Investors are betting that the vaccine stimulates the resurgence of downed stocks

SYDNEY / LONDON (Reuters) – Investors expecting an upcoming COVID-19 vaccine are starting to buy banking and industrial stocks in anticipation of a strong return to consumer confidence, although many remain wary of risks in sectors ravaged by the pandemic .

Developing some kind of preventive medicine is seen as the best chance of stopping the coronavirus, which has killed 1.2 million people and is the main problem for money managers looking to the next big change in financial markets.

As the market hype around the US election subsides, investors are now bracing for good vaccine news, which they believe is a question of when, not if.

“It will be absolutely massive,” said Stuart Oakley, head of cash currency trading at Nomura in London. “If we get a vaccine, we’ll see all that pent-up demand come out.”

Of the approximately 45 vaccines being tested in humans, Pfizer’s PFE.N and Modern MRNA.O are seen as potentially winners of regulatory approval this year, with AstraZeneca AZN.L not far behind.

Investors are looking beyond the expected “excitement rally”, long-term beneficiaries and short selling opportunities.

“What we have done is give us some chances for a recovery trade, or vaccine trade, by having some exposure to financials,” said Binay Chandgothia, a Hong Kong-based portfolio manager at Principal Global Investors.

Banks benefit from increased economic activity and would be helped if bond yields rise, he said, adding that he had greater exposure to small, growth-sensitive companies and will buy stocks in Singapore and Hong Kong if trading and travel increases.

Brian Jacobsen, senior investment strategist at Wells Fargo Asset Management in Wisconsin, said industrialists have offered broad exposure to a rebound in confidence in areas ranging from product construction to aviation.

Deutsche Bank runs a “vaccine basket” of Singapore dollars and Thai baht, seen to benefit from increased trade and tourism, against the Philippine peso, which is weighed by increased imports.

Financial .dMIWO0FN00PUS and industrial .MIWO0IN00PUS they gained with the broader market this month, but are lagging behind with a roughly 5% rise in global equities .MIWO00000PUS this year. The baht has also recently risen against the peso PHPTHB = R.

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Investors are also creating short positions.

Shinji Naito of Japan’s SPARX Asset Management, which has $ 12 billion under management, hopes a vaccine could trigger a gain from scarce pandemic-inflated stocks, such as some tech companies, while helping long-term investments like real estate agent Tokyo Tatemono. 8804.T.

Dave Wang, a portfolio manager at Nuvest Capital in Singapore, said long-short pairs could snatch gains from what is likely to be an uneven recovery.

For example, airports, which charge fares per aircraft regardless of load, may perform better than airlines affected by low patronage and rising fuel costs.

Of course, not everyone is rushing for a piece of action amid questions about the timing, effectiveness, and delivery of any vaccine still left.

“It is better to be a little too late than too soon,” said Hugh Dive, chief investment officer of Atlas Funds Management in Sydney, noting that delays would leave companies under pressure that need to raise more money quickly.

Others, however, believe it is now safe to bet on a global rebound that a vaccine would increase.

“I think there are two different deals,” said Sean Taylor, chief investment officer in Asia for German fund manager DWS. “A vaccine trade and a cyclical trade. I position myself more in the cyclicals, “he said.” If we had much more credible data for vaccines, I would add services. “