News & Analysis

The new generation of Billionaires and the correlation with stock prices

Andrew Saks, Friday, 21 May 2021

Never has Western society been so divided.

Since March 2021, the way of life of many who had been used to very little intrusion in their every day lives and endless opportunities has been completely turned around, and entire populations have seemingly willingly accepted the constant intrusion by the state into every aspect of daily life including requiring permission to sit on a park bench or being sanctioned for entering a bus station without a written reason.

Who would have guessed that just a year before accepting uniformed marshalls demanding to see papers, the British, European and American public were championing the cause of responsible freedom and egalitarianism?

Since March 2020, the month that changed the dynamic of the world's business, fiscal and social life forever, a new set of metrics has come to light, that being the now marked difference between the have and the have-nots.

Those who can bypass the rules, and those who are unable to.

Thus, the wealth and power distribution in Western nations is beginning to resemble that of the Cold War period rather than that of a modern, free and borderless global economy.

The list of British billionaires is growing. There are now 171 billionaires residing in the United Kingdom, which is 24% more than have ever resided in the nation which holds the accolade of being the world's number one financial markets center.

Not only is there a record number of billionaires. The fortunes of existing billionaires in the United Kingdom have rocketed by 22% during the past year, according to figures that were announced this morning.

The divisive nature of the lockdowns has created an environment in which the general public may have had to tighten their belts and many small businesses run by hard working entrepreneurs have been not allowed to operate and therefore without revenue for over a year, there is another side to this new economic circumstance which has placed the power in the hands of a certain few.

Nine CEOs of publicly listed pharmaceutical companies have become billionaires recently. Dissenters have now taken to social media to display their finger-wagging disapproval, with one group, The People's Vaccine, having stated today on yes, you've guessed it, Twitter "The 9 new billionaires, have a combined net wealth of $19.3bn, enough to fully vaccinate all people in low-income countries 1.3 times."

Twitter has become a platform for those wishing to influence the market, and in some notable cases has been effective. Just ask Elon Musk!

Moderna CEO Stephane Bancel is the richest new big pharma billionaire, followed by Ugur Sahin, his counterpart from BioNTech. Each is now worth over $4 billion. Others on the list include three Moderna investors, the chair of a firm contracted to manufacture and package Moderna’s product, and the three co-founders of the Chinese vaccine producer CanSino Biologics.

It was inevitable that this would occur, given the water-tight blank-check contracts with national governments and the endless pushing of these products via government-led directives on every channel from television to SMS messaging.

There is no consumer market for these drugs. They are paid for directly by the government and therefore the revenues are collected up front in large sums rather than drip-fed by retail receipts every time someone buys one.

In the cases of these new products which, according to their manufacturers, did not exist at all before March last year, they are enormous revenue generators due to their quick entry to the market and the method of distribution which is direct to governments which order huge amounts in one go and pay up front.

Before March last year, these big pharmaceutical firms were still massively profitable, however their core business activity has shifted to one that is likely to go down in history as one of the most money-spinning, stock price-affecting sales campaigns by any company in any sector.

Speaking to mainstream media this week, Anna Marriott, the health policy manager at charity Oxfam criticized what she considers to be a monopoly by saying "These billionaires are the human face of the huge profits many pharmaceutical corporations are making from the monopoly they hold on these medicines."

Thus, if this can be taken as a new dynamic in large industry sectors in which publicly listed giants dominate, a whole new world of taxpayer-funded products from which these companies that hold monopolies on the resulting intellectual property are the ones that reap the rewards it could be considered that a correlation between fluctuating share prices in large firms and government policy are now interlinked.

That, plus higher taxes and lower disposable income for the masses.

Amazon stock has been a prized instrument over the past year, largely due to the pseudo-monopoly Amazon has on home delivery. The company is one of the world's largest internet monopolies, with AWS (Amazon Web Services) being the only cloud-based hosting company that is registered as a trade repository, hence all electronic trading companies from OTC derivatives brokers to Regulated Marketplaces (exchanges) have to report their trades to trade repositories via the MiFID II European infrastructure directive and all data for this is handled by AWS.

That data monopoly is highly valuable, yet it pales into insignificance compared to the completely analog parcel delivery service offered by the same company solely because of the lockdowns and closed retailers plus stay-at-home orders forcing people to order everything online.

The product and service may be different, but the cause and effect are identical.

Amazon stock has rocketed several times over the past year, as has the stock of all the major pharmaceutical firms, including those whose CEOs have become billionaires during the last year.

Whilst various markets are now quite volatile, including the major currencies for the first time in over 20 years, the stock of big pharma and the likes of Amazon are relatively stable, and are set at higher prices than ever before.

This is the confidence of endless government contracts and what many are perceiving as the 'new normal' having set these companies at the forefront of public life and government policy.

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