I am not an infectious disease expert but I have a PhD in financial economics and I am really good at analyzing data. Coronavirus pandemic is at the top of investors’ minds these days. Iranian authorities slept at the wheel and now the country has the highest number of deaths outside of China. Insider Monkey estimates that the new coronavirus’ fatality rate (read our article why our calculation is more accurate than WHO’s calculations) is around 0.5% which implies that there are more than 10,000 undetected coronavirus infections in Iran at the moment. The new coronavirus infections are spreading uncontrollably in Iran. As a result, Iran also exported coronavirus to several Middle East countries.
Egypt identified only 2 cases of coronavirus infections so far. The first case was confirmed on February 14th and the second case was reported today. Both patients are foreign nationals. It is mind-boggling because no Egyptians are reported to have contracted the new coronavirus whereas French and Canadian authorities reported 7 confirmed cases of COVID-19 from travelers coming from Egypt.
Moreover, yesterday a California couple also tested positive for coronavirus after traveling from Egypt.
“There is no coronavirus in Egypt. We will not hide anything,” Egyptian Prime Minister Moustafa Madbouly said. If we believe Egyptian authorities nearly a dozen foreign nationals who were in Egypt contracted the virus, whereas no Egyptian contracted the virus. This is probabilistically next to impossible. We believe that Egypt doesn’t want to scare travelers from visiting the country and hiding information from the public and WHO regarding total number of infections in the country. I don’t have any physical evidence of this, I am just using math to infer this.
Yesterday Qatar banned travelers from Egypt over coronavirus fears. Considering that Egypt didn’t report any coronavirus infections in her citizens, Qatar doesn’t seem to believe Egyptian officials either. If you are investor in VanEck Vectors Egypt Index ETF (NYSE:EGPT), you should take into consideration the probability that Egypt could turn into next Iran in terms of coronavirus infections. China and Iran tried to cover up coronavirus infections initially and enable the virus to spread free in their countries. It looks to me that Egypt will follow the same path. We estimate that there are more than 500,000 total coronavirus infections around the world and most of these infections aren’t detected yet. As a result, we are bearish on the market in the short term.
We don’t recommend Americans travel to Egypt at this point in time and urge US authorities to ban travelers from Egypt. Donald Trump is quick to complain about Federal Reserve, but he isn’t doing enough to prevent the spread of the new coronavirus.
Disclosure: No positions.