Bird flu outbreak hits tourism-related shares in Asia

Bird flu outbreak hits tourism-related shares in Asia

Dow Jones, Singapore

Travel and tourism-related stocks were sold across Asia Wednesday because of the spreading outbreak of bird flu, even though many analysts said investors might be overreacting.

Airlines were lower across the board, with shares in Hong Kong's Cathay Pacific down 2.1 percent, Singapore Airlines off 2.6 percent, Japan Airlines System down 1 percent and Malaysian Airline System sliding 4 percent.

Thai Airways International sank a further 1.9 percent after Bangkok officials determined the virus had reached the capital and declared the city a "danger zone". That brought the stock's cumulative losses over the past five days to 9 percent.

The selling spread to hotel, retail and even some consumer goods stocks around the region as investors worried that tourist arrivals and spending might slip. In Malaysia, for example, Resorts World was down 1.9 percent and Carlsberg Brewery Malaysia, a beer manufacturer and distributor, had lost 1.8 percent.

Many analysts continued to insist the flu probably wouldn't have a major impact on Asia's travel and tourism industries - and that drops in these sectors' shares might therefore be good buying opportunities.

"The concern and fear factor is much less versus SARS," said Citigroup Asset Management's Anthony Muh.

Some travel agents in the U.S., Britain and Asia reported preliminary signs of a slowdown in tourist traffic to Asia, including a drop in new bookings over the past few days, particularly to Vietnam, Cambodia and Thailand.

However, they said the change was small, and at least part of the drop-off might be due to seasonal factors such as the end of Lunar New Year holidays. Cathay Pacific, Thai Airways and Hong Kong's Dragonair said there had been no noticeable rise in cancellations.

And even if the bird flu does become a major health issue for the region, Asian governments went through a "baptism of fire" during SARS so "they're in a better position to deal with this than they were before SARS," said ING's Philip Wickham.

Nevertheless, there was concern in the markets that the virus could mutate into a form that permitted human-to-human transmission, which would dramatically increase the risk of a pandemic in the region.

Health officials said there had been no evidence of human-to- human transmission so far, but that they couldn't rule out this possibility if the virus mixed with a regular human influenza strain.

Adding to the concern, some senior government officials in the region sounded much more worried about the virus than they were just a few days ago. Thai Prime Minister Thaksin Shinawatra, who had previously described the flu as "no big deal", said Wednesday that it posed "a grave economic threat" and "a serious public health threat".

Australian Treasurer Peter Costello said the bird flu epidemic was "very serious" and had the potential to hurt local and Asian tourist trade and economies.

Asian travel-related stocks were also hurt Wednesday by the fact they had risen sharply in previous weeks - for example, Thai Airways shares jumped 38 percent between late December and mid- January. This left the stocks vulnerable to profit-taking, and the bird flu news was taken by many investors as a cue for such selling, traders said.