As has been the case with many stocks listed locally and abroad, the Vmoto share price has taken a tumble following on from the coronavirus panic over the past couple of weeks. It would appear that most of the major market actors have given up the ghost, and now seem content to sit on the sidelines while the covid-19 virus continues its apparent inexorable march across the globe.
Is it possible, however that the 'market' has misunderstood the true nature of the covid-19 impact?. Over the past few weeks I've been thinking about this question, and wondering if it is possible that the potential scale of the current epidemic might have been somewhat exaggerated.
Back in February, there was some speculation that the apparent absence of large numbers of covid-19 cases in tropical regions such as Africa and South East Asia might be explained by the warm climate in these regions, the suggestion being that the hot conditions were somehow hampering the spread of the virus.
Epidemiologists and other medical experts have been quite cautious about such arguments, and probably understandably so, given that many countries in these regions are deficient in the appropriate specialists and equipment needed to detect such cases. The apparent lack of covid-19 cases in places such as Nigeria or Indonesia might simply because most of the cases were being missed.
We are now well into March, however, and the virus has been spreading around the globe for weeks. My feeling is that at this point in time, there should be enough accumulated data to allow us to gage whether or not the spread of coronavirus is influenced by temperature.
Using the data from the John Hopkins covid-19 map, I decided to look into the question as to whether there was any correlation between the number of confirmed covid-19 cases and the temperature of a region.
The results are represented on the chart below.
The blue line shows the average annual temperature of each country, represented in degrees Celsius, with the hottest countries on the left hand side, and the coldest on the far right.
The orange line is the number of covid-19 cases, represented on a per capita basis (the number of cases relative to the total population of a country). I haven't included the smaller countries with populations below half a million or so as the sample size is too small.
Using the annual average temperature works pretty well for the majority of countries depicted, however it is a bit problematic for larger countries such as Australia, and even more so for large countries that have experienced highly concentrated outbreaks of covid-19 (in other words, China).
To get around this I created two entries for China: one just for Hubei province, which is 'ground zero' for the covid-19 outbreak in China, and one for China as a whole, which, while not very meaningful, I thought should be included out of a sense of completeness.
There are two things I found quite striking about the above chart. Firstly, the four corners of the globe that have experienced the largest number of covid-19 cases on a per capita basis -Hubei, South Korea, Italy and Iran- all have an average annual temperature that falls within a relatively narrow band, between circa 10ºC and 20ºC.
Secondly, Iran- which is probably the region outside of China which has been most impacted by the virus- experiences temperature ranges that are very close to that of Hubei, the Chinese province that has been the epicentre of the global virus outbreak. The average mean annual temperature of Tehran, the capital of Iran, for example, is 18 °C. By comparison, the average mean annual temperature of Wuhan, the capital of Hubei, is 17.13 °C.
I should note that the mean temperature figures for these two localities varies slightly from source to source, however, the central point is that average temperatures in Iran and Hubei province seem to be extremely close. Is it a coincidence that the two regions that have faced the worst coronavirus outbreaks have such similar temperature patterns?.
The two points above hint at the possibility that the coivd-19 virus has a temperature 'sweet-spot'. The data suggests that it seems to thrive in regions with an average temperature around the 17-18°C mark, and countries with an annual average temperature in the 10-20 °C range appear to represent ideal environments for the virus, based upon the above data.
The above chart also adds weight to the suggestion that the covid-19 virus is challenged by warm temperatures. The only two 'hot' countries which have a large number of covid-19 cases relative to the size of their populations are Bahrain and Singapore.
In both cases, the high per capita number of cases is almost certainly the result of contagion: Bahrain has a predominantly Shiite Muslim population, as with Iran, and there are close links between the two countries. As noted in this report, all of Bahrain's covid-19 cases link back to Iran.
Similarly, the large number of covid-19 cases in Singapore are certainly the result of the close links between this city-state and China.
My view on this is not simply based of the chart depicted above, which is after all just based on a 'snapshot' of data.
I've also been following the global spread of the coronavirus outbreak over the past few weeks, and over that time I have noticed that the disease seems to spread much more slowly in 'tropical' countries than in those countries in temperate climate zones.
To give an example, around the middle of February, Singapore had the highest number of confirmed coronavirus cases outside of China. Yet at time of writing, Singapore doesn't even make it on the 'top ten' list: Today, there are 15 countries which have more covid-19 cases than Singapore. Once again, this example indicates that warm climates seem to somehow handicap the spread of the coronavirus.
The argument that covid-19 doesn't do well in tropical climes is not a new one, and as noted above it was first mooted some weeks back. What is new, however, is that at time of writing, it would seem that there is enough data to back up this line of argument.
It is also possible that colder countries might also be more resistant to covid-19 than those regions within the 10-20 degree 'goldilocks' zone, however I would concede that this suggestion is a bit more iffy.
Turning to the bigger picture, unless there is a sudden major outbreak in some tropical country over the next few days, I would suspect that it won't be long before the market movers and shakers cotton on to the fact that countries in the tropical belt might have a get-out-of-gaol free card when it comes to covid-19.
I would speculate that this realisation will likely soon lead to a market rally, and this rally will be led by those stocks which offer 'tropical exposure'.
If so, Vmoto would be counted in that number. In the 'market update' announcement of 23/01/20, for example, mention was made that the company had signed distribution agreements with distributors in Brazil, Vietnam and the Dominican Republic, all countries that fall within the tropical zone.
Apart from that, Vmoto appears to have some kind of commercial relationship with India's Revolt Motorcycles, and India largely falls within the tropical belt.
This pandemic is a horrible situation, and when you consider that even stable countries such as Italy and South Korea are having such difficulty combating the disease, it is awful to contemplate the potential impact of the virus on troubled countries such as Afghanistan, Syria and Libya. The data at this point in time seems to suggest that the virus doesn't do well in extreme temperature environments, and so hopefully that might limit the extent of the contagion around the globe.
Finally, Zaaczaac suggested in a post on the weekend that the coronavirus situation could potentially result in a boom in couriers, which would lead to a boost in electric scooter sales. While researching this post on the weekend, I noticed this report on one news site about the situation in Wuhan. I've pasted the relevant extracts below:
...Wuhan, the epicenter of the coronavirus outbreak in China, has been in lockdown mode for weeks. But its delivery workers, zipping through empty streets on their motorcycles and scooters, are still very much on the move.
To avoid transmission of the virus, people have been told to stay at home and limit time outdoors. As a result, when they need food or other necessities, many of them turn to delivery workers, who put themselves at risk of exposure to the virus by interacting with dozens of customers, some of whom are sick, and handling multiple packages a day.
The food deliveries include fresh fruit and vegetables, dry goods like instant noodles and some treats, too — like waffles. In addition, hospitals are depending on the couriers to bring medical supplies.
Delivery companies are struggling to keep up. In a press conference in February, the department of commerce director of Hubei province, Qin Jun, said that in a single day, e-commerce companies received 22,000 orders in the province and delivered 1,337 tons of necessities. JD Logistics, one of the country's largest courier companies, says they are looking to hire 20,000 warehouse workers, couriers and drivers to help with deliveries during the outbreak. JD hires men and women, and a recent ad said it pays between $721 to $1,400 a month...
As noted in the report, one unexpected impact of the covid-19 epidemic in Hubei province is a surge in demand for couriers. I wonder if something similar will happen in the northern Italian cities that are currently in lockdown.
(20min delay)