Tracking the Economic Impact of Covid-19 Inside China with Alternative Data

How Alternative Data can provide Informational Advantage during the Covid-19 crisis.

On 10 Jan 2020, the first death from Coronavirus 2019 (Covid-19), was reported in Wuhan, Hubei province, China. Within two weeks, millions of people were locked down in the second largest Economy in the world.

Now, the world is preparing for a pandemic.

In China, the epicentre of the outbreak, the government’s efforts to contain the virus has led to massive disruptions in China’s manufacturing sector, with reports that most companies ‘ground to a halt’ as the travel bans began to bite.

Most companies in the manufacturing sector were cut-off from supply chains and unable to find workers. Even those “that have been granted permission to resume operations face critical shortages of staff, with huge swathes of China still under lockdown and some local workers afraid to leave their homes.”

The Opportunity for Consistent, Objective, Global Measurement with Alternative Data

While official information and data on the spread of Covid-19 and its impact on China’s economy are largely missing, alternative data sources can help to shed light on the events on the ground.

At KASPR Datahaus, our distributed technology scans, aggregates, analyses and visualizes real-time information on Internet activity and quality by measuring hundreds of millions of connected fixed Internet devices at all over the world.

Our technology has already been applied to create insights for decision makers during various critical events such as natural disasters and political crises.

Every one of these events has either a direct or indirect impact on internet activity and quality. This creates signals that are detected by our geo-located global technology in near real-time, days or weeks before the market knows about them.

Inside an Outbreak: Our Daily Sub-National Measurements in China

Throughout the current Covid-19 outbreak, KASPR Datahaus ADM1 Global daily products have revealed dramatic insights on the true state of regional activity in some of the most important, yet typically opaque, economic areas on the planet.

Figure 1. China: Regional Internet Connectivity Index with KASPR Datahaus sub-national products during the Covid-19 outbreak across the six major export provinces by export value.

As can be seen in the figure, the impact of Covid-19 on a country’s economy can be very heterogeneous between regions. Therefore, spatially dis-aggregated data is required to fully understand the differential effects of Covid-19 on a country’s economy as well as individual sectors and companies.

In the figure, the average internet connectivity we observe in our Daily ADM1 China product series over the first 21 days is set to an index of 100, with variations thereafter against this benchmark.

In general, all areas display a decline in activity heading into the major Lunar New Year festival, initially slated for 24–30 Jan 2020. However, with the grinding impact of Covid-19 and the associated travel bans, the Chinese government delayed the traditional return to work until 10 Feb 2020.

Whilst Shanghai appears to follow the official line, no doubt due to its reknowned powerhouse mix of service, finance, and manufacturing the other top 5 export provinces all show a dramatic lag in their return to ‘normal’, with several still far behind business as usual.

Unsurprisingly, the three major export hubs immediately to the East of Hubei province, namely Shandong, Jiangsu, and Zhejiang, appear in our measurements to be the most heavily impacted. Whilst further south, Fujian and Guangdong, appear to be trending back to steady state.

Interestingly, our measurements also shed light on the Internet activity of Hubei province. Here, with the first death announced soon after the 10th January, and the full lock-down announced at 2am on the 23 January, Hubei has had something of an internet bounce after the Lunar New Year period, aligning well with the knowledge that tens of millions of residents are locked in their apartments, glued to their Internet connected devices, whilst unable to get back to work in the East.

Covid-19 and the Global Economy

Similar to the virus itself, the economic disruptions of Covid-19 do not stop at China’s borders. The ripple effects of Covid-19 related interruptions have already had an impact on various sectors and companies outside of China.

For example, the global airline industry is already expecting billions of dollars in revenue losses due to large travel bans by China and cancellations of major events around the world. Car manufacturers are on the other hand are bracing themselves for on two sides. Their supply chains will likely be impacted due to supply interruptions at Chinese contractors and major decreases on the demand side as China is the world’s biggest car market.

Given China’s role as the “world’s factory” it is possible that these Covid-19 induced ripples in the global economy will just increase in intensity in the coming weeks.

Until recently, the most stock markets outside of Asia have been relatively unaffected by. However, recent news about the extent of the outbreak in Italy have led to a 3.4% decline in the S&P 500 index of American stocks on February 24th, which is “the biggest one-day fall for two years.“

Where will KASPR Datahaus products take you?

KASPR Datahaus Global daily products offer decision makers in the financial and other sectors a unique informational advantage.

Figure 2: Observations of the active Internet space from KASPR Datahaus. Over 300 million fixed edge connections. Billions of observations a day.

Shocks to internet availability and stability drive trends across industries and ultimately affect the performance of company’s stocks.

In one of our back-testing exercises, using daily-returns data on the S&P 500 VIX index, KASPR Datahaus Global products reveal subtle shifts in internet activity and stability hinting at market-sensitive movements. Predictive model accuracy improves substantially when KASPR Datahaus internet stability products are added to the feature set. Get in touch to read the white-paper.

KASPR Datahaus Global products give you access to daily, fundamental insights across almost 2000 sub-national regions in 136 countries.

Now you can be the first to know when any region goes down, or changes pattern. Probably before the asset owner themselves.

Get more information about our technology and products from our website or contact us directly at info@kasprdata.com.