The recovery rate
December 31st, 2020
1 minute read
End not beginning
This may sound strange to say, but 2020 for me wasn’t the beginning of a bear market, it was the end. We had been watching for a few years as economies everywhere slowed down. We also knew that here in Indonesia, companies had been running increasingly negative cashflow for years. In 2019 we saw both of these start to improve.
A medical recovery
This meant when the Corona hit, we looked at it a bit differently, as a medical rather than economic or financial crisis. As a result, the data which we chose to monitor for signs of recovery, was the ratio of the number of recoveries to total cases. This data was available daily & we started to monitor it from March.
The March low
By March 20th, I could see that this ratio for all counties was starting to stabilize & wasn’t declining any more. I wrote to my team that we were close to a stock-market low that day. They thought I was nuts, but both the JCU & Dow reached lows on March 23rd, the day this recovery rate started to rise.
A September arbitrage
The Dow followed recoveries perfectly & the JCI did too, until August when it started to lag behind. In September the JCI declined because of the second Jakarta lockdown, even though the recovery ratio was higher & still rising. Sure enough stocks were a great buy & by December the JCI had caught up with & overtaken the recovery rate.
Rising into 2021
People are starting to talk about rising Indonesian cases again, & stocks have declined back to end the year slightly below 6,000. But after falling slightly during December the recovery rate is now starting to rise quite quickly again. It’s back at 85.2% & we expect recoveries to cross above 90% soon & the JCI to keep rising in 2021.
1 minute read
End not beginning
This may sound strange to say, but 2020 for me wasn’t the beginning of a bear market, it was the end. We had been watching for a few years as economies everywhere slowed down. We also knew that here in Indonesia, companies had been running increasingly negative cashflow for years. In 2019 we saw both of these start to improve.
A medical recovery
This meant when the Corona hit, we looked at it a bit differently, as a medical rather than economic or financial crisis. As a result, the data which we chose to monitor for signs of recovery, was the ratio of the number of recoveries to total cases. This data was available daily & we started to monitor it from March.
The March low
By March 20th, I could see that this ratio for all counties was starting to stabilize & wasn’t declining any more. I wrote to my team that we were close to a stock-market low that day. They thought I was nuts, but both the JCU & Dow reached lows on March 23rd, the day this recovery rate started to rise.
A September arbitrage
The Dow followed recoveries perfectly & the JCI did too, until August when it started to lag behind. In September the JCI declined because of the second Jakarta lockdown, even though the recovery ratio was higher & still rising. Sure enough stocks were a great buy & by December the JCI had caught up with & overtaken the recovery rate.
Rising into 2021
People are starting to talk about rising Indonesian cases again, & stocks have declined back to end the year slightly below 6,000. But after falling slightly during December the recovery rate is now starting to rise quite quickly again. It’s back at 85.2% & we expect recoveries to cross above 90% soon & the JCI to keep rising in 2021.
