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Australian stocks to watch during the coronavirus scare

Rear view of businesswoman looking at stock exchange market display screen board in downtown financial district

Businesswoman looking at stock exchange market display screen board in downtown financial district.

There are both stock market winners and losers in a pandemic.

Global stock markets have been slammed in recent days and Australia is expected to follow suit this week as fears over the coronavirus continue to spread.

The outbreak could not have come at a worse time in the calendar year – when millions of Chinese typically head abroad to celebrate the Spring Festival (Chinese New Year), a holiday period spanning from around January through to March.

In Europe, more than $180 billion was wiped overnight, while Australia's benchmark S&P/ASX 200 index dropped 1.7% at the opening on Tuesday as wary investors eyed the fallout from travel bans and a slow-down in Chinese demand.

Stock market dip

As with any crisis, there are both winners and losers on the stock market – and with that comes new opportunities.

"The timing to buy negatively impacted stocks depends on how long and the scope of the impact of the coronavirus," Burman Invest's chief investment officer Julia Lee told Finder.

"If we base it on past experiences, generally the impact is for 2-3 months, and hence the next few weeks should offer a prime buying opportunity for patient investors."

Australian shares during the SARs pandemic

A graph of the Aussie sharemarket (S&P/ASX 200) from November 2002-July 2003 (SARs period) making a V-shaped recovery.

Aussie sharemarket (S&P/ASX 200) from November 2002 to July 2003 (SARs period). Image: Burman Invest

Australian companies that might dip in the short-term include travel and tourism stocks. Lee pointed to Virgin Australia (VAH), Qantas (QAN), Sydney Airport (SYD), Auckland International Airport (AIA) and Webjet (WEB) as stocks that are expected to take a hit.

Others likely to be impacted are those with exposure to Chinese demand, including Treasury Wine Estates (TWE), Crown Group (CWN) and Star Entertainment Group (SGR).

The pandemic affect

The World Health Organisation (WHO) has not labelled the coronavirus a global emergency as yet. However, if it does manifest into a pandemic, the implications could have a far reaching impact on global growth, Medallion Financial's managing director Michael Wayne explained.

"In such an event, you could expect global trade and energy consumption to slow, impacting mining and energy related companies," Wayne told Finder.

The companies to watch in this scenario are our major miners such as BHP (BHP), Fortescue Metals Group (FMG), Woodside Petroleum (WPL) and Oil Search (OSH).

Lee also pointed to mining stocks Beach Energy (BPT), Rio Tinto (Rio) and Fortescue Metals Group (FMG) as standouts.

The winners

Among stocks that could be positively impacted over the next couple of months are healthcare stocks and safe haven stocks such as gold.

Although there's not yet a cure for coronavirus, demand for health supplements could boost companies such as Blackmores (BLK), said Lee. At the same time, providers of anti-viral drugs, such as CSL's Tamiflu might also see a spike.

  • Health: Blackmores (BKL), CSL (CSL)
  • Gold: Newcrest (NST), Evolution Mining (EVN), Silver Lake Resources (SLR)

The losers

Ultimately, the stocks that could be negatively impacted over the next few months are those with exposure to Chinese demand or global growth, said Lee and Wayne.

These include:

  • Tourism stocks: Virgin Australia (VAH), Qantas (QAN), Sydney Airport (SYD), Auckland International Airport (AIA), Webjet (WEB), Experience Co (EXP), Sealink Travel Group (SLK)
  • Exposure to China: Idp Education (IEL), Treasury Wine Estates (TWE), Crown Group (CWN), Star Entertainment Group (SGR)
  • Oil and iron ore: Oil Search (OSH), Beach Energy (BPT), Fortescue Metals Group Limited (FMG), Rio Tinto (Rio), BHP (BHP)

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, options or any specific provider, service or offering. It should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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