Coronavirus and measures taken to curtail its spread are hammering key industries, spoiling the global economic activity and threatening recession for economies all over the world.
Supply disruptions, job losses, falling sales and profits, trade and travel halts are key virus-driven problems that the Australian economy is grappling with.
The virus has infected more than 1000 people and resulted in 7 deaths so far in the country. Retail, Energy and Tourism remain the top 3 sectors that are worst affected.
Major leisure and entertainment industries shut their operations after the government’s announcement of restricting non-essential indoor get-togethers of more than 100 people on 18 March 2020.
The World Travel and Tourism Council has warned, “COVID-19 pandemic could result in a job reduction of 50 million people all over the world in the travel and tourism industry.”
Crown Resorts Limited (ASX:CWN) has closed its gaming, food and beverage (except for takeaways), casinos and conference facilities in Melbourne and Perth following Government’s orders for the closure of all non-essential indoor businesses due to COVID-19 spread.
The stock price of the company fell from a high of A$12.670 on 16January 2020 to A$6.12 on 20 March 2020 amidst the virus spread. The stock traded at $6.40 on 24 March 2020, up 4.6% (1:57 PM AEDT).
The Star Entertainment Group Limited (ASX:SGR) operates The Star in Sydney, The Star Gold Coast and Treasury Casino & Hotel in Brisbane and manages the Gold Coast Convention and Exhibition Centre.
The group requested for a trading halt from 23 March 2020 until the commencement of normal trading on 25 March 2020 as it is expected to make an announcement regarding revised operating conditions to be pursued amid government responses to COVID-19 and related impacts to its business.
The stock price of the company fell from a high of $4.7 per share on 17 January 2020 to $1.615 on 20 March 2020 amid the virus impact.
The Ardent Leisure Group Limited (ASX:ALG), owner of theme parks and entertainment centres, has decided to cease its operations of Dreamworld and White Water world from 23 March 2020 until 31 May, 2020 following Queensland state and Federal Government measures regarding social distancing and restrictions for staying indoor on non-essential needs amid COVID-19 outbreak.
The group will retain minimal staff during the period of closure to take care of its animal collection and ensure the smooth operation of maintenance work. All non-essential capital expenditure was suspended.
The stock price of the company fell from a high of $1.45 per share on 13 February 2020 to $0.117 on 24 March 2020 (1:57 PM AEDT).
Tabcorp Holding Limited (ASX:TAH) is a consumer discretionary company with 3 operating business units being Gaming Services, Wagering and Mediaand Lotteries and Keno.
As per a press release of 23 March 2020, the revenue from Australian licensed venues, TAB agencies and on-course outlets were circa 28% of Tabcorp group revenues while sports betting revenues accounted for circa 4%.
Due to the uncertainty of COVID-19 impact on the group, Tabcorp refrained from providing specific guidance on earnings. The company is instead committed to reducing operating and capital expenditure where possible and encouraging retail customers to use digital substitutes and actively supporting remaining available products.
The shares of the company fell from A$4.650 on 14 February 2020 to a low of A$2.180 on 20 March 2020. The stock traded at $2.320 on 24 March 2020, up 6.4% (1:57 PM AEDT).
Village Roadshow Limited (ASX:VRL), the media entertainment giant, announced the temporary closure of its theme parks in Gold Coast due to persistent spread of COVID-19 amongst the community.
Subsequently, the group is planning to implement cost reductions throughout its businesses by reducing salaries, bonuses for senior executives and freezing non-essential travel and recruiting. Cost savings also included a deferral of Government taxes and use of leave entitlements by employees. The group plans to open once it is safe and prudent for it to do so.
The shares of the company fell from a high of $3.8 in February 2020 to $0.980 on 24 March, 2020 (1:57 PM AEDT).
The Experience Co Limited (ASX:EXP) deals in skydiving and adventure activities. As per a press release on 23 March 2020, the company has suspended its operations indefinitely and refrained from issuing any earnings guidance for FY20, after reviewing advisories on social distancing and non-essential services.
The CEO stated, “strategy of the company will be to minimise short-term cash outflows and ensure viable business and balance sheet given the significant amount of uncertainty prevailing in the market.”
The stock price of the company fell from a high of $0.260 per share on 8 January 2020 to $0.034 on 24 March 2020 (1:57 PM AEDT).
The length of the outbreak and how quickly demand bounces back will determine the true state of the travel and leisure space. The facility closures will push thousands of workers out of their jobs. Westpac is anticipating unemployment rate of 11% by June 2020.
However, the Morrison Government is on its toes, announced a stimulus package of A$17.6 billion on 12 March which included tax relief for small business and cash payments for welfare recipients. Moreover, on 20 March 2020, second wave of fiscal stimulus amounting to $66 billion came into picture.
Moreover, Central Bank is also proactive on aiding the reeling economy with its recent rate cut to 0.25%, supporting SMEs with its 3 year $90 billion funding facility and targeting 3 year government securities at 0.25%.
Economists around the world are eyeing the timing of economic recovery critically dependant on virus containment, effective social distancing and vaccine development.
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