Ebola could hit the stock market before it gets here

Ebola is on the rise and expected to grow. With luck and vigilance, the disease can be kept outside our border but investors should expect businesses to get hurt from health measures in place.


Travel, hospitality, F&B businesses most at risk

TICKERNAMEBusiness (Source: Sharesinv.com)
5AMAsiatravel.comCo provides online travel pdts & svcs. [FY13 Turnover] Hotel reservation (56.5%), tour pkgs (22.9%), online wholesale (13.7%), air ticketing (2.8%), flight packages (2.5%), hotel promotion svcs (1.6%)
5DABreadtalk[FY13 Turnover] Bakery (50.6%), restaurant (22.8%), foodcourt (26.7%).
5DOSakae[FY11 Geographical] S'pore (72.7%), M'sia (24.7%), others (2.6%).
B58Banyan Tree[1H14 Turnover] Hotel invs (65.5%), fee-based & other income (27.3%), ppty sales (7.2%).
C6LSingapore Airlines[FY14 Turnover] Airline ops (81.6%), cargo ops (14.7%), engrg svcs (3.3%), others (0.4%).
G13Genting SingaporeDevelops, operates & mkts casinos & IRs globally, including Australia, M'sia, Philippines & UK. [FY13 Turnover] Gaming (76.7%), non-gaming (23.2%), others & invs (0.1%).
H12Hotel RoyalCo owns and operates Hotel Royal in Singapore, manages and invest in properties in Malaysia and New Zealand. [FY13 Turnover] Hotel (83.4%), property (15.5%), financial investments (1.1%).
H15Hotel Properties[FY13 Turnover] Hotels (67.1%), ppties & others (32.9%).
H18Hotel Grand Central[FY13 Turnover] Hotel ops & mgt (95.8%), rental income from invs ppties (4.2%).
J7XTiger Airways[FY14 Revenue] Passenger seat (76.4%), Ancillary (23.6%).
LJ3OUEAn integrated property developer with real estate portfolio located in prime locations in the US & Asia. [FY13 Turnover] Hospitality income (52.6%), ppty invs (31.6%), ppty devt (14.4%), dividends & others (1.4%).
S07Shangri-la Asia[1H12 Turnover] Hotel ops (91.2%), ppty rentals (3.1%), hotel mgt (5.7%).
S21Genting Hong KongStarcruise

Listed above are Singapore stocks likely to be first hit by an Ebola-economy. An Ebola-economy is one that is prevented from functioning normally because government puts in place ‘social distancing’ measures to prevent Ebola from spreading. Social distancing measures are important public health measures but they affect businesses because they stop people from gathering.

Ministry of Health has a framework called ‘Disease Outbreak Response Condition’ aka DORSCON that will put measures in place. Even if we do not expect such measures to be in place if Ebola can be kept out, it is reasonable to expect affected countries to put up similar measures. After all, most if not all the companies listed here have an international footprint.

DORSCON Alert Levels

DORSCON Alert Levels | Source: Ministry of Health, Singapore

As a supplement, some bullet points from Spring Singapore ‘Business Continuity Guide: Contingency Planning for Infectious Disease Pandemics‘.

Possible impact of a pandemic, page 2

  • Public gatherings may be discouraged.

Business Impact, page 2

  • A large percentage of employees in any organisation may be absent from work at the peak of a pandemic.
  • Supply chain may be disrupted and reduction in demand for products.
  • The number of customers may drop, especially for businesses in the service sector catering to the public.

Alert Green, page 5

  • Overseas travel, e.g. avoid non-critical travel to flu-affected areas (if travel advisory is issued)

Alert Red, page 8

  • Practice social distancing; avoid crowding and gatherings (e.g. childcare centres, school may be closed and mass events may be cancelled).
  • Non-critical staff to work from home.

For readers who are keen for more, I recommend this post ‘Economic impact if SARS strikes Singapore again‘ where I looked at economic impact of 2003 SARS outbreak.

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