Market losers, gainers from nCoV scare

Published February 2, 2020, 12:00 AM

by manilabulletin_admin

By James A. Loyola

With the novel coronavirus from China now reaching epidemic proportions, certain industries are going to take a hit while others are seen to unintentionally benefit from the crisis.

According to Abacus Securities Corporation, “People are likely to go out less. Companies that depend significantly on discretionary spending will be most affected.”

It noted that, “Consumers will avoid crowded places like malls” and listed property companies which own and operate malls will “feel some impact.”

Abacus added that, “Patronage at restaurants should also fall” and this will hurt listed fastfood and casual dining companies, noting that, fastfood restaurants experienced a sharp decline in sales at the height of the SARS scare.

“Domestic tourism will be curtailed,” said Abacus noting that listed airline and ground handling services firms have already borne the brunt. This may also lead to a drop in fuel demand and this would impact oil refiners and retailers as well as tollway operators.

Online brokerage firm 2Tradeasia said 22 percent of tourist arrivals in the first nine months of 2019 came from China, thus the tourism and transport sectors “will feel the brunt of the pressure.”

Meanwhile, it said “Closure of business in hubs such as Shenzhen and Macau may also weigh on tech manufacturing and gaming, respectively.”

China operations of Integrated Micro-Electronics, Inc. (IMI), the manufacturing arm of the Ayala group, has been suspended due to the outbreak of the nCoV.

IMI said it has “delayed resumption of work in selected China manufacturing facilities in conformance with local government notices regarding the outbreak of the nCoV.”

However, some firms will also benefit from the virus scare, assuming Filipinos spend more time at home while the outbreak resolves itself.

“First, more meals cooked and consumed at home means higher food and grocery sales for retailers like Puregold Price Club, Metro Retail Stores Group, Inc., Robinsons Retail Holdings, Inc. and SM Retail.

“They will also benefit from increased sales of protective items like masks, health supplements, disinfectants, etc.”