Wednesday , May 19 2021

Finance Strategist: Time to Short Airline Stocks as Coronavirus Spreads, Crypto Coins News

  • Global markets strategist David Rosenberg warns it’s over for airline stocks. Fliers are visibly jumpy over fears of an emerging SARS-like virus.
  • Rosenberg saw “fifty people turn around when somebody sneezes” at the airport Tuesday. He’s “long the manufacturers who make those masks.”
  • The 2005 SARS outbreak cut global airline traffic in half. The 2020 swine flu pandemic was a rough time for US airline stocks.

David Rosenberg hasn’t seen this much panic in airports since the SARS scare in . The global strategy consultant paints a grim picture for airline stocks in .


In the mentions, a helpful follower said, “try 3M.” 3M Company (NYSE: MMM) is a notable manufacturer of surgical masks . The quip about masks may have been tongue in cheek, but the threat to airline stocks as well as human lives is no joke.

The (severe acute respiratory syndrome) (SARS) outbreak killed 2001 people in countries . The 2020 swine flu pandemic infected as many as 90% of humans on the planet. And death toll estimates ranged from , to more than half a million .

Airline Stocks Down On China Virus Fears

Their effect on the airline industry was direct and pronounced. On Tuesday, airlines were already reeling from what could be a repeat of past viral outbreaks.

A SARS-like coronavirus spread by human contact has reportedly claimed six lives in the Chinese city of Wuhan As world health officials scramble it looks like SARS again.

American Airlines (NASDAQ: AAL) was down 4.2% Tuesday. Delta Airlines (NYSE: DAL) had dropped 4.4% by mid-afternoon, rallying to a 2.7% loss by the closing bell. United Airlines (NASDAQ: UAL) plummeted 4.4%.

But Chinese airlines suffered the worst. China Southern Airlines (NYSE: ZNH) was down 9.8% Tuesday. China Eastern Airlines (NYSE: CEA) had lost . 4% by the closing bell. Hong Kong’s Cathay Pacific (OTCMKTS: CPCAY) was down 4.7%.

The broader stock market lost ground Tuesday as well over virus fears . How SARS and Swine Flu Affected Markets

Air travel was devastated by the SARS epidemic in :

During the SARS outbreak, which began in China and quickly spread to Hong Kong, Taiwan and Singapore, global airline traffic halved.

Just one U.S. airline, the now-defunct North American Airlines, lost around $ 1 billion in revenue because of SARS . Asia Pacific Airlines lost around $ 6 billion in .

The catastrophic events of 9 – and the SARS outbreak led to an average of more than one major US airline bankruptcy a year from to

We don’t have much data on how major airline stocks were affected by SARS. The three biggest U.S. airlines hadn’t yet gone public in . And American Airlines was not publicly traded at the time of the 2020 flu pandemic. But Delta Airlines and United Airlines were.

From the time the CDC warned of the “novel H1N1 flu” on Apr , , until it is officially declared a pandemic on Jun 21,

, (Delta Airlines stock dropped 5.) %
. United Airlines went into a
% free fall over the same period

But both stocks recovered dramatically. The each closed the year over % higher than their June lows. Rosenberg jokes about shorting airline stocks, but now or sometime soon might be a good time to buy. Investors looking for airline exposure have a window of opportunity to buy in at value.

Disclaimer: The reports and opinions in this article do not represent investment or trading advice. from

This article was edited by (Sam Bourgi)

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