Tracking the Coronavirus (COVID–19)
Following on from our “Tracking the Coronavirus (COVID-19)” article last week, we thought we would provide an update to this fluid situation.
Munro Partners has been tracking the Coronavirus daily since China confirmed the outbreak on January 20 in Wuhan Province. As an absolute return manager, we analyse the data and patterns to provide insight in terms of timing and ways to protect against the financial downside for our clients.
Source: Worldometer, Munro Partners
Looking at our chart on confirmed COVID-19 cases by country, we had seen a clear trend developing. Progression of confirmed cases by day (with t+0 at 100 cases on a country-by-country basis), we see that the rate of increasing cases (2nd derivatives) have an inflection point between 15 and 20 days. That is, from the time a country crosses 100 cases, it takes roughly 20 days to get the outbreak under control (new daily cases are less than the day before).
China Ex-Hubei is the longest test case with an inflection point at 20 days. While there were 127 cases at t+0 (1st point) increasing rapidly to 11,287 cases by t+20, a further 20 days later (t+40) there were “just” 1,784 new cases. A similar inflection point occurred in South Korea at t+17, whereby the daily number of new cases started to fall.
Since our last publication things have clearly become considerably worse. Despite being in lockdown, Italy is still experiencing increases to t+22. This could somewhat be explained by the delay to lockdowns on March 9 (t+14) whereas China, South Korea and Singapore quickly implemented early lockdowns. Ostensibly, the experience in China and South Korea suggest this could take six weeks to pass through; but arguably this time period is conservative as Asian nations have generally been more compliant than European nations. More concerningly, other large nations such as the US, Spain and France appear to be on the Italy path which suggests more trouble ahead for those nations and more stringent lockdowns for greater parts of the global economy.
Consequently, it would be safe to assume that COVID 19 is likely to be with us for at least the next few months. If economic restrictions remain for the same amount of time, market conversations will rapidly move from health and liquidity crises to talk of a solvency crisis. The travel industry has already reached this stage and co-ordinated action is urgently needed for the rest of the economy to recover.
Meanwhile, stay safe, and look after each other.
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Nick is a founding Partner and the Chief Investment Officer of Munro Partners. He is responsible for the investment management of Munro’s key investment funds and the formulation and implementation of the proprietary investment process. Nick has...