The global fight against COVID-19 is taking a huge leap forward.
Rather than just relying on vaccinations alone, pharmaceutical companies have begun to come up with an oral alternative.
Last month, Merck (NYSE: MRK) announced an experimental oral drug for COVID-19 that halves the chance of hospitalisation or death for patients who are at risk of severe disease.
It was the first oral antiviral drug developed to combat COVID-19.
And now, Pfizer (NYSE: PFE), the company that came up with a vaccine that was 95% efficient at preventing severe disease, has followed up with its COVID-19 pill.
What’s even better is that Pfizer claims its drug cuts the chances of hospitalisation or death by up to 89%, a significant increase from Merck’s claim of 50%.
While vaccines remain the best way to control the pandemic, their uneven distribution means that certain parts of the world may not have access to them.
People who fear needles may also be averse to vaccinations.
These factors make a pill-based treatment desirable as an alternative and boosts the world’s arsenal of tools to combat the dreaded disease.
Meanwhile, the stock market seems to have taken notice of the developments.
Accelerating the reopening
Singapore Airlines Limited (SGX: C6L), or SIA, SATS Ltd (SGX: S58) and SIA Engineering Co Ltd (SGX: S59), or SIAEC, are three key beneficiaries of this reopening.
Both the airline and the ground handler are set to report their fiscal 2022 first half (1H2022) earnings by the end of this week.
SIA surged as much as 4.2% to S$5.50 while SATS jumped as much as 3.3% to S$4.32.
If further tests confirm the efficacy of both Merck’s and Pfizer’s pills, it would be a game-changer for industries that bore the brunt of border closures.
Pills are much easier to transport and store and their dissemination will hasten the reopening of borders.
Meanwhile, airline-related businesses are showing early signs of recovering.
Last week, SIAEC reported improved numbers for its 1H2022 last week.
Revenue improved by 18.2% year on year to S$263.5 million while operating loss narrowed significantly to just S$6.7 million.
After adding its share of profits from associates and joint ventures, SIAEC reported a net profit of S$25 million, reversing the S$19 million loss in the same period last year.
More VTLs to come?
Over time, as both the pills and vaccines further cut the risk of severe illness, more economies could open up.
Singapore has already introduced vaccinated travel lanes (VTLs) to 10 countries including the US, UK and Germany.
By the end of this month, four more countries — Australia, Switzerland, South Korea, and Malaysia are slated to be added to the list.
Singapore is also adding two more countries — Sweden and Finland, to the growing list by 29 November. The daily quote is set to increase to 6,000 from the current 4,000 by then.
The VTL scheme is being rolled out in stages and has been a success so far with just one out of 1,000 travellers infected with COVID-19.
Singapore is also progressively loosening quarantine restrictions for travellers from more than 30 countries, including Indonesia, the Philippines, India, and Thailand.
Such developments raise the hopes for even more VTLs to be hammered out in the coming months.
Many countries are also returning to some semblance of normalcy even though cases may be surging.
With hospitals and governments now better equipped to manage the disease, restrictions should not be as harsh as they were last year.
Retail and hospitality could see a lift
Retail and hospitality REITs look set to benefit once borders are opened and restrictions are progressively eased.
Malls that rely on a steady stream of tourists, such as Mapletree Commercial Trust’s (SGX: N2IU) VivoCity, stand to benefit.
Other retail REITs such as CapitaLand Integrated Commercial Trust (SGX: C38U) and Starhill Global REIT (SGX: P40U) should also enjoy an uplift in footfall and tenant sales for their central and Orchard Road malls, respectively.
Hospitality REITs will also enjoy much-needed relief from the tough conditions in the past 18 months that depressed both occupancy rate and revenue per available room (RevPar).
Ascott Residence Trust (SGX: HMN) and CDL Hospitality Trust (SGX: J85) should report improved operating and financial numbers in the coming quarters once travel flow gathers momentum.
Get Smart: The news just keeps getting better
There’s a lot of reason for optimism as the news keeps getting better.
As we head on towards 2022, investors should look forward to more positive developments that will benefit the sectors that have been badly hit.
One more sector, banking, should also see better growth prospects as business sentiment improves and companies begin borrowing to expand.
As an investor, you will not want to miss out on this strong recovery theme.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.