Aviation Sector: This morning, South Korea reported 4 new cases of MERS, taking the total to 126 cases (with 10 fatalities). Thousands are still in quarantine while more than 2000, including 22 universities are closed. Hong Kong yesterday also reported 4 suspected cases of MERS at clinics after it issued a “red alert” advisory on 9 Jun against non-essential travel to South Korea. Within the Asia-Pac region, other countries have only recommended travellers to take precautionary measures. WHO has yet to recommend any curbs on travel or trade as a result of MERS outbreak in South Korea.
According to an article by The Wall Street Journal, the South Korea government stated that 54,400 foreign tourists (7% of total foreign visitors over an equivalent period last year) had cancelled their trips as of 8 Jun.
OCBC believes the impact from the outbreak is likely to be short-term in nature and contained at South Korea. The house opts to keep their forecast unchanged for both SIA (HOLD, TP: $11.59) and Tigerair (SELL, TP: $0.30) for now. However, in view of weaker global economic growth as World Bank on 10 Jun cuts its forecast for 2015 from 3% - 2.8% as well as persistent overcapacity reasons, OCBC maintains UNDERWEIGHT on aviation sector.
No comments:
Post a Comment