Asian Travel Stocks Fall on Omicron Fears

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By Yi Wei Wong
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Airline and travel-related stocks are largely lower in early Asian trade, weighed by investor concerns over the spread of the Omicron Covid-19 variant, which has prompted tighter border controls in some countries.

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China Southern Airlines Co. fell 2.6%, Cathay Pacific Airways Ltd. 2.4%, Korean Air Lines Co. 1.3% and Singapore Airlines Ltd. 1.8%. Samsung C&T Corp., which operates South Korea’s largest theme park, Everland, has a 2.3% discount, while Singapore-listed airline servicing company SATS Ltd. declined by 1.3%. Luggage maker Samsonite International SA fell 3.0%.

Listed casino shares in Hong Kong are also down on concerns over the virus, as well as news that an arrest warrant has been issued for the head of Macau’s largest junk conglomerate for cross-border gambling activities. Sands China Ltd. 6.9%, Wynn Macau Ltd. 6.9% and Galaxy Entertainment Group Ltd. is down 6.8%.

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Global markets fell on Friday after the World Health Organization called the newly identified Omicron “a form of concern”.

Many market analysts see the decline in Asian equities as a reaction to uncertainty, noting that little is known about the contagiousness of the new variant. Vaccine partners BioNTech SE and Pfizer Inc have said it will take at least two weeks to assess the efficacy of its vaccines against the new strain.

Morgan Stanley says that the emergence of a new covid version could have different effects across Asia. China, Hong Kong and Taiwan have maintained a “Covid-zero strategy, which will limit the near-term economic impact but delay any reopening efforts and a rebound in consumption growth.” In countries that have attempted to open up and live with the virus – including Japan, South Korea, Singapore and Australia – economies “are exposed to the risk of a shock in near-term growth,” it said.

The bank said the impact on India and Southeast Asia could be greater, noting that “when cases rise rapidly these economies have tightened restrictions.”

It added that risks to regional economic growth are skewed towards the first quarter of 2022, given that the starting point of cases in the current quarter is relatively low.

Investment bank Goldman Sachs estimates travel restrictions could deal a 2.0% hit to global economic growth in the fourth week of November – but they said the impact was modest compared to the 20% hit it reported in mid-April 2020. Is.

Write to Yi Wei Wong at [email protected]

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