China’s Pneumonia Outbreak Hits Some Travel Stocks Hard

(Bloomberg) -- Stock traders are preparing for the risk that a pneumonia outbreak in China will discourage residents from leaving their homes during the Lunar New Year holiday.

On a day that China’s broader stock market continued to climb Monday, with the small-cap ChiNext jumping to its highest finish in three years, investors sold the likes of airlines, casinos and film producers. Meanwhile, some antibiotic producers jumped the 10% daily limit as Chinese authorities said almost 200 people in the central city of Wuhan have been diagnosed with the new SARS-like virus. Cases were also reported in other Chinese cities including Beijing.

Local authorities said the situation is “still preventable and controllable” in an attempt to reassure the public, just as hundreds of millions prepare to travel ahead of the week-long holiday which starts Friday.

Here’s a roundup of stocks that were among the most actively traded Monday:

Health Care

  • Health-care names were the best performers in the MSCI China Index on Monday, with the sector rising 1.3%.
  • Antibiotics makers Jiangsu Lianhuan Pharmaceutical Co., Shandong Lukang Pharmaceutical Co. and Shenzhen Neptunus Bioengineering Co. all climbed the 10% daily limit.

Airlines

  • Air China Ltd. closed down 7.1% in Hong Kong, the stock’s biggest decline since May, and the company’s Shanghai-listed shares dropped 4.1%.
  • China Southern Airlines Co. and China Eastern Airlines Corp. fell at least 2.6% in both markets.

Casinos

  • A Bloomberg gauge of Macau gaming stocks dropped 4.5%, the most since August, with SJM Holdings sliding 6.4% and Sands China Ltd. losing 5.9%.
  • The stocks declined because investors were concerned the outbreak may affect future visits, said Mandy Jia, an analyst at SWS Research Co. She added the impact would be felt across the hospitality, airline and food-and-beverage sectors in China.

Travel & Leisure

  • China International Travel Service Corp. and UTour Group Co. closed down more than 3%, while hotel operators declined more than the travel agencies.
  • Film producers and cinema operators were hit by concerns about box-office performance during the typically busy holiday period, as people may stay away from crowds.
  • Hengdian Entertainment Co. and Wanda Film Holding Co. both dropped the 10% daily limit while China Film Co. ended 7.6% lower.

Restaurants

  • Haidilao International Holding Ltd. lost 5% in Hong Kong while Jiumaojiu International Holdings Ltd. slipped 6.7% and Xiabuxiabu Catering Management China Holdings Co. declined 5.4%.

©2020 Bloomberg L.P.

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