New virus variants are stoking COVID-19 angst, but we see vaccination programs opening the door to economic and market recoveries.

The development of multiple COVID-19 vaccines cheered markets late last year, with efficacy levels that exceeded expectations. Investors are now focused on the counterforces of vaccine rollout vs. virus variants. Data scientists and healthcare analysts from BlackRock Fundamental Equities are tracking the trends around the world to form a view for the road ahead.

Vaccination milestones: 20-30-50

The immediate purpose of vaccination programs is to lessen the severity of the disease and relieve the stress on public health systems, allowing lockdown measures to be lifted. Based on our analysis, we expect mortality rates to come down once 20% of populations – the most vulnerable – have been vaccinated. The number of intensive-care patients in hospitals should drop once about 30% have been vaccinated. It may require 50% of the adult population to be inoculated before the pressure on hospitals can fall significantly.

Outlook for re-opening

We find the impact of vaccinations starts to filter through to the COVID data within roughly a month. This accounts for the time it takes for immunity to set in and the difference in the number of vaccinated vs. non-vaccinated.

Ongoing vaccine rollouts – combined with localized lockdown measures – means the data could improve enough for UK restrictions to be lifted around April, when we see a 50% drop in hospital admissions, as shown in the chart below. Restrictions could ease slightly later in Europe given some problems with vaccine production. The U.S. sits somewhere between the two and varies by state. While only about 35% of vaccines distributed in the U.S. had gone into arms at the beginning of January, that number increased to 50% by month-end. We see this improving further as rollout continues. Israel is the global leader in vaccinations and the impact on hospitalizations and other key trends is encouraging.

Plotting the positive impact of vaccinations
Estimated reduction in COVID-related hospitalizations through Q1 2021

Source: BlackRock Fundamental Equities, February 2021. Data from 1/24/21-3/31/21. The chart shows the estimated drop-off in hospitalization rates as countries roll out vaccination programs. Our analysis is based on official information about vaccine programs, availability of vaccine supplies, efficacy of vaccines, an estimated vaccine adoption rate of 80% and a five-week lag between vaccination and reduction in hospitalization. For illustrative purposes only. There is no guarantee that any forecasts made will come to pass.