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Lower-income countries fall behind in race for vaccines



Inadequate supplies of Covid-19 vaccines for lower-income countries mean it could take years to inoculate some parts of the world, undermining global efforts to end the pandemic.

Desperate to vaccinate their populations against Covid-19, high-income nations, home to about 1bn people, have secured 4.2bn doses, approximately 74 per cent of total government orders, according to the latest weekly data compiled by the Global Health Innovation Center at Duke University of North Carolina. In contrast, lower-middle and low-income countries have secured orders for only 675m doses.

The shortfall means that while the UK aims to offer coronavirus vaccinations to all adults in Britain by September, in many parts of the world it could take as long as three years to inoculate the population during which time the virus will continue to circulate, experts have warned.

“We have a catastrophic supply problem [in low-income countries],” said Anna Marriott, health policy manager at Oxfam GB. “The longer the virus is able to travel the world, the greater the risk of mutations and the greater the risk that the vaccines we do have will become ineffective.”

Column chart of Confirmed number of doses purchased by country income level classification (million) showing Poorer countries fall behind in race for vaccines

Many low and lower-middle-income countries had planned to rely on the WHO-backed Covax facility, set up last year with Gavi, an alliance of vaccine partners, and the Coalition for Epidemic Preparedness Innovations, a foundation that takes donations to fund independent vaccine research.

The programme aimed to ensure the equitable, worldwide distribution of 2bn Covid-19 vaccine doses by the end of 2021. Poorer countries would get doses for free and no country would vaccinate more than 20 per cent of its population before every country had been given the same opportunity.

But Covax has struggled to mobilise the support needed from wealthy nations to subsidise the initiative. It has only secured orders for 1.07bn doses so far, while rich nations have preferred to sign bilateral supply deals.

“It’s not right that younger, healthier adults in rich countries are vaccinated before health workers and older people in poorer countries,” Tedros Adhanom Ghebreyesus, head of the World Health Organization said this week in a searing critique of rich countries and their response to the coronavirus pandemic.

Aurélia Nguyen of Gavi told the Financial Times that Covax had “line of sight” on 1.97bn vaccination doses and was on track to meet its goal of fair and equitable access to vaccines for developing countries. However, she declined to say how many doses would be delivered this year. This would depend on production volumes and on regulatory approval in each country where vaccines will be used, she said.

The uncertainty over Covax has forced developing economies and regional blocs such as the African Union into the commercial market to compete for their own supplies.

“The global situation we’re in is that we’re having to do what rich countries did earlier, hedging our bets with multiple bilateral [deals],” said Fatima Hassan, founder of Health Justice Initiative, a South African group seeking equitable access to vaccines.

“The company plays god,” Ms Hassan said of the vaccine manufacturers and the non-disclosure agreements that govern sales and mean that pricing information and supply volumes have remained closely guarded. “They fuel a lack of transparency . . . it shows quite clearly where power lies in this pandemic.”

Kate Elder, senior vaccines policy adviser at Médecins Sans Frontières, said that low-income countries faced “an artificially induced supply constraint”, explaining that a more collaborative approach to intellectual property could have made it easier for supplies of successful vaccines to be ramped up by other manufacturers.

“[Rich governments] enabled shortages by dumping funding into pharmaceutical companies without conditionality,” Ms Elder said. “We should be mandating the sharing of technology and knowhow to competent manufacturers, but we haven’t done that.”

In Peru, the government secured agreements this month for 38m doses from China’s Sinopharm and 14m doses from AstraZeneca © AFP via Getty Images

One exception is the production of AstraZeneca’s Covid-19 vaccine by the Serum Institute of India, which is set to provide important supplies for many developing economies. The deal is a consequence of the partnership between AstraZeneca and Oxford university, in which Oxford sought to ensure that “those countries who are most vulnerable to the worst effects of this global pandemic have early access to a vaccine”.

Carlos Felipe Jaramillo, the World Bank’s vice-president for Latin America, said he feared that the region would find itself in the worst of both worlds: behind high-income countries with the purchasing power to secure large quantities of vaccines, but not eligible for schemes such as Covax.

In Peru, one of the countries hardest hit by the virus where more than one in every 1,000 people has died of Covid-19, the government secured agreements this month for 38m doses from China’s Sinopharm and 14m doses from AstraZeneca. Talks with Pfizer, however, have stalled over the drugmaker’s request for a liability waiver that would absolve it of responsibility for any side effects. Pfizer did not immediately respond to a request for comment.

“A number of the presidents have told me how difficult it’s been,” Mr Jaramillo said. “These pharmaceuticals are asking for some very difficult conditions that might require changing legislation in the countries . . . I don’t think this will be smooth and quick.”

Additional reporting from Joseph Cotterill in Johannesburg, Michael Stott in London, Michael Peel in Brussels, Gideon Long in Bogotá and Andres Schipani in Nairobi

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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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Emerging Markets

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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