Investors look to data to explain coronavirus impact
Sondra Campanelli, Head of News and Marketing (London)
Asset managers are turning to alternative data sources in the wake of China’s coronavirus outbreak in order to identify the impact the epidemic will have on their investments in the region.
The human toll of the virus is still hard to fully quantify, but officials in China announced Thursday that 170 people have died from the outbreak, while more than 7,711 cases have been confirmed across each of the country’s 31 provinces.
Investors are keeping a close eye on transportation-related datasets, particularly those related to airlines following announcements from British Airways, Lufthansa and United Airlines that they would temporarily suspend flights to and from mainland China.
Geo-location datasets could also prove useful for investors looking to evaluate how much footfall traffic has changed for major retailers, according to Daryl Smith, Neudata’s head of research.
Supply chain and automaker datasets can shed light on the impact the epidemic is having on industrial production. “The Lunar New Year holiday was extended in certain cities including Jiangsu and Guangdong, which have tech plants for Foxconn, Pegatron, Samsung Group and LG,” said Jia Hu, analyst at Neudata. “And of course, those who rely on suppliers in Wuhan will suffer.”
The Chinese government has extended the end of the Lunar New Year holiday from Thursday, January 30 to Sunday, February 2 in order to “reduce mass gatherings” and “block the spread of the epidemic.” Businesses and schools in certain provinces, including Shanghai, will be closed until Sunday, February 9. About 45 million residents are now under official and unofficial lockdown in cities like Wuhan, Jiujiang and surrounding areas.
As a result, residents are spending more time indoors and certain consumer-facing companies could see an uptick in business. “Typically when bad weather strikes particular regions, food delivery companies see strong sales, for example,” Smith said. “So tracking these sort of consumer industries via datasets involving time transactions (e.g. UnionPay data) or aggregated internet user activity could prove very insightful.”
Web traffic and user engagement datasets for online video and live streaming platforms could shed light on how those affected could be spending their time. Several news outlets have reported that even residents who are free to leave their homes have been reluctant to do so. As a result, streaming services—including platforms owned by Bytedance like Douyin (the Chinese version of TikTok) and news platform Toutiao—have seen user engagement spike over the holiday period.