The cure for the common stock market may be as simple as better policy. At least this year.

It makes sense that a better government response to the coronavirus pandemic would result in better public health. New data show that countries whose governments responded best to COVID-19 also experienced noticeably better stock market returns.

So far this year, countries ranked in the top half for their pandemic response saw their equity markets outperform by more than 7% as of May 31 (down 15.8% on average vs. down 23.1%). The study includes all “investable countries” outside the United States for which a country-specific exchange traded fund exists — essentially the S&P 500 equivalent for each country.

“We expected a difference in performance,” said Kurt Lieberman, CEO of Minneapolis-based Magni Global Asset Management. “But the size of the difference was larger than we expected.”

Lieberman and his team manage an international equity portfolio based on the assertion that good governance (regulatory climate, transparency, etc.) leads to better investment results. The strategy has been in place for 17 years, but a global pandemic turned out to be an ideal litmus test for Magni’s premise.

Like a storm spotter who sees a funnel cloud on the horizon, the potential disaster launched governments around the world into action (or, in some cases, inaction). The wide variety of strategies used to address COVID-19 and the global economic shutdown have been evaluated most often in medical terms: Total cases diagnosed, rate of disease spread, death counts, etc.

We also have tools to help quantify how those policies have fared in economic terms, specifically, a method to objectively rank the quality of each country’s pandemic response. That work was undertaken by the Malaysian government and Pemandu Associates, which compiled data from 184 countries to build a new “Global COVID Index.”

Magni then compared equity performance in the world’s “investable countries” to their corresponding COVID scores. Denmark, the best-performing stock market in Magni’s study, ranks third in the Global COVID Index. Taiwan (fourth), South Korea (fifth), and Switzerland (12th) were others with both high marks for COVID response and outperforming equities. Major European economies like the United Kingdom (157th) and France (150th) rank worse than 80% of the world. Both suffered stock market losses greater than 20%. Brazil (141st) fell more than 40%.

One notable outlier is Sweden, whose government made headlines for its laissez faire approach to COVID-19. Swedish equities fared better than average, down only 9% despite its policy response ranking No. 171.

The United States, if you’re wondering, ranks 126th.

There are, of course, many other factors influencing equity performance. Countries with economies more dependent on oil exports, for example, have been harder hit by collapsing crude prices. Currency fluctuations relative to the U.S. dollar are far from equal. Countries where the virus appeared earlier may now be further along in their economic recovery than others.

Still, the overall correlation is obvious. Higher-quality public health policies have had direct economic benefits.