COVID-19: WHAT WE CAN EXPECT MOVING FORWARD LOCKDOWNS ARE WORKING - PowerPoint PPT Presentation

COVID-19: WHAT WE CAN EXPECT MOVING FORWARD

LOCKDOWNS ARE WORKING Regions that applied lockdown have seen new cases peaking US NY 10,000 Spain Germany Italy France UK 3D Avg. of New Cases 1,000 Japan 100 Korea China 10 1 1 11 21 31 41 51 61 71 Days since 30 th cases Page 2 4/27/2020 COVID

WHERE ARE MOST COUNTRIES ON THE TIMELINE? • Countries will go through 4 stages: Lockdown  Peak in Daily New Cases  Containment (0.1%-0.2% daily growth)  Reopen • The timeline for Wuhan is as followed (number of days after lockdown) • 14 days to peak • 45 days to containment then partially reopen • 75 days to fully reopen • We assume that countries will take 18 days to peak, 55 to contain and reopen partially Containment & Partial Date Lockdown Peak Reopen Italy March 8 March 21 May 3 France March 14 March 31 May 9 Spain March 14 March 31 May 9 Germany March 22 March 28 April 30 UK March 24 April 11 May 20 US (last state) March 30 April 15 May 30 New York March 22 April 8 May 22 Page 3 4/27/2020 COVID

WHAT DOES REOPEN MEAN? KEY RISKS OF NCOV-19: • High asymptomatic/pre-symptomatic transmission that is extremely hard to detect LIKELY SCENARIO: Virus will not be eradicated. Path forward will be of compromises: • Some sort of social distance after reopening (large gatherings, selected lockdown) • Mass testing & contact tracing to slow the spread (Korea style) • Interregional travel won’t be possible or fully resumed until most countries reach containment stage • Resurgences WILL happen, but be dealt much swiftly due to our experience & test capability  Full resume of normal life will take much longer, probably until the release of a cure or vaccine Page 4 4/27/2020 COVID

CURES & VACCINES Stage Timeline Efficacy Production Existing antiviral Human Testing Summer 2020 Mixed Mass & ready Remdesivir Phase 3 Summer 2020 High Small Novel drugs Preclinical Early 2021 High N/A Vaccine Phase 1 Early 2021 High N/A • Existing drugs are widely available but have questionable efficacy, which will only aid in the fight but is not going to be a game-changer • Best Case: Q3 2020 • Remdesivir proven effective and ramp up production to 1m courses by the end of the year • Base Case: 1H 2021 • Wait for breakthrough in new drugs/vaccines, which will take us until 2021 Page 5 4/27/2020 COVID

VIETNAM’S SITUATION CURRENT SITUATION, as of April 7 th • Wave 2: 233 cases, 64% imported, 36% local Total tested: 106,397 ( top 20 th globally while only in top 120 th for cases ) • TIPPING POINT 19/03/2020 & DIRECTIVE 15: • Social distance measures and close of non-essential businesses kick in after two local clusters and unable to track F0 of cases  good early decision to limit spreading • For Bach Mai hospital local cluster, within 10 days, Vietnam tracked and tested 60,922 contacts • Oxford’s Index for Government Response rates Vietnam at maximum 100 WHAT WE EXPECT • Vietnam will be able to control COVID by the end of April with very few to 0 new cases daily CASES WAVE 1 WAVE 2 TOTAL Imported 8 154 162 Local 8 98 106 TOTAL 16 252 268 Recovered 16 212 228 Active cases - 40 40 Page 6 4/27/2020 COVID

CONCLUSION REOPEN: • Western countries can start reopening from around end of May • Vietnam will control the disease by end of April due to timely aggressive measures HOW: • Virus will not be completely eradicated • First few months will have some social distancing measures coupled with testing and tracing • Best case for treatment is Q3 2020 while vaccine is still long way to go • Thus, complete resume to normal life might be 2021 Page 7 4/27/2020 COVID

US ECONOMY – LESSON FROM THE PAST

2020 VIRUS CRISIS S&P Index – Market reaction to policies in 2020 Virus crisis 20-Feb: all time high - 3386 3,386 Fed went super 3,400 aggressive – ALL-IN: 1 st Black Monday - Cut rates to 0% - Start QE - Buy commercial Fed cut rates by 50bps paper 3,200 - Start FX swap lines First 10% drop amid virus - Repo and asset spread globally classes - ALL-IN 3,000 2,800 Rally on hope virus 2 nd Black Monday – has peaked in U.S Russia and Arabia and EU MAX PANIC went to war on Oil + Virus worsen 2,600 Black Thursday: - Trump failed to calm down investors 2,400 during his national Rally on the $2.2tn address rescue package - ECB not cut rates 2,237 2,200 3 rd Black Monday Current bottom – down 34% from peak 2,000 1-Jan 15-Jan 29-Jan 12-Feb 26-Feb 11-Mar 25-Mar 8-Apr Page 9 05 Apr 2020 2008 Financial crisis vs. 2020 virus crisis

2020 SITUATION - FOR NOW 2008 GREAT FINANCIAL CRISIS 2020 VIRUS CRISIS Cause: man-made, policy error Cause: Natural phenomenon (likely) Preventable? Yes. Complacent entity: Fed Preventable? Somewhat. Complacent entity: US government Fed: complacent in the early stage, very reactive during crisis, Fed: reactive at first, then turn very aggressive once it realised playing the fire extinguisher role most of the time the financial system could be in trouble (similar to 2008). Go all in to protect its stability Government: reactive most of the time, contributed to the Government: very complacent in the early stage, then realise worsening of the crisis by delaying the bank bailout bill; correct the trouble and turn aggressive by passing the rescue bill in its mistake by release Obama’s stimulus package to end the within a week (learnt hard lesson too). crisis However, still not aggressive enough in lockdown orders (due to states vs. Federal government nature of U.S) Path to recovery: Stabilised the banking system (Treasury Path to recovery: ensure the stability of financial system and bailout package) -> ensure credit flow (Fed QE) -> government credit flow (Fed’s monetary policy) -> rescue bill to support stimulus to restart the engine (Obama’s stimulus package) -> Americans during the outbreak (Treasury 2.2tn rescue out of recession package) -> government see clear path to peak of the virus (unknown) -> government stimulus to restart the engine • Compared to 2008, Fed actions have been very aggressive, they seems to learnt the hard lesson from 2008 (acted too late), so far they have been able to stabilise the financial and banking system. The risk to another collapse in financial system and banking system is moderately low. • From 2008 perspective, stock market only make a bottom once they see a clear path to recovery from recession: Obama’s stimulus package played an important role. Therefore, we think stock market only make a bottom once they see a clear path to recovery – another stimulus package could be an important factor. But we expect the stimulus package only release after the government see a clear path to recovery from the virus Page 10 05 Apr 2020 2008 crisis

ATTEMPT TO OVERLAY S&P INDEX IN TWO CRISES • Are we heading to the 2 nd bottom? Attempt to overlay S&P in 2008 vs. S&P in 2020 165 T: set first bottom of both crisis as index = 100 155 145 Actual stimulus package kicked in after virus 135 situation subdued? Relief rally fading? 125 115 105 Decline again as reality of virus impact kick into 1 st bottom - the economy? 95 stabilized bottom 85 T-56 T-42 T-28 T-14 T T+14 T+28 T+42 T+56 T+70 T+84 T+98 2008 S&P 2020 S&P Page 11 05 Apr 2020 2008 Financial crisis vs. 2020 virus crisis

ROADMAP FOR THE CURRENT CRISIS

OUR FRAMEWORK Disease - lockdown Low Economic Unemployment Credit Risk Activities 5 High-Frequency Indicators  High-Yield Spread  Jobless  FED Weekly  MBS Spread Claims Economic Index  Consumer ABS Spread Page 13 4/27/2020

UNEMPLOYMENT: RECORD HIGH 5,245,000 650,000 Page 14 4/27/2020

UNEMPLOYMENT: JOBLESS CLAIMS • At least 20% of workers are directly impacted by lockdown • We assume that claims will stay elevated for 3 weeks in April and peak around ~7m • Claims front-loaded due to 1) timing of closure, 2) high unemployment benefits Claims 20% of workers at high risk 35,000 Total: 30.8m, 20% of employees 03/28/2020, 6,648,000 30,000 Retail ex 25,000 essentials, 12,575 03/21/2020, 3,307,000 20,000 Transportation, 1,420 15,000 Restaurants & Bars, 12,235 10,000 03/14/2020, 282,000 Entertainment, 5,000 Hotels & 2,493 Tourisms, 0 2,095 Employment (thousands) Lockdown Partial Reopen Close to Fully Reopen Apr-1H Apr-2H May-1H May-2H Jun Jul Aug Sep Oct Nov Dec Claims Page 15 4/27/2020

ECONOMIC ACTIVITIES : WEI Page 16 4/27/2020

ECONOMIC ACTIVITY: WEI • Economists forecast 20 – 25% decline in GDP in Q2, consistent with unemployment numbers • At current reading of -6%, we expect WEI to continue decline and trough near -20% in May • The path afterwards will be a slow recovery, consistent to our COVID base case, which most cities will require some sorts of mild social distancing Consumer Spending Weekly Economic Index Total: 20% of GDP 6 4 Retail ex 2 essentials, 4/4/2020, -6.56 2711 0 -2 Transportation, 166 -4 Restaurants Entertainment, & Bars, 840 Hotels & Tourisms, -6 336 118 -8 02/20 02/20 02/20 02/20 02/20 03/20 03/20 03/20 03/20 04/20 Consumer Spending Lockdown Partial Reopen Close To Fully Reopen Apr-1H Apr-2H May-1H May-2H Jun Jul Aug Sep Oct Nov Dec WEI Page 17 4/27/2020