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Coronavirus vaccine news "false dawn" for markets, analyst says

The first human trials have started in the US while Russia and China are ramping up developments too

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The pharma industry has been ramping up studies for coronavirus vaccines, with biotech company Moderna Inc (NASDAQ:MRNA) testing on humans for the first time this week and Chinese, Russian and Australian companies also reporting new vaccine developments since Monday.

However, some experts say stock markets are not likely to stage a proper recovery yet and such news from the biotech sector should be false dawns for investors.

READ: Small biotechs buck market trend as search for lung infection relief intensifies

Share prices will be determined by the extent of the spread of the disease and measures governments put in place to halt the damage to the economy, said Helal Miah, analyst at the Share Centre.

“Markets will react to false dawns too amid data releases suggesting a slowing of the spread or even rumours or fake news of a vaccine,” Miah said.

For instance, Chinese media reported on Tuesday that the country's Academy of Military Medical Sciences was given the green light to kick off clinical trials.

Similarly, the Vector Institute in Siberia was said to have started testing some prototypes and will present the most effective one in three months’ time.

Many scientists around the globe are certain to benefit from a discovery made by the Doherty Institute in Australia, mapping how patients’ immune system responds to the virus.

According to the study, it can help in the development of vaccines and treatment, but the timescale of drug developments, including important regulatory hurdles, means the effects will not be imminent. 

Looking ahead, Frontier IP Group PLC (LON:FIPP) is, for example, looking to “imminently” start trials on animals, as told to Proactive on Monday.

"While some investors may begin to ask whether we are close to the bottom, others will see further downside potential and I sit in this camp," Miah said.

"We are only just at the start of the crisis in the UK and judging by what’s going on in Europe we have the disastrous economic consequences to deal with in the coming months."

As for the short-term effect on economies and markets, Miah added: "A V-shaped recovery is not on the cards.”

Quick facts: Frontier IP Group PLC

Price: 64.5 GBX

Market: AIM
Market Cap: £35.48 m

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