Good news for the markets: data from China tells us that the second wave of the coronavirus is insurmountable. It’s flat. There is no wave to catch.
If there is no significant momentary wave a few months after restrictions are lifted in Wuhan, there may not possibly be a significant momentary wave elsewhere. The markets are already in line with this line of thinking.
China’s Coronavirus Dragon Tamed
This week, Wuhan’s public health authorities reported that they are nearly done testing some 11 million city inhabitants for the SARS-CoV-2, the mysterious pathogen first discovered there in December.
Wuhan, floor 0 of the pandemic. Now that the dust has settled, only about three hundred more people have tested positive for the virus, with the majority being asymptomatic or with very few symptoms.
The virus has not returned with a vengeance since its emergence, as has been said countless times to occur here in the U. S. UU. si we lifted the quarantine orders.
It remains to be seen if he will return in December. It’s possible. It might be just as bad. It may just be worse. Maybe it’s not bad at all. Remember that the first edition of SARS ran from November 2002 to July 2003 and never made headlines again.
According to China’s National Health Commission (NHC), only 16 other people tested positive in mainland China on May 31, up from two the day before.
Fewer than 20 new cases in China. Fears are receding. A semblance of normalcy is returning to China, with locals staying cautious and avoiding travel and public transportation. (Photo via Getty Images)
The average daily number of new infections in mainland China rose to five in the last week of May, compared with last week. This is largely due to travelers.
No transmitted cases were reported last week, down from a total of 11 cases a week ago.
By contrast, the average number of new infections from foreign travelers rose to five in the last week of May, up from 3 in the third week of May.
It’s not blank yet, but it’s getting there. If it weren’t for a global pandemic, those numbers would be invisible.
At present, the health emergency point of six districts and cities in mainland China remains medium-high. Two districts of the city of Jilin, outside the border with Russia, are still on high alert.
The NHC said about 397 more people were also under medical treatment as of May 31, slightly more than the 396 cases on May 24.
China got out of the ICU and back to work. They are 4 weeks ahead of almost everyone else.
Children in Wuhan play with a sprinkler on International Children’s Day at Ocean Park on June 1. . . [] 2020. (Photo via Getty Images)
Although a number of developing countries and states in Europe and the United States have flattened their curves, the recurring threat of epidemics remains a concern. But if the U. S. coronavirus is anything like the Chinese coronavirus, then everyone is sticking to similar trends. .
The large protests that have taken place in recent days in major US cities could lead to an increase in the number of new cases, but the markets probably won’t know for another week. If there is no increase in cases despite thousands of people nearby, not all wearing masks, then fears of a second wave will subside here, as is currently the case in most of China.
However, the pandemic is over on a global scale.
According to the World Health Organization, South America is the new epicenter of the disease, while Brazil faces demanding situations due to poor planning.
New infections in Peru and Chile are rising, and India and Mexico are seeing increases over the past week in some parts of the country.
Weekly averages of new infections outside of China rose to 108,564 in the last week of May, up from 99,680 in the previous week.
Shanghai. High frequency data shows China has stalled out as it waits the pandemic out in Europe and … [+] the U.S. Factories still at around 80% of capacity.
Returning Business Activity
More interesting news for Chinese investors came from the Caixin/Markit Services PMI. It hit 55 on Wednesday, about 10 points higher than last month. This is a 10-year maximum for China.
High-frequency knowledge shows an economy that is still functioning at its maximum capacity.
According to China’s Ministry of Transport, the annual expansion in the seven-day average of domestic passengers across railways, highways, waterways and civil transport fell to -52. 9% on May 30 from -51. 9% a week ago.
Its monthly expansion amounted to -52. 6% in May compared to -58. 6% in April. Chinese tour teams cannot travel to countries other than the trekker’s home state.
The seven-day average year-on-year expansion in subway ridership in Shanghai was -24. 5% on May 31, up from -27. 5% a week ago.
For Guangzhou, its year-on-year growth was -29.3% as of May 31, up from -33.1% a week ago.
For Beijing, its year-on-year growth was -38.8% on May 31, up from -41.9% a week ago as Chinese prefer to avoid crowded trains.
In signs similar to those of commercial activity, the seven-day average annual expansion of coal burned through six primary power plants in terms of volume was 16. 7% on May 31, up from 18. 4% a week ago. Year-on-year expansion in May increased to 16. 9%, compared to -10. 9% in April and -24. 3% in March. Therefore, more coal is burned as more electric power is needed as factories and offices continue to reopen.
Traffic on the Guangzhou metro is down compared to a year ago. It will only do so completely when other people are no longer afraid of the virus.
China’s production PMI is above 50, positive.
It reached 50. 6 in May, up from 50. 8 in April and 52 in March. This is most likely due to a slower-than-expected recovery in China’s export industries.
The Office for National Statistics said that 81. 2% of companies surveyed in the official production PMI have resumed more than 80% of production.
According to data from financial firm WIND, annual growth in new home sales volume in 30 major cities rose 10. 5% as of May 30, up 3. 8% from last week. Its monthly growth remained weak at -4%, but considering that it was. . . 19. 5% in April, this is a win.
Nomura Securities’ China economist Ting Lu thinks that Beijing is likely to rely on demand-side economic stimulus in order to cushion the blow caused by Covid-19.
“Beijing seems so hesitant to run a larger deficit,” he says. “They will once again rely on local governments to take on debt and spend, with the focus mainly on infrastructure rather than the traditional trio of infrastructure, property and autos.”
He estimates that coronavirus stimulus measures would amount to about 5. 8% of China’s GDP, but provinces and giant state-owned enterprises could play a role in bringing the overall plan to about 10% of GDP.
The Chinese bomb is working.
In the wake of the pandemic, a new threat emerges. Downward pressure will build up on small and medium-sized businesses that will be severely affected by lockdowns in the coming months if activity resumes. Export-oriented companies could also struggle in the coming months due to continued decline in external demand and growing uncertainties around the U. S. -China industrial deal and Hong Kong, Nomura analysts warn.