The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price slipped lower after posting its November traffic numbers even as the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) recovered from early losses.
The SYD share price declined 0.4% to $6.99 although it isn't the only defensive stock to be on the backfoot this morning with the InvoCare Limited (ASX: IVC) share price crashing 5.6% to $10.32, Healius Ltd (ASX: HLS) share price falling 3.7% to $2.20 and Transurban Group (ASX: TCL) share price reversing 0.2% to $11.88.
The rate hike and not dovish enough outlook from the US Federal Reserve is dragging on sentiment towards "bond proxies" although the ASX 200 managed to claw back from the red to trade around breakeven at the time of writing.
Sky not falling
That's a good outcome for our market given the bearish sentiment and big falls on Wall Street overnight, although shareholder's in Sydney Airport shouldn't be complaining as the stock has performed better than most since November.
The November traffic figures should also give supporters a new reason to cheer. The increase in the all-important Chinese visitor category has rebounded to 7.6% last month compared to last November.
In contrast, Chinese travellers grew 5.2% in October vs. the same period in 2017.
Sydney Airport and the Australian economy has benefitted immensely from the Chinese tourism boom and there are worries that this boom has peaked as the Chinese economy slows.
Dark clouds
But it isn't all good news. The growth in international travellers moving through our largest airport seems to be slowing overall as the rate increased by 3.5% last month when it was up 6% in October.
The year-to-date growth in international passengers is 4.8%, which is further evidence that the growth could be slowing.
What was perhaps more of a surprise was the 1.1% decline in domestic travellers, although management pointed out that this was due to a usually high number of local travellers in November last year and bad weather.
The latest traffic update will reassure investors worried about a sharp decline in Chinese visitors moving through Sydney Airport, but I don't think it will be enough to quell the sceptics who point to a number of headwinds for the airport in 2019.
I suspect we will see a drop in Chinese arrivals next year as regulatory risks to the sector builds as the Productivity Commission reviews the rules governing airport monopolies.
