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SIA shares at 15-year low as aviation, tourism stocks tank in S'pore in wake of Asean travel curbs

SINGAPORE — Aviation and tourism-related stocks in Singapore tanked on Monday (March 16) as investors reacted to additional travel restrictions imposed by the Singapore Government over the weekend in a bid to slow the Covid-19 outbreak.

SIA shares have sunk to their lowest level since October 2004.

SIA shares have sunk to their lowest level since October 2004.

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SINGAPORE — Aviation and tourism-related stocks in Singapore tanked on Monday (March 16) as investors reacted to additional travel restrictions imposed by the Singapore Government over the weekend in a bid to slow the Covid-19 outbreak.

Analysts say the death knell was the extension of the restrictions to travellers from member countries of the Association of Southeast Asian Nations (Asean), which are Singapore's closest neighbours — and include some of the world’s busiest air routes.

It was a bloodbath for the Straits Times Index (STI) on Monday, with aviation and tourism stocks particularly hard hit. It came amid massive selloffs on stock markets around the world as fears over the economic impact of Covid-19 verge on full-blown panic.

Singapore Airlines slumped 6.34 per cent to end the day at S$6.74, a more than 15-year low. SIA last traded at this level in October 2004. Genting Singapore, which owns Resorts World Sentosa among other leisure industry properties, slid by 5.88 per cent to S$0.64.

Far East Hospitality Trust dived 10.38 per cent to S$0.48, while CDL Hospitality Trust sank 10.71 per cent to close the day at S$1.

Both counters are business trusts that have hotels in their portfolios.

The STI, as a whole, lost 5.25 per cent, ending the day at 2,495.7 points.

On Sunday, the Government announced that all travellers entering Singapore with recent travel history to Asean countries, Japan, Switzerland or the United Kingdom in the previous 14 days will be issued with a 14-day stay-home notice.

Singaporeans are also advised to defer all non-essential travel abroad with immediate effect, the Ministry of Health (MOH) said.

About 40 per cent of international arrivals into Changi Airport are from Asean countries, almost four times more than Chinese travellers, said Mr Paul Chew, head of research at Phillip Securities.

Asean comprises Indonesia, the Philippines, Vietnam, Cambodia, Laos, Thailand, Malaysia, Brunei, Myanmar and Singapore.

“By default, half of the business disappeared overnight. It’s quite devastating,” he said.

In 2019, three flight routes within Asean were among the world’s top five busiest flight routes of the whole year, according to travel data provider OAG.

The Singapore-Kuala Lumpur route topped the list at 30,187 flights, while the Singapore-Jakarta route came in third at 27,046 flights.

The Kuala Lumpur-Jakarta route took fifth spot at 19.741 flights every year.

Already, Singapore has progressively banned travellers from China, Iran, Italy, France, Germany, South Korea and Spain from entering the country.

These newest restrictions on Asean nationals, would “kill a lot of business travel”, said Mr Terence Wong, founder of Azure Capital.

“Most of them are intra-Asean travel, probably just in the country a day or two right? There is no reason why you want to be subjected to a 14-day stay-at-home requirement,” he said.

Ms Pan Jingyi, market strategist at IG, said that the market selloff is not just due to restrictions imposed in Singapore.

Australia and New Zealand, which are destinations close to Asean, have also put up restrictions as part of their containment efforts.

“There is a consolidated effort across the board,” she said.

Yet while the market is down dramatically, analysts to whom TODAY spoke said investors should exercise caution and not rush in just because share prices look very cheap.

While Asian countries, such as Singapore, are generally perceived to be doing a better job at containing the Covid-19 outbreak, Ms Pan noted that financial markets here are still influenced externally, particularly with what’s going on in the United States.

Over the past week, financial markets in the US have suffered whiplash, rising and falling dramatically — but the net movement is a huge dive, from above 29,000 points in mid February to just above 22,000 in early trading on Monday.

Last Thursday, the US market suffered its single largest percentage fall — 9.5 per cent — since Oct 19, 1987 when the US market lost 25 per cent in a single session.

“The outlook for the US market in the short-term, and I mean in the next one month, the outlook is not so positive. I don’t recommend trying to catch this falling knife at this point in time,” said Ms Pan.

Mr Wong also warned not to jump into the market as there might be more downside risk in the future.

However, Mr Chew said it is a good time to buy though his advice would be to pace the investments as the situation is still deteriorating.

“The market will remain weak until we reach a peak in the number of new patients… Whenever the numbers rise, the market will take it that the detrimental economic impact will be more entrenched,” he said.

“The positive side is we see that the virus can be contained but at the cost of huge economic damage.”

 

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SIA stock market Covid-19 coronavirus air travel tourism

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