We have written twice previously on 01/27/20 and 02/14/20 offering our perspective on the evolving coronavirus narrative.  In light of a recent spike in anxiety and global flight to safety, we attempt to look beyond the headlines and reduce the narrative to its most basic components.  Below, we have done our best to objectively evaluate the facts and the risks as we see them today.  Fundamentally, we see two ways for the coronavirus situation to get worse from here:

  • It gets worse inside of China
  • It proliferates outside of China

While we recognize there are risks to our view, our assessment of each of these two items suggests that there may be more reason for optimism than is currently being factored in.

Coronavirus in China

Through February 23, 2020, there have been 77,150 confirmed cases and approximately 2,600 deaths in China.  Cases matter because each one represents an opportunity to spread the infection – more cases means more risk, and new cases are confirmed every day.  Unfortunately, this metric (cases) includes those who were infected with the virus, treated, and subsequently discharged from the hospital with a clean bill of health.

If we subtract the number of people who have been discharged from the hospital, we are left with the number of cases that have the potential to spread the disease.  We will call these “active cases” and in our view, this is the data point worth focusing on.  Active cases in mainland China actually peaked on February 17 at approximately 60,000 and have declined each day since, down to 52,500 as of February 23.  Said another way, over the course of the last week, more people are being sent home from the hospital each day than new cases are being confirmed and this is occurring at an accelerating rate.  The overall situation in China is not getting worse… it appears to be getting better.

Coronavirus outside of China 

The world wants to avoid a scenario where the level of outbreak that has occurred in mainland China is repeated elsewhere.  To date, there have been approximately 2,400 confirmed cases and 33 deaths reported outside of mainland China.  Nearly 700 of the 2,400 cases are on a single cruise ship quarantined off the coast of Japan.  This is an unfortunate, but unique set of circumstances highlighting how the virus can spread within a confined population without early detection and appropriate precautions.

Adjusting for the cruise ship, there are really about 1,700 cases outside of mainland China.  Importantly, the 1,700 cases are not concentrated in one location, as would have been the case as the virus originally proliferated in Wuhan, China.  About half of these cases (833) are in South Korea, with other notable concentrations in Italy (219), Japan (144), Hong Kong/Macau (89), and Iran (61).  There have been 45 confirmed cases in North America including 35 in the United States.

Certainly, each concentration represents risk of a larger scale outbreak; however, the world is paying attention now.  Health officials around the world are on high alert and there are protocols to follow – this may not have been the case in early January.  Further, the World Health Organization (WHO) declared the virus a global health emergency on January 30 – a designation that enables international coordination of containment efforts.


To be clear, we are not healthcare professionals or viral disease experts and the risk of a deteriorating coronavirus narrative remains front and center.  Some level of economic damage has already been done, primarily in China, and the question remains whether the situation improves or deteriorates from here.   Looking through the headlines and the noise, we believe there is a reasonable case to be made that the worst could soon be over.  The situation in China actually appears to be improving when viewed through the lens of total active cases and outside of China, total cases remain low and globally coordinated efforts to contain the virus reduce the likelihood of a full-fledged pandemic materializing.


Sources: Bloomberg, LP; World Health Organization; National Health Commission of the People’s Republic of China