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Investors mull growth areas as bird flu looms Fri Nov 11, 2005 3:34 PM ET
By Bob Burgdorfer
CHICAGO (Reuters) - The spread of Asia's deadly bird flu virus has investors scrambling to assess which products or commodities will benefit at the expense of others, with pork producers and drugmakers attracting the keenest focus early on.
Among the areas that could be hurt, should the virus mutate and cause a global pandemic, are crude oil prices and certain currencies such as the Chinese yuan. A pandemic would generally hurt economies, lessen demand for energy and disrupt trade and travel, analysts said.
The high-risk H5N1 strain of bird flu, or avian flu, has killed 64 people and infected more than 100 others in Asia since late 2003. The disease has also been found in Europe, but is not in the United States.
Countries with the disease, such as China, Thailand, and Vietnam, have killed chickens and other birds to curb its spread.
The disease has spread from birds to people but scientists are worried a global pandemic would occur if the virus mutates and spreads from person to person. The United States does not have the disease, but President George W. Bush said he will request $7.1 billion in funding to stockpile drugs and vaccines should a pandemic occur.
PORK SALES MAY BENEFIT
Recent gains in hog prices at the Chicago Mercantile Exchange have been attributed in part to expected bird flu-related demand for pork, the analysts said.
"If consumers reduce their consumption of chicken because of the product safety issue and there is not an equivalent risk involved in pork, then you would expect a shift away from poultry," said Jacinto Fabiosa, technical director at the Food and Agricultural Policy Research Institute at Iowa State University.
A shift to pork occurred in Japan when its cattle were detected to have mad cow disease in 2001, he said.
"The company that could be seen in an obvious positive position with no negatives would be Smithfield," said Ron Plain, University of Missouri agricultural economist.
Smithfield, Virginia-based Smithfield Foods Inc. is the world's largest pork producer.
The benefits to U.S. chicken companies, such as Tyson Foods Inc. , Pilgrim's Pride Corp. and others, are less clear. Such companies could be helped if countries afflicted with bird flu must import more chicken to replace destroyed flocks.
Asian countries and Russia could increase imports 10 to 15 percent as local production there falls due to the flu, Pablo Zuanic, JP Morgan food analyst, said in a recent research report.
However, the concern is that overseas consumers could turn away from chicken altogether, which could be negative.
U.S. beef exports may not be greatly affected because of beef's higher price relative to pork and chicken. Also, some countries still ban American beef because of mad cow disease here.
PHARMACEUTICAL COMPANIES MAY BENEFIT
During Europe's foot-and-mouth disease outbreaks, incoming tourists passed through decontamination centers.
A similar program could occur with the bird flu, which could help companies that make those systems, said Harry Baumes, managing director for agriculture at Global Insight, a food industry consulting firm.
"If I've got the money and the disease keeps spreading, whatever these monitoring systems are is where I would dump some money," he said. "Certainly any pharmaceutical or animal health company that has a substantial business in the poultry sector would be another."
Swiss drug firm Roche Holding AG produces Tamiflu, a drug that is seen as a means of fighting the bird flu. The company said recently it expects agreements with nations to produce the drug.
OIL COULD BE AFFECTED
"Anything that throws China off its growth path would affect commodities, especially crude oil. Look what SARS did to China for just a couple of quarters," said Bill O'Grady, assistant director of market analysis at A.G. Edwards and Sons. Severe Acute Respiratory Syndrome or SARS in 2003 led to a sharp reduction in civilian airline schedules in Asia as demand for tourist and business travel declined.
If there is a bird flu pandemic, the dollar could benefit as people make a flight to quality, O'Grady said.
"During any pandemic you have political instability, and I think you would have people looking for safety and stability," he said.
Currencies of countries with the disease could suffer.
"If this flu strain were to start infecting a greater number of people, the first economic problem would almost certainly be Asia's, with travel restrictions and frightened investors threatening a reversal of the capital flows," said Chip Hanlon, president of Global Advisors Inc., a firm that specializes in global equity markets and currency trading.
-------------------- Spend Word For Word With Me And I Shall Make Your Wit Bankrupt. Posts: 1326 | From: Here | Registered: Oct 2005
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Thus far there is no indication that the bird flu will ever become a pandemic... This being said. There will be some hysteria in the markets over this bird flu... NFLX or even GZFX could do well
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Bird flu in the news is already calming down I give it a month or two before it's nearly out of the picture 100%.
Take a look at the SARS scare. I think that lasted 2 weeks. That was a nice media play on video to make it seem like SARS was really a big deal.
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spectacular quin... that's not the point... in those two months or so there will be hysteria causing people to buy and sell specific companies in the stock market... that's the point.
-------------------- Spend Word For Word With Me And I Shall Make Your Wit Bankrupt. Posts: 1326 | From: Here | Registered: Oct 2005
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SARS was a big deal. it lasted a lot more than two weeks, and was only contained by heroic effort... Canada had quite a few quarantined hospitals... it just didn't get started here in the US....
SARS is still there in China... it is carried by civets. eating civets has been banned, that's why it hasn't shown up again...
bird flu? maybe maybe not...
there is no denying that WW1 was ended by a pandemic, not by fighting...
there are documented stories of whole towns in America being wiped out by that pandemic....
is Tamiflu the cure? i'm not convinced, but it may help peopel recover instead of die, is there any cure YET? i don't think so....
-------------------- Don't envy the happiness of those who live in a fool's paradise. Posts: 36378 | From: USA | Registered: Sep 2003
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Speaking of sars.. I had a friend in china at the time and his whole college campus was quarantined. After about two months he was getting a bit edgey... Of course it was all hype to fatten Bush's wallet. We all know how chummy the chinese are with Bush and Cheney.
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glassman I dont think it was a big deal(or at least how the media portraid it to be), the cdc website says about 8K worldwide were infected and 774 died. http://www.cdc.gov/ncidod/sars/faq.htm
On that page it also talks about how sars isn't highly contageous like the media was saying.
One chinese college campus is probaly 50% of the 8K.
Posts: 562 | From: NY | Registered: Jul 2005
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the issue isn't that simple tho.... i absolutley agree that the media overhypes almost everything they touch all of the time, on the other hand? scientists all over the world literally have to beg for funds to do research..do they waste a lot of money? yes and no....
even "negative" research results adds to the "body of knowledge" as long as people publish HONESTLY...unfortunately? this type of honesty gets discouraged in order to be a more successful "beggar"
do you realise why there so many "minor" flu bugs? these viruses have the capbiltiy of mutating literally overnite... you can catch the "SAME" flu/coldbugs that you just beat three weeks ago... whether it is because your immune system failed to retain it's defenses after two weeks or whether the bugs mutated a new counter-defense measure is still under intense scrutiny...some combination of BOTH is the most likely answer..
say someone gets sick with two at the same time? there is a very high likelihood they will exchange genetic material...99.9% of the mutations are unsuccessful.... but that one in (10?)million or so? that's the one everybody is afraid of...
SARS is highly fatal but not as easy to catch as the common cold... by your own stats? that's about 10% mortality ....now take that and extrapolate from the number of people that cath the common cold not just once, but two three times a year now, and you see why SARS was such a big deal....
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China to vaccinate 14bn poultry China has vowed to vaccinate all of its estimated 14 billion poultry to contain the spread of bird flu. In his announcement, Chief veterinary officer Jia Youling said all the fees would be covered by the government.
The move comes as new outbreaks of bird flu were confirmed in several regions of China in the past month.
So far there have been no confirmed human infections in China, although several cases are being investigated.
The H5N1 strain of bird flu has killed more than 60 people in South East Asia since 2003. Vaccine shortages
Mr Jia made the announcement while answering questions on an internet forum about the current bird flu situation in the country.
China is producing more than 100m doses of bird flu vaccine a day but some areas were still reporting shortages, the ministry of agriculture says.
The World Health Organization (WHO) said it had been told by Beijing about two new outbreaks of flu among chickens in China's far-western Xinjiang province on 9 November.
More than 300,000 poultry had been slaughtered in two counties of the province, a WHO spokesman in Beijing said.
WHO officials are also investigating the possible transmission of the disease to four people in Hunan province.
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