By Samuel Indyk
Investing.com – The sector was under selling pressure on Friday after a new COVID variant was discovered in Southern Africa which has been described as the “most significant” seen yet.
The UK Transport Secretary Grant Shapps announced new travel restrictions from six countries in Southern Africa as a precautionary measure. From 12pm today, South Africa, Botswana, Zimbabwe, Lesotho, Eswatini, and Namibia have been added to the UK’s Red list, where people arriving in the UK must take quarantine measures.
The UK has also placed a temporary flight ban on arrivals from those countries for the weekend.
The European Commission President Ursula von der Leyen is proposing, in close coordination with member states, to activate the emergency brake and stop are travel from the southern African region.
The new variant, named B.1.1.529, has been described by scientists as the “the most significant variant they’ve encountered to date”, Shapps told Sky News.
The variant is heavily mutated and there are fears that the large number of mutations may make the variant more resistant to the vaccines that are currently authorised around the globe. At the moment, it is unclear whether the variant spreads faster than the Delta variant, is any more severe, or to what extent it can evade immune protection.
The World Health Organization (WHO) is to convene an experts meeting at 11:00GMT to assess the new variant and decide whether it should be classified as a variant of concern or a variant of interest.
Countries with the variant
UK Transport Secretary Shapps said there are no cases of the variant in the UK identified currently. According to reports, Israel, Singapore, and Hong Kong have all detected at least one case of the new variant.
Unsurprisingly, airlines and other travel stocks are coming under heavy selling pressure in early trade.
British Airways parent IAG (LON:) was down by as much as 20% in early trade, while easyJet (LON:), Ryanair (LON:) and Wizz Air (LON:) were all lower by between 10%-13%.
Cruise line operator Carnival (LON:) (NYSE:) fell by around 14% while tour operators Tui (LON:) and Jet2 (LON:) were off by 12% and 9%, respectively.
Jet engine manufacturer Rolls-Royce (LON:) saw shares tumble by as much as 13% in early trade.
“The decision by the UK government to impose stringent quarantine rules on six southern African countries within hours has severely rattled the travel and tourism industry,” said Hargreaves Lansdown (LON:) Senior Investment and Markets Analyst Susannah Streeter. “The immediate way the tough restrictions were imposed was a reminder of just how tied companies’ fortunes are to snap government decisions and the latest twists in the trajectory of the virus.”
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