How the coronavirus outbreak might affect airline stocks
Asian airline stocks plummet amid rising coronavirus concerns in China
Shares in Asia travel companies tumbled on Tuesday amid growing concerns over an outbreak of a mysterious virus in China that has already killed six people..
Airline stocks across the region have taken a hit. Shares of China Eastern Airlines and China Southern Airlines in Hong Kong fell 6.7% and 6.51%, respectively, while Cathay Pacific fell 4.07%. Japan Airlines fell 2.97% in Japan and ANA lost 2.16%. Australian Qantas fell 1.7%.
In Hong Kong, insurers fell as AIA shed 3.42%. Hong Kong shares of Ping An and China Life Insurance also fell 4.31% and 4.95%, respectively. Casino operator shares were also down, with Wynn Macau down 4.81% and Melco International Development down 4.35%. Wynn Macau has regular contact with China.
Chinese authorities have so far confirmed 17 deaths from the country‘s ongoing coronavirus outbreak, bringing the total number of confirmed cases to more than 500. The disease can be transmitted from person to person, Chinese officials confirmed..
Outside of China, cases have also been confirmed in Thailand, Japan and South Korea, according to the Centers for Disease Control and Prevention..
«In fact, the biggest risk comes from the fact that Chinese New Year is just around the corner, so the number of domestic tourists who will simply travel to China actually increases the risk.… how widely this virus can spread from people to people. people communicate with each other more than at any other time of the year», – notes economist analyst at the Economist think tank Vakas Adenwala.
Adenwala said that due to the upcoming holiday season, the impact of the situation could extend beyond travel companies such as airlines..
«In fact, you will see a lot of impact on working people and large retail conglomerates, or FMCG, where in fact you will see how many people go to buy holiday food right before the holidays.», – said Adenwala, referring to fast-selling consumer products that tend to sell quickly and at a lower price..
Hundreds of millions of Chinese citizens are expected to travel domestically and internationally during the extended Lunar New Year holiday starting Saturday.
«For the Chinese New Year, millions of people will move to their hometowns across China, making the whole situation unmanageable, confirms Margaret Young, an analyst at CMC Markets in Singapore. – The sale is just the beginning, we will see more in the coming days».
The annual mass movement of people has rekindled fears of the further spread of the virus and rekindled memories of the deadly severe acute respiratory syndrome (SARS) pandemic in 2002 and 2003. SARS killed 800 people – most of them from China and Hong Kong, according to the World Health Organization.
According to Adenwal, the current situation «saves a little» the presence of online trading, compared to the times of the outbreak of SARS.
«In the digital age, you can actually consume a lot, buy a lot of things online, says Adenwala. – At the time, you didn’t have as many tourists or consumers going online to shop as you can see it happening now».
Japan’s Nikkei shed 0.8% and Shanghai blue chips 1.5%, under pressure from airlines. Caution spreads to S futures&The P 500 on Wall Street, which fell 0.4%, while the FTSE100 fell 0.5% at Tuesday’s open.
The Japanese yen confirmed investors’ bets on safe movement, the dollar fell to 109.92 from 110.17. It also rose against the euro, leaving the single currency unchanged at $ 1.1092.
Against a basket of currencies, the US dollar remained stable at 97.599, close to a four-week high of 97.729.
Spot gold rises to $ 1,566.71 an ounce and bounces back to a seven-year high of $ 1,610.90 hit last week.
Oil prices have fluctuated, having previously increased on the risks of supply disruptions in Libya. Brent crude futures drop 31 cents to $ 64.89 a barrel, while U.S. crude fell 5 cents to $ 58.49.