ITALY'S COVID CONUNDRUM - ARCA SGR SPA
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Marzo 2020
ITALY’S COVID CONUNDRUM
Europe has, for the time being, become the focal point of coronavirus
contagion. Its epicentre is Italy (Figure 1), which now accounts for a
quarter of the world’s active cases.
Italy’s mortality rate has risen to double the global average. While
country-to-country discrepancies can easily arise in the early stages
of a pandemic, this gap doesn’t make intuitive sense. Over time the
disease should have a similar effect on all populations.
To square the arithmetic, twice the mortality rate would suggest Italy’s
infections are understated by half. But in fact, it turns out that its infection
rate (per million of population) is also close to double that of any other
major country (Figure 2). Something else is going on.
Disclaimer ARCA FONDI SGR SpA. Via Disciplini 3, 20123, Milano.
La presente pubblicazione è prodotta da Independent Strategy e distribuita da ARCA FONDI SGR. Pur ponendo la massima cura nella predisposizione della presente
pubblicazione e considerando affidabili i suoi contenuti, ARCA FONDI SGR non si assume tuttavia alcuna responsabilità in merito all’esattezza, completezza e attualità dei
dati e delle informazioni nella stessa contenuti ovvero presenti sulle pubblicazioni utilizzate ai fini della sua predisposizione. Di conseguenza ARCA FONDI SGR declina ogni
responsabilità per errori od omissioni. La presente pubblicazione viene a Voi fornita per meri fini di informazione ed illustrazione, non costituendo in nessun caso offerta al
pubblico di prodotti finanziari ovvero promozione di servizi e/o attività di investimento né nei confronti di persone residenti in Italia né di persone residenti in altre giurisdizioni,
a maggior ragione quando tale offerta e/o promozione non sia autorizzata in tali giurisdizioni e/o sia contra lege se rivolta alle suddette persone. ARCA FONDI SGR non potrà
essere ritenuta responsabile, in tutto o in parte, per i danni (inclusi, a titolo meramente esemplificativo, il danno per perdita o mancato guadagno, interruzione dell’attività, perdita
di informazioni o altre perdite economiche di qualunque natura) derivanti dall’uso, in qualsiasi forma e per qualsiasi finalità, dei dati e delle informazioni presenti nella presente
pubblicazione. La presente pubblicazione è destinata all’utilizzo ed alla consultazione da parte dei collocatori di ARCA FONDI SGR cui viene indirizzata, e, in ogni caso, non si
propone di sostituire il giudizio personale dei soggetti a cui si rivolge. ARCA FONDI SGR ha la facoltà di agire in base a/ovvero di servirsi di qualsiasi elemento sopra esposto
e/o di qualsiasi informazione a cui tale materiale si ispira ovvero è tratto anche prima che lo stesso venga pubblicato e messo a disposizione della sua clientela. ARCA FONDI
SGR può occasionalmente, a proprio insindacabile giudizio, assumere posizioni lunghe o corte con riferimento ai prodotti finanziari eventualmente menzionati nella presente
pubblicazione. In nessun caso e per nessuna ragione ARCA FONDI SGR sarà tenuta, nell’ambito dello svolgimento della propria attività di gestione, sia essa individuale o
collettiva, ad agire conformemente, in tutto o in parte, alle opinioni riportate nella presente pubblicazione.
1
Other countries’ experience might provide some clues.
China began to report a steady increase in case
resolution (deaths plus recoveries, as a share of
reported infections) from end-January. By 18th
February its remaining active cases had peaked
(Figure 3).
Italy’s epidemiological progression started around three
weeks later. Lagging the Chinese data by 23 days, we
can see that Italy’s resolution rate matched China’s for
the first couple of weeks of its epidemic. But over the
most recent 10 days Italian resolutions have slipped
behind that pace, improving only marginally, with new
infections rising far faster than recoveries (Figure 4).
Now, it may be that the difference in recovery rates is
partly definitional. Across the board, richer countries
seem to have exhibited lower recovery rates — or
more extended recovery times — than poorer ones.
It may well be the case that in poorer countries, which
generally have less hospital capacity available per
capita, a patient being discharged from hospital to
convalesce at home — because they are no longer
considered to be in mortal danger — is classified as a
“recovery”. In a richer country that patient may remain
under hospital supervision for quite a while longer.
The age test
Another country which appears to have got a grip on the
virus is South Korea (see Figure 1). It took a different
approach to China, avoided draconian restrictions on
the population’s movement. Of course there were
some special factors in Korea — including a concentrated cluster of early
infections — but their approach was based more on widespread testing
for the disease with quarantining of those infected. To date Korea has
performed 287,000 tests, eight times as many as the US and Japan
combined, despite a population one-ninth the size. Italy has taken that
message on board, with more than 100,000 tests performed.
But the Korea paradigm is pertinent in another way. We know that
coronavirus is most dangerous for the elderly, with at least half of all
fatalities globally occurring in the over-70s. So an obvious analytical
starting point is to look at the weight of this cohort in each country. Korea
2
is at the younger end of the spectrum and has a low
mortality rate of around 1% while Italy is at the older
end with a mortality rate of closer to 8%. So far, so
intuitive.
But looking at a wider spread of countries shows
that population age explains little of the variation in
observed rates of mortality (Figure 5).
We need to dig deeper. Unsurprisingly, Korea has
also seen infections biased towards the younger end
of the population. Only 9% of Korea’s infections have
been among the over-70s, broadly in line with this
cohort’s 10.6% share of the overall population.
This is where the contrast with Italy could not be
starker. While over-70s account for 17.5% of Italy’s
population, a staggering 38.5% of infections have
been among this cohort (Figure 6).
If the prevalence of infections in the over- 70s goes
a long way in explaining why Italy’s mortality rate is
so high, it begs the question as to why so many of
the elderly are getting infected. A cultural of tactile
social greetings, coupled with a tendency to live
in multigenerational dwellings, may be admirable
hallmarks of Mediterranean conviviality in normal
times. But in current circumstances going home to
hug Nonna is a no-no.
Health system needs acute care
If Italians are becoming infected faster than almost
anyone else, and within the overall population the
elderly are succumbing disproportionately, it stands to
reason that the country’s hospital services are under
intense pressure.
In China, around a fifth of the first 45,000 coronavirus infections were
graded either “serious” or “critical”. While, given the age bias, this
fraction is likely to be higher in Italy, as a rich country it should also have
a stronger healthcare system.
What counts in these circumstances is the availability of intensive care
unit (ICU) beds. Normal occupancy of standard hospital beds varies by
country from 65-85%, varying by season, with higher occupancy during
3
the winter months. Occupancy of ICU beds is a
fairly stable 80% in the UK all year round whereas in
the US, where there are many more beds per 100K
population, it averages 68%.
This means there’s 20-30% “spare capacity” to meet
Covid-19 related admissions. While the situation can
change rapidly, for most countries that’s sufficient at
the moment (Figure 7).
The exception, unsurprisingly, is Italy. Assuming 79%
normal occupancy, its current level of 1,800+ serious/
critical coronavirus cases has used up almost all the
spare ICU beds available. Anecdotal reports confirm
that the health system there is close to overload.
Once those in a serious condition are turned away from brim-full hospitals
and left to be treated at home, it is likely that fatalities will be exacerbated.
Indeed, given Italy’s exceptionally-high mortality rate of 7.7%, this may
already be happening.
For whom the bells tolls
Most conclusions about coronavirus are necessarily speculative at this
stage. All we know is that the disease spreads rapidly and kills the
vulnerable fast.
Italy’s grim experience is a warning to all other countries to test
aggressively, to implement quarantine measures, to shore up our health
systems, and to protect the elderly. A vaccine may ultimately be found,
but this will likely take more time than we have.
This memorandum is based upon information available to the public. No representation is made that it is accurate or complete. This memorandum is not an offer to buy or sell
or a solicitation of an offer to buy or sell the securities mentioned herein. Independent Strategy Limited has no obligation to notify investors when opinions or information in
this report change and may disseminate differing views from time to time pertinent to the specific requirements of investors. Independent Strategy Limited is authorised and
regulated by the Financial Conduct Authority in the UK. Save for any liability or obligations under the Financial Services and Markets Act 2000, Independent Strategy Limited
accepts no liability whatsoever for any direct or consequential loss arising from any use of this memorandum and its contents. It may not be circulated to or used by private in-
vestors for any purpose whatsoever, or reproduced, sold, distributed or published by any recipient for any purpose without the written consent of Independent Strategy Limited.
4
You can also read
