Airline stocks have been among the hardest hit equities in the coronavirus selling. As the biggest airline in China and indeed in all of Asia China Southern Airlines (ZNH) has sold off especially quickly. The New York traded ADRs sold at $35.41 on January 14 and were at $28.00 at 3:20 p.m. New York time today, January 28. That’s drop of 35% in two weeks (even though the ADRs are up 1.89% today.)
In my thinking we’ve still got a way to go before markets can breathe a true sigh of relief and put coronavirus fears behind them. And move onto worrying about other things like economic growth rates in China, rising debt levels, and earnings growth for U.S. stocks in the first and second quarters of 2020.
Normally I wouldn’t sell a long-term pick out of my 50 Stocks Portfolio on a short-term event like this. But the price moves in China Southern on the downside have been so pronounced and the move to the upside should be so clearly defined that this trade seems worth making.
I remain convinced that over the long-term China Southern is a good way to profit from growth in air traffic in China and other Asian developing economies.
Today’s sell is about preventing further losses–the position is down 47.33% since I added it to this portfolio on April 30, 2018–and then rebuying after the market moves even lower on further virus pandemic fears. (At least that’s the theory)