Sovereign Funds and Pensions Track Coronavirus, Sees Quarantine End as the Largest Driver of Equity Returns Short-Term

Posted on 06/13/2020

Causing massive economic devastation due to quarantine lockdowns, the Wuhan coronavirus (COVID-19) was first detected in Wuhan, China. According to the John Hopkins Coronavirus center, as of June 13, 2020:

Global: 7,715,880 reported cases and 427,670 deaths.
U.S.: 2,061,315 reported cases and 115,059 deaths.
Brazil: 828,810 reported cases and 41,828 deaths.
U.K.: 295,828 reported cases and 41,747 deaths.
Readers need to keep in mind the risk of over and under-reporting data and the classification of how coronavirus deaths are recorded.

According to the June 2020 SWFI Global Asset Owner Survey, the viral pandemic remains the largest tail risk, when surveying pensions, sovereign wealth funds, superannuation funds, and other asset owners.

The other question in the global quarterly institutional investor survey, “Which of the following is likely to be the largest driver of listed equity prices in the next 6 months?” The most popular answer by a far margin was “Pandemic and Quarantine End”. Institutional investors know that the lockdowns will be less prevalent and less restrictive in the future.

Beijing District Grows Cautious on Viral Cluster

In the Xinfadi market in Beijing’s southwestern Fengtai district a cluster of COVID-19 infections were discovered. 45 people out of 517 tested in that cluster were tested with throat swabs. This Beijing district moved to ban tourism and sports events over the weekend. These lockdowns are being imposed in other areas across Beijing.

Latin America

The coronavirus pandemic has made major inroads into Latin America. Brazil has the second highest coronavirus death toll, just behind the United States. And recently, Mexico and Chile, recorded their worst days of COVID-19.