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Emerging Markets

Chinese and Russian vaccines in high demand as world scrambles for doses



As the international scramble for Covid-19 vaccines intensifies Chinese and Russian manufacturers have found a growing list of foreign buyers despite lingering concerns over incomplete trial data and the rigour of domestic approval processes.

Russia’s Gamaleya Research Institute of Epidemiology and Microbiology has agreed to sell its Sputnik V vaccine to countries including Algeria, Argentina, Saudi Arabia and Brazil, while the two leading Chinese manufacturers have signed deals with more than a dozen countries including Bahrain, United Arab Emirates, Egypt, Philippines, Indonesia and Hungary.

For Moscow and Beijing, both keen to see their pharmaceutical sectors compete internationally, the sales represent a significant political and commercial coup. China in particular has made bold promises that its vaccines will deliver a diplomatic win by playing a leading role in the global immunisation drive.

“Covid has the potential to significantly change how the world will see China’s vaccines,” said Jennifer Huang Bouey, an expert on China’s health policy at RAND, a California-based think-tank. “We could for the first time see a critical vaccine from China on the global stage.”

Men in Beijing wait to receive a Covid-19 vaccine developed by state-owned Sinopharm, one of several Chinese groups with a coronavirus shot approved or under development © Roman Pilipey/EPA-EFE/Shutterstock

Yet for all the grand ambitions and the queue of willing buyers, neither the Gamaleya Institute nor the leading Chinese manufacturers, Sinopharm and Sinovac Biotech, have published full sets of trial data, leaving most scientists unable to make rigorous comparisons to their western rivals.

“I am very confident with the data we have on the mRNA vaccines,” said Fiona Smaill, a pathologist at McMaster University in Ontario, Canada, referring to the jabs developed by US company Moderna and the German-American partnership of BioNTech and Pfizer. “Because we don’t see that same data for the Chinese vaccines, it is much more challenging for us to have that same confidence.”

The leading Chinese and Russian vaccines all published promising results from early stage clinical trials in peer-reviewed international journals such as The Lancet. In each case, phase 3 safety and efficacy trials were then set up in ways that appeared to meet international standards in terms of scale and process, experts said.

But complete interim results from those trials — the data underpinning conclusions about efficacy — were not released before the vaccines received regulatory approvals either in China or Russia, or in other countries that have registered the vaccines for use.

“Approvals without publishing full phase 3 data is becoming something of a trend,” said Professor Raina MacIntyre, an infectious diseases specialist at the University of New South Wales in Sydney. “Bottom line is, when you are talking about rolling out a vaccine to the public you want to see that data published.”

Russia has supplied doses of Sputnik V to Argentina © Marcos Brindicci/Getty Images

In Russia, President Vladimir Putin made Sputnik V the world’s first registered vaccine in August — its name a nod to the Soviet satellite that launched the space race — when it had only completed phase 2 trials on 76 participants. 

Phase 3 trials of Sputnik V began in September on 30,000 volunteers. Though they will not conclude until later this year, the state-run Gamaleya Institute said in November that interim data from the trials showed the vaccine’s efficacy was 92 per cent — on a par with its western counterparts. The shot uses a harmless adenovirus to deliver the immunising protein into the body, similar to the technology in the Oxford/AstraZeneca jab. The Gamaleya Institute says it has been working on adenoviral vaccines since the 1980s and points to its recent success with an Ebola shot in 2015.

In China, the authorities have allowed the limited use of several vaccines since the summer and gave conditional approval to a vaccine developed by state-owned Sinopharm in December after the company said it was 79 per cent effective in an interim analysis of phase 3 results. Earlier that month, Bahrain and the UAE, which also trialled the vaccine, had said it was 86 per cent effective. None of the announcements included key information normally considered by regulators such as the number of infections among trial participants. Sinopharm did not respond to a request for comment.

Conflicting efficacy data has also been released for the Chinese vaccine developed by Sinovac Biotech. The shot was found to be 91.3 per cent effective in trials in Turkey and 65 per cent effective in trials in Indonesia. In Brazil, trial organisers announced it was 78 per cent effective, then revised that rate to 50.4 per cent when “very mild” cases were included.

Sinovac told the Financial Times the findings were “objective” and a “reasonable” outcome from carrying out independent trials in multiple locations. But the confused releases have raised fears of a knock to public trust in places such as Hong Kong, which is likely to delay its rollout of the jab until seeing more data.

China’s vaccine industry has long been dogged by quality and corruption scandals and none of the companies producing Covid-19 shots have been big exporters in the past.

In 2017, during a public outcry over faulty vaccines, the Wuhan Institute of Biological Products — a branch of the Sinopharm subsidiary developing one of its Covid-19 jabs — was found to have produced 400,520 doses of substandard inoculations against diphtheria, pertussis and tetanus, known as DPT vaccines.

Efforts have since been made to clean up the sector and, domestically, public confidence has improved. One recent study found almost 90 per cent of respondents in China were likely or somewhat likely to take a Covid-19 vaccine, the highest among the 19 countries surveyed.

But China’s vaccine industry is used to supplying government-backed immunisation programmes at home, and has struggled to understand how to develop trust outside China, said Jin Dong-Yan, a virologist at the University of Hong Kong.

“State-owned vaccine makers have basically never needed to work on branding or to describe their review process, because they can rely on the government to gain public trust,” said Mr Jin. “The model of ‘if the nation says it’s OK, then it’s OK’ is clearly insufficient if they want to gain a large share of international markets.”

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Emerging Markets

Tech-heavy Taiwan stock index plunges on Covid outbreak




Taiwan’s stock market, home to some of the world’s biggest tech companies, suffered one of the largest drops in its history as investors were rocked by a worsening Covid-19 outbreak.

The Taiex fell as much as 8.55 per cent on Wednesday, the index’s worst intraday fall since 1969, according to Bloomberg. It finished down 4.1 per cent.

Construction, rubber, automotive and financials — sectors retail investors had been shifting into from technology in recent months — were the worst hit in the sell-off.

The world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Company, which has a 30 per cent weighting in the index, fell as much as 9.3 before recovering ground to be down 1.9, while Apple supplier Hon Hai Precision Industry, also known as Foxconn, dropped 9.8 per cent before paring losses to be down 4.7 per cent.

While Taiwan’s sell-off was related to domestic Covid-19 problems, it followed recent declines in global markets as investors worried about possible inflationary pressures.

The falls came as Taiwan’s government was expected to partially close down public life to contain a worsening coronavirus outbreak — something the country had managed to avoid for more than a year.

“The reason that triggered the escalated sell-off during the trading session is the new [Covid-19] cases to be reported this afternoon, and probably the raising of the pandemic alert level,” said Patrick Chen, head of Taiwan research at CLSA. “On top of that, the market before today was already at a point where the index was at an inflection point.”

Taiwan’s strict border controls and quarantine system and meticulous contact tracing measures had helped it avoid community spread of Covid-19 until recently.

That success, which allowed Taipei to forego lockdowns, helped boost the local economy, which grew about 3 per cent last year and 8.2 per cent in the first quarter of 2021.

But health authorities announced 16 locally transmitted confirmed cases on Wednesday, for three of which the infection source was unclear — a sign of widening spread in the community. Authorities had confirmed seven untraced cases on Tuesday, and domestic media reported that the government might introduce partial lockdown measures.

President Tsai Ing-wen called on the public to be vigilant but avoid panicking.

Taiwan’s stock market rose almost 80 per cent over the past year, peaking at a historical high late last month. It is now down 8.5 per cent from that mark.

Retail investors have increasingly moved out of technology stocks in recent weeks, reducing the sector’s weight in trading volume from almost 80 per cent at its height to just over 50 per cent.

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Emerging Markets

China factory gate prices climb on global commodities boom




The price of goods leaving factories in China rose at the fastest pace in more than three years, on the back of a rally in commodities supported by the country’s economic recovery.

The producer price index rose 6.8 per cent in April year-on-year, beating economists’ expectations and surpassing March’s increase of 4.4 per cent.

The rate was driven in part by comparison with a low base last year in the early stages of the pandemic. But it also reflects a global surge in the prices of raw materials that was first stoked by China and now incorporates expectations of recovering global demand.

While PPI prices in China have leapt, economists suggested there was limited spillover into consumer prices and that the central bank was unlikely to react. China’s consumer price index added just 0.9 per cent in April, the National Bureau of Statistics said on Tuesday, although it touched a seven-month high.

“It tells us that demand at this moment is super strong,” said Larry Hu, head of greater China economics at Macquarie, of the PPI data, although he suggested policymakers would see the increase as “transitory” and “look through it”.

“We’re going to see some reflation trends,” he added.

Signs of tightening in China’s credit conditions have drawn scrutiny from global investors eyeing the prospect of higher inflation as the global economy recovers from the pandemic, especially in the US, which releases consumer price data on Wednesday.

China’s PPI index remained mired in negative territory for most of 2020 following the outbreak of coronavirus, but has started to gather momentum this year. Gross domestic product growth in China returned to pre-pandemic levels in the final quarter of 2020.

An industrial frenzy in China has stoked demand for commodities such as oil, copper and iron ore that make up a significant portion of the index and have helped to push it higher. 

Policymakers in China have moved to tighten credit conditions, as well as attempted to rein in the steel sector. Ting Lu, chief China economist at Nomura, said the relevant question now was “whether the rapid rise of raw materials prices will dent real demand, given pre-determined credit growth”.

Retail sales in China have lagged behind the growth rate of industrial production, putting downward pressure on CPI, which has also been weakened by lower pork prices that rose sharply on the back of African swine fever. Core CPI, which strips out food and energy, rose 0.7 per cent in April 

Julian Pritchard-Evans, senior China economist at Capital Economics, said that producer prices were feeding through into the rebound in consumer prices, but also suggested that pressures on the former were “likely to be mostly transient”.

He added that output prices for durable consumer goods were rising at their fastest level on record.

China’s rapid recovery has been driven by its industrial sector, which has churned out record quantities of steel and fed into a construction boom that policymakers are now trying to constrain. On Monday, iron ore prices hit their highest level on record, while copper prices also surged.

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Iron ore hits record high as commodities continue to boom




The price of iron ore hit a record high on Monday in the latest sign of booming commodity markets, which have gone into overdrive in recent weeks as large economies recover from the pandemic.

The steelmaking ingredient, an important source of income for the mining industry, rose 8.5 per cent to a record high of almost $230 a tonne fuelled by strong demand from China where mills have cranked up production.

Other commodities also rose sharply, including copper, which hit a record high of $10,747 a tonne before paring gains. The increases are part of a broad surge in the cost of raw materials that has lasted more than a year and which is fanning talk of another supercycle — a prolonged period where prices remain significantly above their long term trend.

The price of timber has also hit a record high as US sawmills struggle to keep pace with demand in the run-up to peak homebuilding season in the summer.

“Commodity demand signals are firing on all cylinders amid a synchronised recovery across the world’s economic powerhouses,” said Bart Melek, head of commodity strategy at TD Securities.

Strong demand from China, the world’s biggest consumer of commodities, international spending on post-pandemic recovery programmes, supply disruptions and big bets on the green energy transition explain the surge in commodity prices.

Commodities have also been boosted by a weaker US dollar and moves by investors to stock up on assets that can act as a hedge against inflation.

The S&P GSCI spot index, which tracks price movements for 24 raw materials, is up 26 per cent this year.

Strong investor demand pushed commodity assets held by fund managers to a new record of $648bn in April, according to Citigroup. All sectors saw monthly gains with agriculture and precious metals leading the way, the bank said.

Agricultural commodities have had an especially strong run owing to rising Chinese demand and concerns of a drought in Brazil. Dryness in the US, where planting for this year is under way, is also adding to the upward rise in prices. Corn, which is trading at $7.60 a bushel and soyabeans at $16.22, are at levels not seen since 2013.

“From a macro economic environment to strong demand and production concerns, the ingredients are all there for the supercycle,” said Dave Whitcomb of commodity specialist Peak Trading Research.

Rising copper and iron ore prices are a boon for big miners, which are on course to record earnings that will surpass records set during the China-driven commodity boom of the early 2000s.

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JPMorgan reckons Rio Tinto and BHP will be the largest corporate dividend payers in Europe this year, paying out almost $40bn to shareholders. Shares in Rio, the world’s biggest iron ore producer, hit a record high above £67 on Monday.

Brent crude, the international oil benchmark, has crept back up
towards $70 a barrel, which it surpassed in March for the first time in
more than a year, recovering ground lost as the pandemic
slashed demand for crude and roiled markets.

Supply cuts by leading oil producers have helped to bolster the market
as consumption has begun to recover around the world.

While some Wall Street banks have hailed the start of a new supercycle, with some traders talking of a return to $100 a barrel oil, others are less convinced. The International Energy Agency said oil supplies still remain plentiful meaning any talk of a supercycle is premature.

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