News - Outcry over bird flu hit list | Business | Breaking News 24/7 - NEWS.com.au (30-11-2005)
One of the world's largest investment firms has developed a strategy for its Australian clients to profit if bird flu mutates and triggers a "virulent pandemic".
Citigroup advises clients to sell shares in companies that need people to go to public places - such as mall operator Westfield (wdc.ASX:Quote,News), airport owner MAp and casino controllers PBL (pbl.ASX:Quote,News) and Tabcorp.
They should also dump airlines (Qantas (qan.ASX:Quote,News) and tourism companies, which would include Flight Centre.
Investors are told to substitute stocks of companies that would benefit if people were forced to stay in their houses.
These include phone companies -- for instance, Telstra -- and media businesses, such as Austar. Freight delivery firms are also favoured by the Citigroup strategists. The main players in Australia are Toll Holdings and Patrick Corp.
Business ethicist John Sweeney said the analysis had the hallmarks of Gordon Gekko, the character played by Michael Douglas in the film Wall Street. Gekko famously said: "Greed is good."
"This makes your blood go cold," said Mr Sweeney, leader of the Edmund Rice Business Ethics Initiative.
Mr Sweeney also said that market behaviour may need to be regulated in the event of a bird flu pandemic.
James Thier, who oversees a $380 million portfolio at Australian Ethical Investment, said Citigroup should have kept its advice to "positive stocks" like vaccine makers and pathology.
"These people are looking at avian flu and saying that these are potential winners for us.
"They are looking at the negative side," Mr Thier said. "But this needs to be approached from a positive perspective rather than saying, 'How can we profit from millions of deaths?'."
In research called Setting the Scene for Aussie Stocks 2006 (Part 2), Citigroup's Adrian Blundell-Wignall and Alison Tarditi present their "Avian Flu Thinking".
A sub-head follows: "Event Risk Scenarios for Possible Human Pandemic." Underneath is a flow-chart which contemplates both mild and "virulent" pandemics.
Under the virulent scenario, there would be "protracted [economic] weakness as fundamentals deteriorate", so clients should move to a "very defensive" investment strategy.
Outcry over bird flu hit list | Business | Breaking News 24/7 - NEWS.com.au (30-11-2005)