Weekly Update - Wave upon Wave

With the recent rise in infections, the world has now registered 145.4m cases of the coronavirus, leading to 3.1m deaths. 123.7m people have recovered from the virus leaving 18.6m active cases, of which 110,000 are currently considered critical. Over the past 7 days, the world has counted 5.6m new cases, a 9% increase from the preceding 7-day period. However, the increase is dominated by India – a 60% rise to a 7-day total of 2.0m. Of the other top 10 countries, only Argentina and Colombia have seen significant increases (+8% and +7% respectively) while the US, Brazil, France and Italy all registered weekly declines in new cases of between 11 and 13%.

Of course, India’s figures should be put it context – with 1.39bn inhabitants, it ranks second behind China in terms of population size and has a much less centralised and authoritarian central government. Moreover, India holds large numbers of mass gatherings, including Kumbh Mela – the world’s biggest religious assembly – which saw up to 3m Hindus take a ritual dip in the Ganges on April 14. However, India’s case numbers look less dramatic when compared to its population size – over the past 7 days, it has registered 1,416 cases and 9 deaths per 1m inhabitants while third-ranked Turkey has seen 4,872 cases and 27 deaths.

Since the start of the pandemic, treatment protocols have improved, meaning that fewer patients now require intensive care and that death rates have declined. Over the first 21 days of April 2020, the world counted a total of 1.6m new cases and 133,700 deaths. Over the same period this year, the totals are 14.7m and 239,500 respectively. Of course, new case numbers have risen as testing has become more widespread but fatality numbers have not followed suit – the current 7-day average daily death total at 12,196 is still below January’s 14,462 high.

Rapid progress in vaccination programmes has raised hopes that the pandemic could be brought under control. Indeed, this appears to be the case already in countries like Israel and the UK. Israel has now delivered 120 jabs for every 100 inhabitants and has seen average new case totals tumble from 8,395 in mid-January to 157 this week while average daily deaths are down from 65 to 5. In the UK, 66 inoculations have been delivered per 100 inhabitants, enabling average case and fatality totals to fall from January’s highs of 59,591 and 1,250 to 2,493 and 22 respectively.

In the European Union, vaccination programmes got off to a slow start but improved availability of doses has enabled countries to accelerate inoculations. Germany, France, Italy and Spain have given 4.1 vaccinations per 100 inhabitants over the past 7 days, just behind the UK’s current 5.1 rate. Moreover, the EU has exercised an option to get an additional 100m doses of the Pfizer/BioNTech vaccine, just as the first deliveries of Johnson & Johnson’s serum are getting underway.

In India however, the vaccination programme has proved inadequate so far. Although the country ranks third in total vaccinations behind China and the US, it has only delivered 9.4 jabs for every 100 inhabitants and progress is woefully slow – only 1.1 inoculations per 100 over the past 7 days. As one of the world’s leading vaccine producers, India will have to step up its ordering dramatically if it is to reduce the strain on its healthcare system.

Bottom line. Despite the recent rise in cases, we do not believe that India’s crisis has the potential to derail global recovery – the country is much less embedded in global supply chains than China, where we expect growth to accelerate this year to over 8%. In light of strong performance over the past 12 months and somewhat stretched valuations, we recently decided to lock in some profits on global equities although we retain an Overweight stance, given the supportive cyclical backdrop.

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