COVID-19 has dominated 2020, irrevocably disrupting life as we knew it and changing how we live in ways that will arguably become permanent. While hope in the form of a vaccine is on the horizon, 2020 will always be remembered as the year of the pandemic.
We’ve seen our borders close, been confined to our homes, and been forced to discover new means of working, learning, and living. As our priorities shifted suddenly in the face of the pandemic, so too did our spending patterns. This has resulted in increased cash flows towards some sectors of the economy, while others have seen a cash drain.
The Australian share market has largely recovered the ground it lost in the March market crash. The S&P/ASX 200 Index (ASX: XJO) was trading on par with January by mid-December. But there have been winners and losers among ASX shares as a result of COVID.
Some shares have boomed as the pandemic provided unexpected tailwinds. ASX shares like Afterpay Ltd (ASX: APT) have seen their share prices soar as consumers move to digital shopping and payment methods. But others have suffered badly as the pandemic disrupts travel and spending patterns. Sectors like travel and shopping malls have seen serious reductions in customer numbers which have flowed through to lower share prices.
Let’s take a look at which ASX sectors were hit hardest by COVID in 2020.
ASX travel shares
The travel industry was an early victim of the pandemic and will likely be one of the last industries to recover. Australian borders were closed in March and international travel remains off the cards for now.
Qantas Airways Limited (ASX: QAN) cut all international flights and reduced domestic capacity by 60% in March with two thirds of employees temporarily stood down. State borders which had finally opened in time for Christmas slammed shut again with the December COVID outbreak in New South Wales.
The Qantas share price is still more than 30% down from its January 2020 high, although it is up nearly 130% from its March low. But Qantas is not the only ASX travel share to feel the pain. Flight Centre Travel Group Ltd (ASX: FLT) is trading around 60% down from its January high but is ‘only’ 85% up from its March low. The travel business fell out of the S&P ASX 100 Index (ASX: XTO) in the most recent quarterly rebalance. The company also recorded a $510 million underlying loss before tax in FY20. Prior to restrictions, Flight Centre had achieved a $150 million underlying profit for the eight months to February 2020.
Other travel booking companies are in a similar position. Webjet Limited (ASX: WEB) is trading at 50% of its January high having recorded a $153 million loss for FY20. The company saw total transaction volumes fall to $687 million in the second half from $2.3 billion in the first half.
Corporate Travel Management Ltd (ASX: CTD) likewise recorded a statutory loss for FY20, but has been more resilient. The Corporate Travel Management share price has recovered to within 16% of its January high.
Sydney Airport Holdings Pty Ltd (ASX: SYD) has suffered from a lack of passengers with total passenger volumes down 97.5% in April, 97.4% in May, and 94.9% in June. Some recovery has been seen lately with volumes down 90.6% in November. The Sydney Airport share price is, however, still trading down around 27% from its January high as at 30 December.
ASX shopping centre shares
ASX listed shopping centre operators have also suffered from a lack of customers due to the pandemic. With all but essential shops closed in many Australian jurisdictions during the height of COVID-19, shopping centres became ghost towns. The lack of customers resulted in reductions in rents paid to the landlords of retail malls.
Vicinity Centres (ASX: VCX) fell out of the S&P/ASX 50 Index (ASX: XFL) in the most recent rebalance, with the share price down 35% from pre-COVID levels. The shopping centre operator reported September quarter sales were down 32% compared to September 2019, although it did pay a distribution for the 6 months to December 2020.
At the time of writing, Unibail-Rodamco-Westfield (ASX: URW) is trading at around a 57% discount to its pre-COVID share price. With malls across Europe and the United States, Unibail’s business has been significantly impacted by the pandemic. Total tenant sales were down 51.1% through to 30 June 2020, mainly due to the impacts of COVID-19. The group reported an operating loss for the period to 30 June 2020 thanks to an increase in doubtful debt provisions and administrative expenses.
Scentre Group (ASX: SCG) saw gross rent cash collection drop to 28% or $59 million in April and 35% or $74 million in May. But rent collections largely recovered by September and October, where rent of 88% or $187 million and 96% or $203 million was collected. Customer visits during the September quarter were 90% of the same time last year (excluding Victoria) and portfolio occupancy was at 98.4%. Nonetheless, the Scentre Group share price remains around 28% below pre-COVID levels at the time of writing.
ASX entertainment shares
The pandemic had a major impact on entertainment and gambling providers like Star Entertainment Group Ltd (ASX: SGR) and Crown Resorts Ltd (ASX: CWN). With venues and gaming floors closed to fight the spread of the virus, these ASX share prices took a tumble.
The Crown share price halved in March and is yet to regain pre-COVID levels, with gaming floors remaining closed between March and November in Melbourne.
Star Entertainment Group has benefitted from a recent easing of restrictions in Queensland and New South Wales which permitted increases in patronage. The Star Entertainment share price, however, remains more than 20% down from pre-COVID levels as at 30 December.
There’s no doubt 2020 will be a year for the record books. Unfortunately, this is for all the wrong reasons when it comes to these ASX shares. But hope is on the horizon in the form of a vaccine. Investors in the travel, shopping, and entertainment sectors will no doubt be hoping a vaccine will usher in a return of more ‘normal’ conditions for ASX shares operating in these industries.
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Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Crown Resorts Limited and Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.