VULNERABLE MARKETS

AIRLINES

“Airlines are what the banks were in 2008,” said Will Sparks of SparksWealth. “They may be required to take more State aid and look at other refinancing arrangements. At worst, many airlines might be forced to revert to their semi-state origins. None of these outcomes are positive for equity investors in these companies.”

It’s important to remember that while a number of banks collapsed in the 2008 financial crisis, many also survived. So while airlines have a few tough years ahead of them, a number of the stronger ones could see brighter days.

There are however big questions around the future of business travel — which came to a standstill during the pandemic. Some of the companies which paid for a lot of business travel in the past may have gone to the wall. Others who are still in business may be reluctant to pay for as much business travel as they did.

Technologies such as Zoom provided an alternative to the one-to-one meetings business executives had often travelled to — and this is likely to continue in some form going forward.

“Airlines heavily involved in business flights will be vulnerable,” said Peter

Brown of Baggot Investment Partners.

TOURISM

Tourism and travel have been rocked — as have many longestablished hotels.

The share price of some cruise liner companies have taken huge hits. “There is real concern that people won’t want to take cruises again,” said Brian O’Reilly of Mediolanum Asset Management.

ENTERTAINMENT “Entertainment stocks will

be hit hard,” said Brown. “There’s no question we will be left with a very large stub of people unemployed after this. That will be a big hit to restaurants, pubs and the entertainment industry.”

HIGH STREET RETAIL

Physical retail [high street stores and shopping centres] will face challenges as long as the virus exists and some social distancing measures remain in place, according to O’Reilly.

“Even if economies open up, there are some doubts about whether people will feel confident enough to mix in public settings,” he said.

High street retailers with a niche or unique offering may weather the storm.

To survive going forward, high-street retailers will have to reinvent themselves and offer something which can’t be obtained through an internet browser, according to Sparks. Some shops already do this.

“Primark [which trades as Penneys in Ireland] for example offers an experience and niche that can’t really be recreated online,” said Sparks. “Action are a non-food supermarket on the Continent which gain consistent repeat business from bargain hunters.”