Coronavirus put aviation, tourism, and oil and gas stocks on alert

Aviation, tourism, and oil and gas stocks are forecast to be hit hard by coronavirus

According to a research by Agribank Securities Corporation (Agriseco Research), in addition to China, Vietnam and Thailand are forecast to suffer the worst hit of the coronavirus outbreak. A fall of 75 per cent in the number of Chinese arrivals within the past three months may result in a drop in Vietnam and Thailand's GDP by 0.37 and 0.58 per cent this year.

Regarding the securities market, the research also showed a correlation between epidemics and stock indexes. The biggest panics over outbreaks were all followed a nosedive by stock markets. Back when the SARS, H5N1, and H1N1 were scaring the populace and stock traders many years ago, the market also recorded sharp downturns and took at least six months to recover.

The local stock exchange has also been negatively impacted by global impacts. 2020’s first session recorded a sharp downturn of 3.2 per cent in the VN-Index, and Agriseco Research was of the opinion that this followed the global trend and forecast the market to fall by 3-5 per cent in total before recovering.

As a result, Agriseco advises that short-term risks are unavoidable, so short-term investors should lower their share rates to preserve capital, and soon sell stocks in sectors flagged to be affected, like aviation, tourism, or oil and gas.

In addition to Agriseco Research, BIDV Securities Company (BSC) also assessed the impacts of the coronavirus outbreak on the local securities market. Accordingly, during the previous SARS outbreak, the local exchange fluctuated and mostly declined in the first three months of the outbreak.

Based on historical evidence, BSC stated that investors should lessen their stock holdings but not sell completely. At the same time, lowering holdings of negatively affected stocks is the best option, while looking to raise their stocks that stand to benefit from the epidemic.

According to BSC, aviation stocks like HVN, VJC, and other stocks from the oil and gas sector have gloomy prospects. Otherwise, healthcare shares like DBD, PME, DHG or jewellery shares like PNJ are forecast to have good prospects.