Connect with us

Industry News

Moderna share rally could stutter ahead of Q2 earnings

Moderna saw its meteoric rally stall last week after news emerged that hackers linked to Beijing targeted the company’s Covid-19 vaccine ahead of its second quarter (Q2) earnings on Wednesday 5 August.

Moderna saw its meteoric rally stall last week after news emerged that hackers linked to Beijing targeted the company’s Covid-19 vaccine ahead of its second quarter (Q2) earnings on Wednesday 5 August.

The US-based drug maker has seen its share price skyrocket in 2020 on hopes that the company will create a cure for the coronavirus pandemic, with the stock climbing close to 400% to a peak of 94p in mid-July.

However, the rally showed signs of stalling last week, with the stock losing 22% of its value since reaching an all-time-high on 17 July, with news of the hacking scandal worrying investors.

Another factor weighing on Moderna’s shares is its plan to pitch its coronavirus vaccine at around $50 to $60 per course, according to reports, which if true, puts its treatment far higher than other drug makers have agreed to charge governments.

The race to find a viable vaccine is quickening in pace every day, with Moderna facing stiff competition from rivals like AstraZeneca, GlaxoSmithKline, BioNTech and Pfizer.

On Monday, investor sentiment seems to have improved towards Moderna, with the stock up 1% at $74.87 at the time of publication, with the company’s share price up 289% year-to-date.

Moderna: financial guidance

Moderna has up to $2.4 billion to invest, including cash and investments of $1.7 billion and up to $0.7 billion in potentially available grants and awards this financial year.

In 2020, the company expects net cash used in operating activities and for purchases of property and equipment to be approximately $500 million, according to its own guidance.

China denies Moderna hacking allegations

Despite the Moderna allegations against Beijing coming from a US security official tracking Chinese hacking, China rejected the accusation that the hackers, which targeted the drug maker, were linked to it.

Last month, the US Justice Department filed a public indictment against two Chinese nationals that it accused of spying on the US, among them three unnamed North American targets that were involved in medical research aimed at fighting the coronavirus pandemic.

The indictment accused the two Chinese hackers of conducting ‘reconnaissance’ against a Massachusetts-based biotech firm (Moderna) known to be working on a Covid-19 vaccine in January.

‘Moderna remains highly vigilant to potential cybersecurity threats, maintaining an internal team, external support services and good working relationships with outside authorities to continuously assess threats and protect our valuable information,’ company spokesman Ray Jordan said.

Moderna: technical analysis

Moderna has been on a tear since last August, when the current uptrend began. After rising steadily into February, the trend took on new strength, according Chris Beauchamp, chief market analyst at IG.

‘But losses have been contained around the 50-day SMA (currently $67.03), as we saw in March, May and then early July, forming higher lows as the price continued its surge,’ he added.

‘A move back below $57 would be regarded as a bearish development, and we have yet to see a turnaround from the continuing losses of the past few days.’

Continue Reading
Advertisement

Daily Financial News

Don’t Count On JPY Correction; Staying Long GBP/JPY

The path of the potential pace of the JPY decline may still be underestimated by markets, which continue trading the JPY long.

While the 10% USDJPY advance from September lows looks impressive from a momentum point of view, it may no thave been driven by Japan’s institutional investors reducing their hedging ratios or Japan’s household sector reestablishing carry trades.

Instead, investors seemed to have been caught on the wrong foot, concerned about a sudden decline of risk appetite or the incoming US administration being focused on trade issues and not on spending. Spending requires funding and indeed the President-elect Trump’s team appears to be focused on funding. Here are a few examples: Reducing corporate taxation may pave the way for US corporates repatriating some of their USD2.6trn accumulated foreign profits. Cutting bank regulation could increase the risk-absorbing capacity within bank balance sheets. Hence, funding conditions – including for the sovereign – might generally ease. De-regulating the oil sector would help the trade balance, slowing the anticipated increase in the US current account deficit. The US current account deficit presently runs at 2.6% of GDP, which is below worrisome levels. Should the incoming government push for early trade restrictions, reaction (including Asian sovereigns reducing their holdings) could increase US funding costs, which runs against the interest of the Trump team.

Instead of counting on risk aversion to stop the JPY depreciation, we expect nominal yield differentials and the Fed moderately hiking rates to unleash capital outflows from Japan.The yield differential argumenthas become more compelling with the BoJ turning into yield curve managers. Via this policy move, rising inflation rates push JPY real rates and yields lower, which will weaken the JPY. Exhibit 12 shows how much Japan’s labor market conditions have tightened. A minor surge in corporate profitability may now be sufficient, pushing Japan wages up and implicity real yields lower.

JPY dynamics are diametrical to last year . Last year, the JGB’s “exhausted”yield curve left the BoJ without a tool to push real yields low enough to adequately address the weakened nominal GDP outlook. JPY remained artificially high at a time when the US opted for sharply lower real yields. USDJPY had to decline, triggering JPY bullish secondround effects via JPY-based financial institutions increasing their FX hedge ratios and Japan’s retail sector cutting its carry trade exposures. Now the opposite seems to be happening. The managed JGB curve suggests rising inflation expectations are driving Japan’s real yield lower. The Fed reluctantly hiking rates may keep risk appetite supported but increase USD hedging costs.Financial institutions reducinghedge ratios and Japan’s household sector piling back into the carry trade could provide secondround JPY weakening effects

Continue Reading

Daily Financial News

Mexico raises interest rates, cites Trump as risk

The head of Mexico’s central bank says U.S. Republican candidate Donald Trump represents a “hurricane” sized threat to Mexico.

Banco de Mexico Gov. Agustin Carstens told the Radio Formula network Friday that a Trump presidency “would be a hurricane and a particularly intense one if he fulfills what he has been saying in his campaign.”

Trump has proposed building a wall along the border and re-negotiating the North American Free Trade Agreement.

Mexico’s central bank raised its prime lending rate by half a percent to 4.75 percent Thursday, citing “nervousness surrounding the possible consequences of the U.S. elections, whose implications for Mexico could be particularly significant.”

Mexico’s peso had lost about 6 percent in value against the dollar since mid-August. It recovered slightly after the rate hike

Continue Reading

Financial News

Africa’s first Fairtrade certified gold co-operative offers hope to gold miners living in poverty

Syanyonja Artisan Miners’ Alliance (SAMA) has become the first artisanal small scale mining co-operative in Africa to become Fairtrade certified, bringing much needed hope to impoverished communities who risk their lives to mine the rich gold seam that runs around Lake Victoria.

SAMA is one of nine previously informal groups from Uganda, Kenya and Tanzania which has benefitted from a pilot project launched by Fairtrade in 2013. This innovative program aims to extend the benefits of Fairtrade gold to artisanal miners across East Africa.

In that short time, SAMA has undergone training in business and entrepreneurship, as well as safe use of mercury, internal control systems, labour rights and better working conditions, health and safety and more. Previously, daily contact with toxic chemicals used to process gold meant members risked disease, premature births and even death.  Fairtrade gold was first launched in 2011, and SAMA now joins Fairtrade certified gold mines MACDESA, AURELSA and SOTRAMI in Peru.

The co-operative produces just 5 kg gold per year, but nevertheless has the potential to significantly benefit many people in the local community through better conditions through certification. It is expected that Fairtrade and organizations like Cred Jewellery will support the miners, ensuring their gold can be refined and made available to jewellers in the UK and other markets.

Gonzaga Mungai, Gold Manager at Fairtrade Africa said: “This is a truly momentous and historical achievement and the realisation of a dream that is many years in the making. Gold production is an important source of income for people in rural economies. Congratulations to SAMA, it sets a precedent which shows that if groups like this can achieve certification, then it can work for others right across the African continent.”

The Fairtrade Gold Standard encourages better practice and changes to come in line with international regulation around the production and trade of so-called ‘conflict minerals’. Under the Standard, miners are required to:

  • Uphold a human rights policy preventing war crimes, bribery, money laundering and child labour
  • Clearly represent where the minerals were mined
  • Minimise the risks of conflict minerals through robust risk assessments and collaboration across supply chains
  • Report to buyers and trading partners regarding the risks of conflict minerals

Now in its second phase, the programme will focus on supporting other mining groups in the region to access affordable loans and explore a phased approach to accessing the Fairtrade market, allowing more mining co-operatives across Africa to participate in the programme.

Gonzaga added: “Sourcing African metals from smallscale miners in the Great Lakes Region is the responsible thing to do. For a long time companies have avoided buying gold from this region, with devastating consequences for impoverished communities who were already struggling. It has driven trade deeper underground, as unscrupulous buyers pay lower prices and launder illegal gold into legitimate supply chains. That’s why we have chosen to work with these groups to help them earn more from their gold within a robust compliance system that offers social, environmental, and economic protections.”

The Fairtrade gold programme offers a small but scalable solution to sustainable sourcing of gold from the region in line with Section 1502 of the Dodd-Frank Act in the US, OECD Due Diligence Guidance and recent EU Supply-Chain Due Diligence proposals which could come into effect in 2016. This means that up to 880,000 EU firms that use tin, tungsten, tantalum and gold in manufacturing consumer products could be obliged to provide information on steps they have taken to identify and address risks in their supply chains for so-called ‘conflict minerals’.

Continue Reading

Trending