By Charlie Robertson
THUR 01 JULY, 2021-theGBJournal- My 20 year old son is isolating upstairs with COVID (half his friends have it too) and another friend who’s been double Astra-Zeneca vaccinated got COVID off her daughter last week. Neither describe their symptoms as much worse than a bad cold, and the boy is discovering just how distant a father can be, even when we’re living in close proximity.
Nearly 400,000 UK children are now stuck at home due to COVID infections among their friends. Given all this, I’ve been prompted to look again at case numbers in every country globally. Zimbabwe has restricted movement, SA is back in level 4, and Bloomberg is carrying stories about the COVID threat to EM in general.
The most important virus chart is probably this one – showing even India, the country at the epicentre of the Delta variant outbreak (the Indian variant) – has seen a typical wave. Cases have collapsed, even without full national lockdown. Over 30m confirmed cases since the virus began, less than 400k deaths.
For equity investors – the most important chart related to this – MSCI India using the same date range. The lack of reaction to the virus is why you’ve had so few “virus update” emails from me since summer 2020.
The waves striking the UK, Russia, SA, Namibia, Zimbabwe etc will also soar and collapse.
In Russia – there is a drive to push up the vaccination rate in the face of this third wave.
Fortunately for the UK – the hospitalisation numbers (over a week old here) are not picking up like they used to – because the vaccines work in terms of massively reducing the risk of you getting seriously ill (unless, like me, you define a bad cold as seriously ill)
Source: Our World in Data
Or to show the same data – with a two week lag – the figures as of 20 June were about the lowest vs cases (2 weeks earlier) that we’ve ever seen. Of course, as cases pick up, hospitalisations will too, but presumably not in an “overwhelm” the health infrastructure way.
Source: Our World in Data, Renaissance Capital
I’ve been wondering if any cases were picking up in the US – and the answer is broadly no but the surge in Missouri may well be related to the rise of the Delta variant that is now dominant in that particular state. US vaccination rates are similar to the UK a month ago – when the UK had very few cases, so this could yet change and temporarily disrupt retail and entertainment.
But so far – the numbers are looking pretty good. The big difference in vaccination rates between the UK and US – apart from vaccine type – is that a higher share of young people have been vaccinated in the US and a lower share of old people – so case numbers might not explode as fast, but deaths among the unvaccinated older population could still pick up a fair bit.
When the Delta variant takes off in a largely unvaccinated country – the numbers can be dramatic – doubling or trebling every week – for 6 weeks – pushing daily cases up 100-fold in that period.
However, our young frustrated sales guy in London was right to flag Singapore. There is a proposal there to change policy on COVID and to live with it. All countries with sufficient vaccination rates may well adopt a similar policy, and basically drop all restrictions once vaccination levels ensure that the vast majority of us are only going to get a bad cold. In the UK, there is a suggestion that come September, kids won’t have to isolate at home if they come into contact with someone with COVID – only if they actually get COVID. The UK still intends to further loosen restrictions on 19 July – which if the Indian scenario plays out – could be roughly when cases numbers are about to peak and then fall dramatically anyway.
But .. for a little while longer .. we have to deal with continued restrictions in vaccinated countries. Meanwhile for most of EM, full-scale lockdowns like SA’s level 5 in April/May 2020 and India’s in April 2020, are not happening. Even particularly strict SA has only gone back to level 4. There remains a threat of tighter restrictions in east Asia. It would be surprising to see any shift of policy in Latin America, Egypt or Turkey.
SE Asia is seeing a surge for now … in Thailand ..
. Vietnam… (consensus Frontier overweight)
Indonesia
Bangladesh
But this is a misleading picture – because I’m not showing you all the countries with still very low levels of cases, which is the vast majority of countries, from central Europe to India’s neighbour Pakistan to Nigeria and Kenya.
Or benign figures in Philippines
And no big problems in Saudi Arabia
CONCLUSION
In the UK, despite a surge in cases, hospitalisations are down about 90% (my estimate) relative to where they would have been 6 months ago with this many cases, accounting for a two week lag. Vaccinated countries are likely to follow the Singapore proposal and learn to live with COVID.
Despite the greater contagiousness of the Delta variant – which will lead to more deaths in unvaccinated countries (because more people will get the virus) – there’s no sign yet of EMs getting harsher on their policy reaction than in 2020. We do need to accept there will be fluctuations in economic data – even without harsh lockdowns – because of people going out less, local restrictions on retail etc. Eg textile output in Bangladesh may show weaker data in June/July 2021 vs earlier months.
Charlie Robertson is Global Chief Economist, Renaissance Capital |Twitter: @RenCapMan| TED talk: http://www.ted.com/talks/charles_robertson_africa_s_next_boom.html?source=email#.UmdluZ8ok3k.email
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