struggled during the coronavirus pandemic.

These stocks, especially in the retail and financial sectors, have been eclipsed by the ascendance of large technology stocks that profited from the shift to working from home.

"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," Balyasny said.

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The race for a coronavirus vaccine has been hit by setbacks of late. Johnson & Johnson said it halted all dosing associated with its vaccine trials on Monday after a participant developed an "unexplained illness."

Its US rival Eli Lilly also paused trials of its COVID-19 antibody treatment after an independent board of experts raised safety concerns.

In September, the British pharma group AstraZeneca paused its own trials over concerns a participant may have had a serious adverse reaction. Though trials in the UK have resumed, the US trial is still on hold and is under further review by the Food and Drug Administration.

Balyasny said investors were expecting only a somewhat effective vaccine to be distributed and improved over next year. By the later half of 2021, "you sort of start getting back to normal," Bloomberg reported him as saying.

Bloomberg said he did not mention specific stocks and sectors but suggested this sentiment would drive equities outside the technology sector.

"As soon as there is light at the end of the tunnel for that, you can get a rotation," the asset manager said.

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