First published on May 1st.

Carraighill has developed a detailed and exhaustive framework to monitor the impact of COVID-19 on Europe and emerging market economies (CEE plus Turkey). From our experience of both the 2008/09 GFC and the Eurozone 2012 crisis, we know that it is important to develop such a robust process early. 

 This helps our clients navigate the news flow by delivering clarity of thought and helps eliminate ‘noise’. Additionally, it provides more time to generate considered responses to investment opportunities, for a given (and now better understood) level of assumed risk. This forms only part of our exhaustive research process. 

Our recovery framework focuses on monitoring the data each week and assessing how it compares to our base crisis assumptions. For this, we:

1. Track the virus: 85% of world GDP is now below peak new cases (up from 83% in our last report). This is a Carraighill developed proprietary index, weighted globally.

2. Monitor the lockdown intensity: Carraighill uses a GDP weighted lockdown intensity index (Oxford University) to monitor the easing of restrictions. This is currently at 54 globally (out of a possible 100). This is a slight rise from 50 one month ago. Regionally we highlight: 

  • Europe: There is limited change in Europe. Spain, Italy, France and Germany have all outlined timetables for easing. The UK has not provided any such timetable yet.
  • Asia: South Korea has eased restrictions while Singapore has tightened.
  • Others: The USA has eased slightly, while most other world countries remain on stringent lockdown. We are now also starting to monitor individual US states.

3. Measure the subsequent recovery:

  • Only Hong Kong has recorded a notable increase in public transport usage. Usage was 55% below peak on April 7th but is now only 35% below peak. Hong Kong appears to have successfully overcome a second wave of infections.
  • The Citi Economic Surprise Index has moved down significantly in the Eurozone, from -62 one week ago to -240 this week.

Other developments:

  • Denmark reopened its schools over two weeks ago. There has been no spike in new cases.
  • An antibody test with 99% accuracy (Abbott) has been given EU approval.