The success or failure of Russia in the fight against the epidemic Covid-19 effect on investment climate in the coming years.
Can not be that in Russia the death rate was only 1,02%-1,12%, according to some Western media. They must be doing something wrong. In Western Europe the number of deaths is much greater. In the United States — five times more. In the same way as in Brazil, which last week ahead of Russia and took second place in the world in the number of infected with the coronavirus. In Russia the number of cases is more than 387 thousand, and she takes the 3rd place. But why in Russia the mortality rate cannot be low? What really hinders its growth?
The epicentre of the outbreak coronavirus infection in Russia is Moscow. Still the capital was the city most affected by infection, but on may 28 the number of new cases decreased until 2054, which is the lowest rate since reaching a peak in early may. Kremlin critics say that the data about the virus coming from other cities, were unreliable. This suggests that the number of cases is much higher — as, apparently, in the South of the country, in a Muslim Republic of Dagestan.
Earlier this month in articles published in the newspaper “financial times” (The Financial Times), also talked about the fact that mortality statistics in Russia is underestimated. The authors wrote that the number of deaths, probably about 70% more than the official Russian statistics. The newspaper “new York times” (The New York Times), received the Pulitzer prize for reporting on the Russian scandal, which was not, wrote that the real death toll in Moscow in April amounted to 1,700 people, which is almost three times higher than the official statistics.
Today it is fashionable to expose cases of under-reporting. However, while effectively “exposed” only that the number of deaths when the underlying cause of death was laboratory-confirmed coronavirus, about two to three times less than the total number of deaths exceeding the average figures for the earlier years.
But the same can be said of almost every country in the world.
Coronavirus and the collapse of oil prices have become a destructive force in the Russian economy. The rating Agency “Fitch” (Fitch Ratings) last week changed the Outlook for reducing the country’s GDP, and now the decline is at 5% compared to the previous forecast, which amounted to 3.5%.
The French Bank “Be-EN-PE Paribas” (BNP Paribas) has reduced the target rate of return by 2 percentage points to -6,5% due to the prolonged quarantine, and idle enterprises, as well as sluggish external demand for Russian goods, namely oil and gas.
Russia in the fight against coronavirus
One of the reasons “suspiciously” low mortality is that Russia is cited only counted deaths of people who died from the coronavirus, but not from other diseases, called comorbidities. Ironically, this approach is outlined in the manual of the world health organization, which clearly stated that these deaths “are not deaths caused by Covid-19, and must not be certified as such.”
In the Centre of evidence-based medicine at Oxford University explain that it is wrong to associate with Covid-19 the death of all those who had received a positive test result for coronavirus SARS-CoV-2, causing atypical pneumonia. Specialists of the Center noted that “the death in the presence of the disease (bond) is not the same as death from disease (causation)”.
For example, explain in the Oxford Centre, all acute viral infections, including seasonal flu, leads to increased mortality from cardiovascular disease, but in these cases death occurs not from the flu, but from cardiovascular disease.
Countries with a higher mortality rate from coronavirus, such as France, provide data about the number of “dead people who had a positive test result”, regardless of the main cause of death. Compared with the parameters determined according to the methodology of the who, it will be about two times more.
In the Moscow Bureau it is judicial-medical examination saying that they had the most accurate data. Forensic experts say that, unlike many cities and countries around the world, in Moscow, conducted an autopsy of all deaths of patients, a history which had symptoms similar to Covid-19, not just those who have had positive test results.
According to the Department of health of Moscow, the average annual mortality rate over the past three years in Moscow in April was 10081 people, 1753 cases less than in April of this year. Death was caused by a coronavirus Covid-19 almost half of them is 805 people, and 756 (43%) was positive test result for SARS-CoV-2, but they died from other diseases. About 200 (or 11%) of the total number of “excess” (i.e., exceeding the average rate) deaths directly to the pandemic are not connected.
In percent these data are very close to new York.
According to the new York Center for control and disease prevention, from March 11 to may 2, 2020 new York 24 172 “excess” deaths relationship with Covid-19 was laboratory confirmed in only 57% of cases.
Professor-epidemiologist novel Primula (Roman Prymula), head of the national crisis headquarters of the Czech Republic, said he believes reports of low mortality a simple discrediting Russia “in pursuit of sensation”.
“If you just share the number of those who died, the number of those who had received a positive test result, the result is very incorrect and biased number,” he says.
“Some countries are doing more tests, given these asymptomatic cases, and others conduct fewer tests and only those with very acute symptoms, he says. — It is not surprising that the mortality rate in the latter case higher than in the first”.
In addition to the “bias associated with the principle of testing”, the countries vary considerably in population density, population age structure and other aspects related to health that also affect mortality from the virus.
If you compare the total number of “excess” deaths per million, you can get more complete and convincing picture. In London in April, there were about 750 “excess” deaths per million, and in new York in two and a half times more (1,700 per million). In Moscow, according to conservative estimates, that number is now around 160 deaths per million — the figure comparable to the number of “excess” deaths per million in Berlin.
Why are these associated with coronavirus indicators are important?
The higher the mortality, the more doubts arise on the lifting of quarantine restrictions. Data on the number of infected and dead are manipulated to justify or refute the policies and quarantine restrictions.
Professor Primula: “Total quarantine and isolation can’t last forever.”
“The solution is smart quarantine,” he says. Like the advanced system of tracking the spread of the virus in real time to accurately determine new centers, and quarantine of potentially infected people. In the Czech Republic this system already producing results.
Moscow only starts gradually and gently get back to work as a major European city. And new York, meanwhile, is still in isolation and will it be back in a week.
What does this mean for investors in the Russian securities?
“Be-EN-PE Paribas” advises “not to take positions”
For a start, it should be noted that the quotations of Russian securities in the portfolio of the investment company VanEck Russia (RSX) ETF is holding up well, as Chinese MSCI China (MCHI). Over the past three months they fell by slightly less than 4% and exceeded the benchmark stock index of emerging economies (MSCI Emerging Markets Index). Compared with the previous year it fell by more than 18%, in line with the emerging markets MSCI. And higher than in Brazil (where rampant disaster coronavirus), and India (countries of concern to the world Bank), where millions of people will fall back into extreme poverty due to quarantine measures and plant closures, designed to stop the spread of the epidemic.
According to the Russian Bank “Tinkoff”, a new index, which he launched to assess business activity in Russia as it recovered from the effects of a pandemic of mers shows that the index scale 10, the index of business and consumer activity in Moscow grew by 0.6 points to 5.9. In other regions of the country, this figure increased 0.4 points to 6.3 on a 10-point scale.
Consumer sentiment deteriorated in February by 27%, while the maximum decrease was observed in the field of tourism (-86%), entertainment (-74%) and restaurant business (-63%).
According to the economist of Bank “Be-EN-PE Paribas” Luis Peixoto (Luiz Peixoto), investors should simply “stand your ground” against Russia. It really does not require much cost. It makes sense. But for investors it is a difficult task.
In the context of maintaining the quarantine, and given the low oil prices and weak external demand, this year Russia is likely to be in a deep recession, and in 2021 will start the economic recovery, says Peixoto, but with one caveat — “depending on the global economic recovery and curb the spread of the virus”.