The stage seems to be set for a major revival of share prices for companies in the entertainment and travel industries.
In recent days, big brands like Carnival, the cruise ship operator, EasyJet and Cineworld have seen their share prices soar.
That’s after they plunged in value as the coronavirus lockdown came into force to decimate trading.
Cineworld has surged upward by more than 50%, followed by Carnival riding 20% higher.
But these are troubling times for these companies more used to sailing on the crest of a wave.
Businesses will stay shut for weeks
EasyJet has grounded its entire fleet of aircraft and laid off thousands of staff.
Cineworld has closed movie theatre doors, with senior staff and executives taking pay cuts and foregoing bonuses.
None of these businesses wants to start trading when coronavirus restrictions lift and to be blamed for a resurgence of the outbreak because customers could not carry out social distancing rules.
It could be many weeks before the lockdown is completely lifted worldwide and much longer before tourists are confident enough to travel again.
Market analysts are warning investors to show caution when buying shares in the travel and entertainment sectors.
Cineworld has 780 theatres closed in 10 countries and will take time to get back to normal.
Stocks in a deep and dark place
“Leisure and travel stocks are emerging from a deep and dark place,” said Stephen Innes, global market strategist at AxiCorp. “While people will return to cinemas, revenues may be slow to pick up as movie-goers and the industry respects social distancing guidelines.
“But they may have to open with reduced capacity, knocking back revenues. After all, the last thing a movie chain wants to get accused of is being the next super spreader epicentre.”
EasyJet has taken a £600 million bail-out from the UK government to keep going and the trade body IATA is worried millions of jobs are at risk as businesses find other ways to work rather than flying executives around for meetings.
“Many questions still remain as to just how eager travellers are willing to board the confines of an airplane cabin even after the pandemic subsides,” said Innes.
