The stock market crisis caused by the coronavirus is having a clear victim in the international equity markets. It is none other than the tourism sector that is seeing how in recent days the price of listed companies is being lowered with special intensity and with practically no exclusions of any kind. With an average depreciation in the last seven days around 5% and being at the bottom of the stock market among all business segments. Hotels, reservation centers, air lines or companies linked to leisure or entertainment are now with a cheaper price as a consequence of this important health incidence in the Far East.
In any case, the crisis is not over and it remains to be determined whether the worst has already passed for the values of the tourism sector. Or if on the contrary, the worst is yet to come in the next few days or weeks before a worsening of this crisis. In any case, there is a very clear fact and that is that money is abandoning these values in the equity markets. Where they have shown serious divergence with respect to other sectors integrated in the stock market indices: electricity, banks, construction companies or telecommunications companies. With the worst performance on the Ibex 35.
The fear that they will suffer from overnight stays in hotel accommodation and a decrease in air travel have led to this new scenario in the booming tourism sector. Despite the fact that some stocks have not been doing very well in recent months. As for example, the case of the hotel company Sol Meliá that before the virus emerged in China it was very close to its lows in the last five years. And in any case, with a very relevant bearish projection that did not presage anything new for small and medium investors. Like other representatives of the sector, as in the specific case of NH Hoteles.
Tourism sector values: airlines
This business segment is the most affected of all, with price cuts that in some cases are above 5%. Not surprisingly, many flights and reservations that were destined for the Asian country have had to be canceled and that can represent a serious problem in their billing. Despite the fact that the price of oil has fallen significantly these days and to reach levels of 50 dollars a barrel of crude. In what should be very positive news for the commercial interests of airlines around the world. But that in this case has not affected so that the prices of their shares rebound. If not, on the contrary, they have developed a very vertical descent.
In this sense, the effect has not been long in coming in the equity markets and the price of oil has reached annual lows. Because in effect, last Monday, oil prices fell to their lowest in more than 1 year, pressured by concerns about the decline in demand in China (the world's largest oil importer) because of the coronavirus. Both the international benchmark Brent and the West Texas Intermediate (WTI) closed with their lowest level since January 2019. Giving clear signs that fuel demand has plunged in China, as airlines have canceled flights to stop the spread virus and the provinces are delaying the reopening of factories after the Lunar New Year festivities.
All hotel chains down
Without a doubt another of the affected sectors This virus is widely represented in equities, both in Europe and on the other side of the Atlantic. Well, their reaction to this fact has not been long in coming and their titles have not waited long to fall drastically in financial markets around the world. In Spain, the best example of this trend is represented by Sol Meliá. Securities that at the moment are not on the radar of a large part of financial analysts and are not integrated into the investment portfolio for the next few months. If not, on the contrary, they are more of a sell than hold and of course buy these days.
While on the other hand, it cannot be forgotten that there are other values that are directly or indirectly linked to tourism and that are going to be affected by this new global health scenario. In any case, they are proposals that must not be accepted because the risks are very high and where there is much more to lose than to gain at this time. On the other hand, it is necessary to influence their high volatility since they present wide divergences between their maximum and minimum prices that do not allow the entry and exit prices to be adjusted very well in these listed companies. Like the fact that the falls can be accentuated in the coming days or weeks if the scenario regarding this virus worsens or solutions are given to stop it.
Take advantage of business opportunities
Another fact that must be considered these days is that there are other values that can develop the opposite trend, that is, directed upward. In particular, with the representatives of the pharmaceutical industry who are the most representative of this trend. And from where the savings can be made profitable much better than in other more conventional sectors. In any case, investors will have no choice but to carry out a perfect follow-up since trading operations can be carried out in the face of the volatility presented by these stock values in these first of this new year.
On the other hand, no less important is the fact that these trends can be collected through investment funds that are one of the products chosen by users for channel your savings in a less aggressive way. In comparison with the purchase and sale of shares on the stock market, which is where all these kinds of companies to which we are referring are listed. Not surprisingly, it can be invested in sector funds that can take advantage of the trend that each one of them shows. Although with more expansive commissions than in the rest of the financial products.
IAG cancels its connections with China
This airline has been one of the stocks that have come off the worst of this situation in regard to the selective index of Spanish equities, the Ibex 35. After showing a really impeccable technical aspect and with prospects of go up to 8 euros for each share or even more demanding price levels. But this fact has upset all their hopes that it would be one of the best proposals in the financial market of our country. To the point that it has started a bearish phase that can take it back to the level of 5 euros. Being one of the values that must be absent these days due to the risk that their operations entail from now on.
On the other hand, the IAG Board then decided that, in view of the level of shareholding by Non-EU Persons, it was necessary to set a total maximum of Non-EU Shares in accordance with article 11.8 (b) of the IAG statutes. In this sense, the percentage of issued IAG shares that are owned by Non-EU Persons is, as recorded in the IAG share registry book, 39,5 percent. Consequently, the maximum allowed is removed with immediate effect. They are considered withdrawn and any pending notifications of affectation will be without effect.
Amadeus loses reservations
The reserve center is another of the great harmed within the Ibex 35. It has lost 6% of its valuation on the stock market in just over a week. After a very clear uptrend and that it had made it very attractive to the movements of small and medium investors. In line with what other listed companies with similar characteristics are doing and which encourages having to be in liquidity to avoid unwanted situations at this precise moment. Despite the good moment that it was going through since the end of summer last year and from where it started a suggestive bullish rally until this situation has arrived.
On the positive side, it should be noted above all that EeasyJet, Europe's leading airline, and Amadeus have announced the renewal of a long-term agreement that will offer travel agencies continued access to easyJet fare selection. The distribution agreement will support the airline's multi-channel growth strategy by continuing to focus on business travelers and ensuring easy access to the airline's selection of business products, such as Inclusive and FLEXI fares.