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Japan won praise during the COVID-19 pandemic for staying open while other developed economies locked down, which helped lift stocks to three-decade highs. But as the country now struggles with its inoculation program, some investors fear a wave of vaccine envy.

In the past month the Topix has sunk 2.6%. That compared with gains of 7% in the S&P 500 Index and 4.6% by the FTSE 100 in London — where photos of revelers at reopened pubs this week contrast with reports from Tokyo, where hours at bars and restaurants have been shortened as COVID-19 cases surge.

“Japanese indexes are starting to fall behind. Foreign investors are looking at vaccination rates as an investment decision,” said Tomoichiro Kubota, a senior market analyst at Matsui Securities Co. “Markets are at their wits’ end right now with the vaccination rate slower in Japan.”

Talks between Prime Minister Yoshihide Suga and Pfizer Inc. Chief Executive Officer Albert Bourla on a new supply of vaccine failed to immediately lift spirits in Tokyo markets, amid reports the capital’s leadership was considering another state of emergency to tackle the resurgence.

Suga told reporters Monday that Pfizer had agreed to hold talks on supplying more of the vaccine, and that he expected to have sufficient supplies for the entire country by the end of September. However, he didn’t give further clarity on the timeline or how many doses might be secured.

Taro Kono, the nation’s vaccine czar, said Sunday that a deal had been effectively reached with Pfizer.

“In a way, it’s a buying opportunity, because it’s not forever that Japan will be behind,” said John Vail, chief global strategist at Nikko Asset Management Co., on Friday, before reports on a possible Pfizer deal. “People are going to get vaccinated pretty soon. A lot of people will be relieved.”

The first shipments of Moderna Inc.’s vaccine, which could be approved for use in Japan next month, are also set to arrive this week, according to news reports.

Olympic focus

Japan has entered a fourth wave of the COVID-19 pandemic with fewer than 100 days before the scheduled opening of the Olympic Games.

A senior official in the ruling Liberal Democratic Party indicated last week that canceling the event was an option, though he later clarified his remarks.

In Tokyo’s financial circles, some envy peers abroad who have already been vaccinated. Hong Kong on Thursday expanded eligibility to all people over the age of 16. Japan has yet to set out a schedule for groups other than the over-65s, although officials have said they expect the rates to increase in May.

“If the inoculation rate for Japan remains so overwhelmingly low, it’s inevitable that compared to other countries, the recovery of the economy will be significantly delayed,” Toshihiro Nagahama, chief economist at Dai-Ichi Life Research Institute, wrote in a report.

The country plans to distribute enough vaccine to cover both doses for people age 65 and older by the end of June, though the time frame for actual administration of the shots hasn’t been finalized.

Less urgency

The government started inoculating older people one week ago, administering to only about 7,000 of the 36 million that are 65 or over in the first four days. Nearly 2 million doses have also been given to medical workers.

A combination of factors has hindered the rollout, including a requirement for local trials, a lack of domestic development and production capacity, which has made the nation dependent on imports, and a public long-skeptical of vaccines.

Also, with around 500,000 reported cases to date — compared to 31 million in the United States and 5.2 million in France — Japan hasn’t felt as much urgency as many nations in the West. Even during the most recent state of emergency, businesses both large and small mostly stayed open.

“Globally, Japan is still an A-student in terms of how little economic activity declined,” said Hiroshi Matsumoto, head of Japan investment at Pictet Asset Management. He cites a lull in the earnings cycle for sluggishness in the markets, with a recovery already priced in and earnings season looming.

“There isn’t really a debate that Japan is somehow worse compared to other countries that need to ramp up vaccination because their outbreak is worse,” he said.

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