Tray Chen an investment manager at Brandywine Global didn’t share the market expert’s optimism for China’s V shaped recovery from the recent COVID-19 outbreak. She based her position on an array of ‘alternative’ data sets, which offered frequent updates of how quickly Chinese workers were actually returning to work, as opposed to waiting for official data releases offered by the government. Instead, high-frequency data such as traffic congestion and coal consumption are some of the alternative data sources that a growing number of hedge funds, money managers, and analysts are turning to, to gain on the ground information.
When you have a situation such as the coronavirus epidemic esoteric data can be particularly valuable in order gain an information edge and allow for front runners on Wall Street during the deterioration in investor sentiment. That being said, potential problems that can plague some data sources illustrating the importance of combining multiple data sources to get a composite picture of economic and industrial trends. Brandywine’s Chen listed a whole host of data sources she has used to track the industrial recovery in China including, daily coal consumption, box office revenues, and container volumes at Chinese ports.
The Alqami Take
At Alqami we are finding new opportunities for our clients data sets during this crisis and particularly for when the market stabilises and investment managers will all be scrambling to find alpha over their competitors in a bear market. We are also now looking to find relevant businesses who generate information within such sectors such as, Commodities, Supply Chain, Manufacturing, Travel, Entertainment, even Hospitality. This data will become increasingly interesting to global markets as it helps us understand the full impact of the COVID-19 crisis and eventually how well each region is recovering and in which sector. We would hope that the potential revenue opportunities through data licensing would also help data vendors financially in what is and will be a tough economic period.