The Coronavirus, or COVID-19, has grabbed headlines for the last couple of months. We’ve heard about ghost towns and entire regions in complete lockdown, misleading data coming out of countries and hundreds of cancelled flights across the world.
The web has become, as it always does in times of panic, full of fake news and memes which have now started popping up in our WhatsApp conversations — but what is the data really telling us?
I decided to explore the current situation and future implications using VAYU and here are some conclusions I found in a 30-minute analysis.
Since the first case detected in Wuhan, China on 31st December 2019, the virus has spread to more than 100 countries, infecting over 118,000 people and killing more than 4,000. Looking at the share of cases by country, it is clear how China represents about two-thirds of the total as of date.
However, this number has been decreasing significantly and it’s not telling us much about how the situation is evolving. New cases in China have plummeted since the government introduced certain measures to contain the virus on 23rd January, including a complete lock-down of the Hubei province, the main region affected by the virus with over 67,000 cases as of today.
New cases outside China (% total of 7-day rolling)
New cases confirmed out of China represents now virtually 100% of the total, with only 16 new cases recorded in China on the 10th March, compared to over 4,400 on the same day globally.
As China is clearly resolving the emergency, the virus has started moving to the West. Excluding South Korea and Iran, the largest chunk of new cases is now in Europe and the US. Italy, with over 10,000 cases reported and 660 deaths, is now the second most affected county globally. On 9th March, the Italian government decided to follow the Chinese example, taking the unprecedented move of locking down the whole country of 60 million people.
Confirmed cases (cases > 150)
Others are now following not far behind. If we plot the number of days since the first 150 cases recorded by country, it’s clear how the trajectory is similar between most EU countries, the US and Italy. There is a lag of eight to nine days and if things don’t change, more European countries will need to adopt strategies similar to those of China and Italy. (Time to take it seriously UK…or maybe it is already too late?)
Leaving aside the human tragedy and the overwhelming strain on the healthcare system, the economic consequences of such measures are significant. Locking down entire countries sets unprecedented challenges for every business, both on the demand and supply side. Demand for most services and goods falter, and as a consequence growth does too. It’s probably too early to gauge the demand reduction in countries outside of China, but initial data coming from the Mainland is not encouraging. For instance, car sales in the first couple of months of the new year are down significantly.
China Car Sales % change, YoY
At the same time, supply chains, which have never been so integrated before, are suffering. One missing component from China can stop an entire production on the other part of the world, as we’ve seen with Jaguar Land Rover, who flew much-needed components out of China in suitcases!
Financial markets, after initially downplaying COVID-19, are reacting severely to the shock. The S&P 500 is down almost 20% since the peak in January 2020.
The travel industry, among others, seems to be the most affected in the short term. Stocks of hotel operators and airlines across the world are trading at 30–40% discount compared to their December levels. Some notable exemptions include companies providing remote working capabilities (e.g. Slack, Zoom), manufacturers of detergents (e.g. Clorox) and groceries (e.g. Tesco) are all certainly capitalising on the situation much better than organisations in other sectors.
Global stocks plummeting, with some exemptions (100=December 31, 2019)
It’s hard to find a positive note amongst all of this, but the silver lining sure does exist. This episode shows how the largest economies can be brought to their knees, and that nature still is a supremely important factor in the growth of the human civilisation. This is also the time to appreciate the growth and development of countries such as India, Singapore and South Korea, who have all dealt with matters exceptionally well despite the crippling effect of the virus by controlling the spread of contagion in highly populated regions. We are personally interested in seeing how “working from home” as a means of delivering work can be a standard in many organisations.
Let us not forget the detergent makers, sanitisers, mask manufacturers and hand wipes sellers who are doing exceptionally well! This is not to say that any amount of wealth can in any way diminish the magnitude of human loss.
Will this impact real estate in the long run? Can we rethink insurance? What about travel? Will new startups come up in areas of contagion prediction and control? Only time will tell. For now, we must take heart in the fact that we have been able to provide mutual empathy and a renewed drive to continue using data as the driving force behind our decision making.
The situation is incredibly fluid and quite volatile, things can change in both ways going forward. In the near term, it is likely that more countries in Europe and US will approve measures to reduce travel. China, on the other hand, seems well placed to start a recovery, having recorded almost no new cases recently, if reports coming out of the country can be deemed accurate.
All in all, the Coronavirus is proving to be one of the largest shocks to the system ever witnessed. Despite all the hardship, when all is said and done it might prove to be a test base for future challenges. It may well serve as a platform and model we can use to filter information that has global impacts such as climate change, gender inequality, poverty, and health.
We can check how robust we are, what economies we have built, who are these nation-states that we have elected, what are these products we are spending time and money on and where have all our collective resources gone?
Time to be cautious, and to observe…