The global environment has turned hostile towards S&P/ASX 200 (Index:^AXJO) (ASX:XJO) shares and I don't mean just on sentiment alone!
The geo-political turmoil is also directing impinging on the bottom lines of our listed companies and it isn't all about the US-China trade war and hard Brexit risk – although these are probably the two events that will hurt the fundamentals of several ASX stocks.
The violent Hong Kong riots that is threatening to send the territory into a recession is another we can't lose sight of even though there are far fewer Aussie listed entities that's exposed to that one Asian market.
ASX stocks caught up in the rioting
Fortunately, travel related stocks like Webjet Limited (ASX: WEB) and Flight Centre Travel Group Ltd (ASX: FLT) are unlikely to suffer much. Travellers that were planning on visiting Hong Kong can easily choose other destinations in most cases.
However, the same can't be said for Sydney Airport Holdings Pty Ltd (ASX: SYD). Despite its defensive earnings characteristics, our nation's busiest airport is likely to feel the heat as Hong Kong travellers account for around 7% of its traffic, according to Macquarie Group Ltd (ASX: MQG).
The broker warns that the rioting, which doesn't look like it will end anytime soon, is impacting on the number of Hong Kong visitors moving through the airport and that will translate to a $3 million hit to Sydney Airport's earnings before interest, tax, depreciation and amortisation (EBITDA).
"HKG adds another pressure point for SYD. A 10-20% drop in load factor on these routes translates to ~9k-20k PAX reduction per month is 0.05-0.12%pa growth," said Macquarie.
"Whilst this political unrest is temporary, when and how it is resolved is likely to have an influence on PAX growth."
Sydney Airport's problems could grow
The financial impact may not sound like much given that Sydney Airport posted a FY18 EBITDA figure of around $1.3 billion, but the problem could grow if travellers from the mainland choose to boycott Australia if our government is seen to be supporting the Hong Kong protesters.
There are growing calls for the federal government and Australian universities to do more to protect Hong Kong students who are facing retaliation from mainland Chinese.
Macquarie has a "neutral" recommendation on the stock with a 12-month price target of $8.53 a share.
Meanwhile, personal matchmaking service Love Group Global Ltd (ASX: LVE) issued an ASX announcement this morning to warn that the unrest in Hong Kong is having an adverse impact on its business with fewer bookings and consultation performed over the last two months.
It's hard to find love among the Molotov cocktails!
Management is trying to manage the downturn by cutting back on marketing and advertising in the short-term, while reducing headcount among its part-timers.
