2020 has started off with a series of grim events. Bushfire continues to threaten various states in Australia with a state of emergency being declared for the capital city of Canberra. At the same time, bushfire news has been overwhelmed by the Wuhan virus fears, which has spread across the globe and is now being declared as an international emergency by the World Health Organization.
In between these two international disasters, sports fans will also know of the sudden death of NBA legend Kobe Bryant, who passed away with one of his daughters, due to a helicopter accident. Also, in case you missed it because of all the other news, the United Kingdom has officially withdrawn from the EU on 29 January.
Unfortunately, the financial markets are not going to be spared from these unfortunate events. Singapore, in particular, is likely to be affected economically due to the understandable fears of the Wuhan virus.
In this edition of 4 Stocks This Week, we look at some stocks which may be impacted because of the Wuhan virus.
CapitaLand Ltd (SGX: C31)
We wrote about CapitaLand just three weeks ago saying that it was one of the best performing real estate stocks on the Singapore Exchange (SGX) for 2019, having delivered a return of 24.7% for 2019.
Since then, CapitaLand which has significant exposure in China had to close six malls in China (four in Wuhan) while reducing opening hours at 45 other malls across China. There is no timeline on when the malls will reopen or revert to regular opening hours.
This will affect the company’s performance over the next three months and possibly, for the rest of the year. While many health experts are saying that the virus is not as deadly (yet) as SARS, sentiments are going to be weak and investors of CapitaLand will have to ride through this tough period.
CapitaLand stock prices have dropped to $3.62 as of 31 Jan. A week ago, its share price was $3.89 (24 Jan).
Sasseur REIT (SGX: CRPU)
Another real estate company that will be adversely affected because of the Wuhan virus is Sasseur REIT. The company, which owns four retail outlet malls in China, had to temporarily close all its malls this week because of the spread of the Wuhan Virus.
Investors in Sasseur, similar to how we intend to stop the spread of the Wuhan virus in our country, will need to take precautionary measures and wait for this unfortunate event to be over before life reverts to normal. There is no real way to get around this.
Sasseur REIT share price has dropped to $0.795 (31 Jan) from $0.875 (24 Jan) a week earlier.
Singapore Airlines (SGX: C6L)
Besides, airlines in China, Singapore’s national carrier will be one of the airlines that are going to be most affected by the Wuhan Virus. For a start, with the fears of the virus not just limited to Asia but also around the world, travel plans for both leisure and business travellers are going to be affected.
Singapore has announced that any new visitors (except for Singapore residents) who have recently travelled in the past 14 days to mainland China will no longer be allowed to enter Singapore. Also, it’s temporarily barring entry to Singapore for those holding China passport.
Singapore Airlines (SIA), along with its subsidiaries SilkAir and Scoot, have started suspending some flights to mainland China, which comes as no surprise given that travel ban is already in place in Singapore and the naturally weak demand of people from Singapore wanting to travel to China at this point in time. Affected customers will be given a full refund, further reducing revenue for the airline during this period.
How long the travel bans from the various countries are going to be in place will depend primarily on whether the spread of the virus can be curtailed in the coming months and the danger of it. In the short-term, however, both the airline and its investors will need to be prepared for the challenging days ahead.
Since the start of the year, SIA share price has dropped from $9.11 (2 Jan) to $8.55 (31 Jan).
SPDR Gold Shares (SGX: O87)
Gold has commonly been seen as a safe haven when the economy is uncertain and people want to park their funds elsewhere in an asset that is seen as more stable, or at least uncorrelated with the economy.
In Singapore, the SPDR Gold Shares ETF is an ETF that you can buy to get easy exposure to Gold. Since the start of 2020, the SPDR Gold Share ETF has increased in price from $143.05 (2 Jan) to $148.55 (31 Jan), which represents a good option if you are looking to protect some value in your portfolio during this potentially volatile period. Trading turnover has also almost doubled in early 2020 as compared to 2019.
ETF RSP with FSMOne
Don't Time the Market - Invest regularly with FSMOne.com's ETF RSP feature. Investors can now apply for Regular Savings Plan (RSP) on a selected list of 40 ETFs listed on SGX, HKEX and US stock exchanges. Use Dollar Cost Averaging to help you take small but steady steps towards building a diversified portfolio.
4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.