SINGAPORE — Airline and casino stocks in Asia-Pacific surged on Tuesday, following their peers overnight on Wall Street as investors reacted to a major positive coronavirus vaccine development from Pfizer and BioNTech.
Travel restrictions have pummeled the airlines and entertainment sectors, both of which depend on tourism revenue. News about a potential vaccine boosted optimism that the global economy could recover and "return to normal" sooner than previously anticipated.
"Your hotel stocks, casinos, airlines, all of those really are ... now back in play," David Bailin, chief investment officer at Citi Private Bank, told CNBC's "Squawk Box Asia" on Tuesday.
Airlines across the region surged, with Australia's Qantas gaining 8.33%. Over in Hong Kong, shares of Cathay Pacific popped 14.06% while China Eastern Airlines rose 7.93%. Japan Airlines surged 21.21% while ANA Holdings advanced 18.06%. Korean Air Lines added 11.24% while Singapore Airlines shares soared 13.99%.
Casino operators jumped, with Australia's Crown Resorts rising 4.6%. Over in Hong Kong, Wynn Macau soared 9.95% while Melco International Development gained 6.84%.
The oil sector also saw sharp moves upward, a departure from the uncertainty that has plagued the demand outlook for most of this year. Santos shares in Australia gained 12.18% while Japan Petroleum Exploration's stock rose 4.61%. Hong Kong-listed shares of PetroChina and CNOOC popped 6.44% and 13.96%, respectively.
We're far from being out of the woods, yet.Agathe Demaraisglobal forecasting director at the Economist Intelligence Unit
'Stay-at-home' and defensive stocks drop
Bailin said he expects an "incredible rotation" away from defensive and "stay-at-home" shares toward cyclicals.
"This is a very big shift, it's gonna take probably you know, three to six months to play out," Bailin said.
Shares of Japanese video game firm Nintendo, which has seen sales soar amid strong demand for its Switch console, fell 4.49%. Sony shares also declined 3.25%. Over in Hong Kong, shares of Razer plunged 8.42%. South Korea's Kakao Games also declined 2.2%.
Other big losers on Tuesday included gold-related firms, with shares of Newcrest Mining and Evolution Mining in Australia dropping 4.84% and 10.39%, respectively. The precious metal is often seen as a safe-haven that investors flock to in times of economic uncertainty, like the pandemic.
With other vaccine candidates set to announce their results in the coming weeks, Bailin said: "If even one more of them, you know, comes out with … very big and positive results like we saw (Monday) from Pfizer, I think it's a particularly good time to be rotating your portfolio."
'Caution remains required'
Pfizer and BioNTech announced Monday that their coronavirus vaccine was more than 90% effective in preventing Covid-19 among those without evidence of prior infection.
The reported efficacy rate was higher than expected, as scientists had hoped for a coronavirus vaccine that is at least 75% effective, while White House coronavirus advisor Dr. Anthony Fauci has said one that is 50% or 60% effective would be acceptable.
While the coronavirus vaccine development from Pfizer was positive for the global economy, the Economist Intelligence Unit's (EIU) Agathe Demarais warned in a note that "caution remains required."
"We're far from being out of the woods, yet. There will likely be bottlenecks around the actual manufacturing processes of the vaccine, and getting the jab rolled out across the world will be both tricky, and expensive," said Demarais, global forecasting director at the EIU.
"We continue to expect that the global economic recovery will be slow and bumpy. Global GDP will not recover to pre-coronavirus levels until at least end-2022, with a longer timeline likely for several countries, including Japan, Italy and Mexico," Demarais said
— CNBC's Sam Meredith contributed to this report.