Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

As investors crunch numbers to determine how the coronavirus, also known as COVID-19, will hit China’s economy, hedge fund manager Nathaniel Polachek has tied much of his outlook to the fate of a ship anchored near Weihai, China.

The vessel carries some 750 tonnes of lead concentrate that Mr. Polachek, head of New York-based Commodity Asset Management, purchased in Greece to sell on the Chinese mainland.

The coronavirus outbreak has kept the ship idling off China’s coast for weeks, as movement restrictions and factory closures slow swathes of the world’s second-largest economy to a crawl.

Story continues below advertisement

Word that the ship has been allowed to dock in Weihai – an access point to one of China’s main industrial hubs and home to several metal refineries and smelters – would be one signal that business activity is finally picking up, Mr. Polachek said.

Another encouraging sign would be an increase in air pollution levels over key Chinese manufacturing areas, which Mr. Polachek monitors daily using the Air Quality Index web site.

“The best indicators are … from the physical world,” he said. “I want to see how long it takes for materials to get off the boat, how long it takes for me to get paid for them.”

Doubts over whether there are more cases in China than are being captured by official figures have fuelled a do-it-yourself approach among investors looking to determine the outbreak’s trajectory and gauge its economic effects. The tools they use range from artificial intelligence and computer modelling to simple word of mouth.

Investors “don’t believe the stuff they’ve been hearing from the Chinese government,” said Leland Miller, head of China Beige Book International, which regularly surveys thousands of Chinese firms to gauge business conditions in the country.

Chinese officials have defended Beijing’s management of the epidemic and rejected the idea that China was not transparent enough in its initial handling of the outbreak.

The latest data provided by China indicate a decline in new cases but “every scenario is still on the table” in terms of the epidemic’s evolution, the World Health Organization said Monday.

Story continues below advertisement

The economic toll, meanwhile, has started to pile up, with Apple Inc. the latest company to warn of the impact.

Many of Miller’s clients – which include hedge funds and pension funds with as much as US$100-billion under management – remain uneasy about the potentially disruptive effects of COVID-19 on global growth, even as they continue betting on more upside in an equity rally that’s taken markets to record highs.

“Everyone realizes that they are not pricing in much risk,” he said.

His firm’s next survey will contain new questions about the effects of the lockdown, such as whether the respondent has returned to work or working from home.

Others are relying on their contacts inside the country. Kevin Smith, founder of Denver-based Crescat Capital and a long-time skeptic on China’s economy, increased his bets against the country’s stocks after receiving an e-mail from one of the firm’s Chinese clients describing “paralyzing and tragic scenes” in Hubei, the outbreak’s epicentre.

“It’s not really possible for us to be any more bearish on China,” said Mr. Smith, who has been betting against China’s currency since 2014. “But we are more convinced that this is a catalyst for a downturn.”

Story continues below advertisement

Some methods verge on the macabre.

John Lekas, chief executive and senior portfolio manager at Leader Capital in Portland, Ore., has been seeking any sort of on-the-ground information, including crematorium activity in hard-hit areas, to assess the death toll. So far, any information he’s received on the subject has been unverifiable.

Mr. Lekas’s more mundane methods include studying data from the Johns Hopkins Center for Health Security to determine when the rate of new cases will equal the rate of recoveries, a point he believes would indicate a peak in the outbreak. Using his own calculations based on the daily figures, he predicts such a point will come in early March.

His US$450-million fund has been buying Treasuries, a popular destination for nervous investors.

“We are fixed income [investors] and nervous by nature,” Mr. Lekas said. “The uncertainty makes us nervous.”

Coronavirus information
Coronavirus information
The Zero Canada Project provides resources to help you manage your health, your finances and your family life as Canada reopens.
Visit the hub

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies