S&P/ASX 200 (INDEXASX: XJO) travel shares have been hammered lower by coronavirus concerns. But with the likes of Webjet Limited (ASX: WEB) rebounding 8.31% yesterday, is now the time to buy?
What's going on with ASX 200 travel shares?
It's been a big fortnight for shareholders of the ASX 200 travel shares. The Webjet share price has slumped a whopping 43.93% lower this year even with yesterday's rebound.
The news hasn't been much better for its industry peers. The Corporate Travel Management Ltd (ASX: CTD) share price is down 51.80% since the start of the year while Flight Centre Travel Group Ltd (ASX: FLT) shares have slumped 43.17% year-to-date.
The big story here has been the COVID-19 outbreak. ASX 200 travel shares have been hammered by government travel restrictions and general public fear. Fewer people are booking international flights as the contagion spreads across the world. That means fewer flights, cruise ship holidays and accommodation bookings.
All in all, this has put the projected earnings for all the ASX 200 travel shares under pressure. The share prices have responded as investors have fled towards safer assets like gold in the last fortnight.
However, yesterday was a glimmer of hope for buy and hold investors. Webjet shares rebounded 8.31%, Corporate Travel shares climbed 4.44% higher and Flight Centre ended the day up 1.17%.
It's a bit of a stretch to say that things are looking up. Whenever a share price is nearly halved, it's rarely good news for investors. Unlike some other shares, I think the coronavirus outbreak has a tangible impact on earnings and isn't just driven by irrational selling.
The other notable factor is the oil war between OPEC and Russia. Unlike some of the airlines, which are also being hammered, these ASX 200 travel shares won't benefit from a reduced oil price.
Foolish takeaway
I think we saw yesterday that the share market is very volatile right now. All you can really do is pick good companies that will perform in the long-term.
The ASX 200 travel shares are under pressure right now, but if COVID-19 moves through and we see some normality by the middle of the year, these current valuations could be an absolute bargain.
