Bird flu fears shoot down Hong Kong stocks

Hang Seng lost 2.7% on bird flu fears last week.

Hong Kong stocks suffered their worst drop in more than eight months last Friday as worries about the impact from a new strain of bird flu in China hurt sentiment. Airline shares were especially hit hard.

Cathay Pacific Airways Ltd dropped 4.1% amid concerns about the impact of bird-flu deaths in China on air travel. Among Chinese mainland carriers, Air China Ltd fell 9.8%; China Eastern Airlines Corporation went down 8.3% and China Southern Airlines Company shed 8.5%.

The Hang Seng Index fell 2.7%, its worst percentage decline since late July, following reports of two deaths in Shanghai linked to a new strain of avian flu called the Novel Coronavirus. Airline stocks in Europe were also hit by the news.

Analysts said the combination of fears related to bird flu, and geopolitical worries linked to North Korea, weren’t helpful to airlines. They said that the bird flu threat, although probably overblown, was a big unknown factor for investors.

The impact from the outbreak will depend on how well it is contained. Analysts noted that if the disease becomes widespread and disrupted travel, it won’t be helpful.