New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Transport Titbits — Wuhan Flu</h2>
The new coronavirus that was first detected in the central Chinese city of Wuhan has now spread beyond China’s borders with confirmed cases in Japan, Thailand, South Korea and the US.&nbsp; With Chinese New Year celebrations kicking-off shortly (Saturday 25 January) a large proportion of the Chinese population will undertake domestic and international travel. This could lead to a more rapid spread of the virus. The World Health Organisation (WHO) has yet to declare it a global health emergency, however it is meeting today to discuss the situation. The most recent declarations by WHO were for Kivu Ebola (2018), Zika (2016), Ebola (2014), Polio (2014), and H1N1 swine flu (2009).&nbsp;&nbsp;
What are the implications for travel markets? We make a number of observations below based on the SARS (severe acute respiratory syndrome) pandemic in 2002-2003 given it also emerged from China and spread internationally. There were around 8,000 confirmed SARS cases that resulted in 774 deaths across 37 countries.
<ul>
<li>The Wuhan coronavirus appears to have a lower fatality rate than SARS with only six fatalities to-date, however it is still early days in this outbreak.</li>
<li>Passengers may fear possible disease transmission through air travel. The SARS outbreak had a short sharp shock on global travel markets. Asian air travel demand declined -8% in 2003 but recovered in 2004.</li>
<li>While there were no reported SARS cases in New Zealand, inbound passengers from Asia declined by -34% in the June quarter of 2003.</li>
<li>Once contained (SARS was contained in July 2003 having emerged in late 2002), travel markets recover quickly.&nbsp;&nbsp;</li>
</ul>
Sentiment for both airline (Air New Zealand) and airport (Auckland Airport) stocks will be negatively impacted by the Wuhan coronavirus. It is not clear how the situation will evolve. If it escalates the impact on passenger travel could be material for a period of time, as was the case for SARS.
Transport Titbits Chart: Impact of SARS on global travel in 2003&nbsp;
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.1&amp;permmsgid=msg-f:1656381254732598167&amp;th=16fca5f9acf3cb97&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ-pD9jS8fnGhMouIvxdcgSb-h1YrAgoMFTb2DlVQZWc0y0kr96QRpKc8leY7moLf7DKj5QHfgGS7yWk--EittlkN9teTsghOljWjp1DLwlF-vcFmDcCoT_gBYI&amp;disp=emb" width="1142" height="631" class="editor-image img-responsive" data-image-whitelisted=""></figure>
Source: IATA, Forsyth Barr analysis &nbsp;&nbsp;NOTE: RPK = Revenue Passenger Km
Andy Bowley Head of Research Forsyth Barr Limited
M: +64 21 338 941 | P: +64 4 495 8246 | TF: 0800 367 227 Level 22 , 157 Lambton Quay, Wellington

Transport Titbits — Wuhan Flu
The new coronavirus that was first detected in the central Chinese city of Wuhan has now spread beyond China’s borders with confirmed cases in Japan, Thailand, South Korea and the US.&nbsp; With Chinese New Year celebrations kicking-off shortly (Saturday 25 January) a large proportion of the Chinese population will undertake domestic and international travel. This could lead to a more rapid spread of the virus. The World Health Organisation (WHO) has yet to declare it a global health emergency, however it is meeting today to discuss the situation. The most recent declarations by WHO were for Kivu Ebola (2018), Zika (2016), Ebola (2014), Polio (2014), and H1N1 swine flu (2009).&nbsp;&nbsp;
What are the implications for travel markets? We make a number of observations below based on the SARS (severe acute respiratory syndrome) pandemic in 2002-2003 given it also emerged from China and spread internationally. There were around 8,000 confirmed SARS cases that resulted in 774 deaths across 37 countries.

The Wuhan coronavirus appears to have a lower fatality rate than SARS with only six fatalities to-date, however it is still early days in this outbreak.
Passengers may fear possible disease transmission through air travel. The SARS outbreak had a short sharp shock on global travel markets. Asian air travel demand declined -8% in 2003 but recovered in 2004.
While there were no reported SARS cases in New Zealand, inbound passengers from Asia declined by -34% in the June quarter of 2003.
Once contained (SARS was contained in July 2003 having emerged in late 2002), travel markets recover quickly.&nbsp;&nbsp;

Sentiment for both airline (Air New Zealand) and airport (Auckland Airport) stocks will be negatively impacted by the Wuhan coronavirus. It is not clear how the situation will evolve. If it escalates the impact on passenger travel could be material for a period of time, as was the case for SARS.
Transport Titbits Chart: Impact of SARS on global travel in 2003&nbsp;

Source: IATA, Forsyth Barr analysis &nbsp;&nbsp;NOTE: RPK = Revenue Passenger Km
Andy Bowley Head of Research Forsyth Barr Limited
M: +64 21 338 941 | P: +64 4 495 8246 | TF: 0800 367 227 Level 22 , 157 Lambton Quay, Wellington