AIRYY Air China Limited (PK)

By Dave Sebastian

Shares of tourism-related companies with exposure to the Chinese market fell on concerns over a coronavirus outbreak ahead of the annual Lunar New Year holiday this week.

The newly-identified virus which originated in China and causes pneumonia-like symptoms has killed six people in China since first appearing in central China last month. Chinese health authorities acknowledged Monday that the virus is being transmitted between humans, heightening concerns that it could spread quickly as tens of millions of Chinese people travel across the country and abroad for the Lunar New Year holiday later this week.

Shares of Wynn Resorts Ltd. (WYNN), which operates hotels in Macau and globally, were off about 4.9% Tuesday to $144.26, while shares of Las Vegas Sands Corp. (LVS) fell around 4.3% to $70.85. Casino operator MGM Resorts International (MGM) were off 3.3% to $33.40, while shares its Hong Kong-listed subsidiary MGM China Holdings Ltd. (HK:2282) declined 6.2%.

Travel sites also took a hit, with American depositary shares of the Chinese online-travel company Trip.com Group Ltd. (TCOM), which owns Ctrip.com, declining about 11% to $34.63. Booking Holdings Inc. (BKNG) shares were off 2.4% to $2,005.03, while Expedia Group Inc. (EXPE) shares fell 1.1% to $110.60.

Before the outbreak, Ctrip.com, which is China's largest travel platform, estimated around 450 million trips within China for the Lunar New Year between Jan. 24 and Jan. 30, an 8.4% increase from last year. But the virus has prompted some Chinese travelers to change plans, putting what is commonly described as the world's largest annual human migration at stake, The Wall Street Journal reported.

American depositary shares of China-based airlines slid, with China Eastern Airlines Corp. Ltd. (CEA) off 10.4% to $24.62, Air China Ltd. (AIRYY) off 9.7% to $17.92 and China Southern Airlines Co. (ZNH) off 9.1% to $31.10. Shares of U.S. airlines were down too, with United Airlines Holdings Inc. (UAL) falling 3% to $86.96 and Delta Air Lines Inc. (DAL) off 3.4% to $59.95.

Cruise operators such as Carnival Corp. (CCL) and Royal Caribbean Cruises Ltd. (RCL), both of which have operations in China, dropped 2.2% and 3.8%, respectively.

The outbreak also dragged stocks of hotel companies down, with shares of Hyatt Hotels Corp. (H) down 2.4% to $86.07, Marriott International Inc. (MAR) down 2.6% to $146.42 and Hilton Worldwide Holdings Inc. (HLT) down 1.9% to $111.74.

Short-term health scares such as swine flu, SARS and ebola have hurt stocks, but shares have historically rebounded, C. Patrick Scholes, an analyst at SunTrust Robinson Humphrey Inc., told The Journal.

Analysts at J.P. Morgan also alluded to the stocks' recovery in past disease outbreaks, adding that pharmaceutical stocks and makers of diagnostic kits and protective equipment tend to perform well in these situations.

"Past experience of market performance around such events suggests that markets tend to bottom with the peak in new cases and news flow," the analysts said in a note to investors.

Write to Dave Sebastian at dave.sebastian@wsj.com

(END) Dow Jones Newswires

January 21, 2020 12:07 ET (17:07 GMT)

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