Companies in the Ibex 35, the benchmark index of Spanish equities, that are linked to the travel and tourism sector (Meliá, Aena, IAG, and Amadeus) lost nearly €1.600 billion in market capitalization on Monday due to the collapse of Thomas Cook, one of the leading tour operators in the United Kingdom. This news caught many small and medium-sized investors off guard, to the point that some had hoped to capitalize on the strong performance of the summer tourism season.
This is very worrying news for the tourism and travel sector, as it is a significant blow to the arrival of British tourists in Spain . British tourists represent 15% of all foreign visitors and are the leading source of inbound tourism within the country. For this reason, it is no surprise that Amadeus has been hit hardest by the impact on its booking service, falling by just over 3% and becoming one of the companies with the largest stock market declines on this Black Monday for the tourism sector.
Another aspect to consider is that airport operator Aena will also see its share price fall by around 1% due to the threat that the collapse of Thomas Cook will impact air traffic. This stock, which until now had maintained one of the clearest upward trends, may substantially change its investment strategy from this point forward. Similarly, hotel groups in Spain have come under significant selling pressure from investors, a trend that could continue in the coming days.
Thomas Cook surprises everyone
However, one effect has surprised all investors. While the Spanish tourism sector was suffering more than any other from the unexpected collapse of Thomas Cook, in the British market , the remaining companies in the industry and tourism sector are now sharing the market share lost by this operator. Consequently, their share price has risen in the first few hours of the week. This contrast has been very visible in the equity markets.
Now, another question plaguing small and medium-sized investors is whether these declines will continue in the coming days or weeks, or if they will finally stop. The latter scenario seems highly unlikely due to the impact of Thomas Cook's collapse on Spanish companies in the sector. Moreover, all indications suggest that the declines will persist, at least through this week and next. The key question, however, is whether they will be as intense as they were on Monday. The stock market is the worst-performing sector in Spanish equities, even worse than the financial and cyclical sectors.
What can investors do?
Given the current global scenario affecting Spain's powerful tourism sector, the best course of action for small and medium-sized investors is to divest from these stocks and seek safer sectors to protect their capital. This is an investment strategy you can implement in the coming weeks to observe the performance of the stocks affected by this latest corporate bankruptcy. You may be able to purchase shares in the coming weeks at much more competitive entry prices than before, given the anticipated pressure from sellers on buyers.
On the other hand, it's also important to keep in mind that these stocks were lagging behind in their price formation. In other words, they weren't at the top of the national equity markets. This is additional pressure that works against them and makes them more complex to trade in the short and medium term due to their specific characteristics within technical analysis . It's crucial to remember that most of them are currently trading at significant support levels, which will determine their upward or downward trend in the coming months or even years.
In the Balearic and Canary Islands
The areas most affected by the collapse of Thomas Cook, which has negatively impacted the Spanish tourism sector on the stock market, are precisely the islands: the Balearic and Canary Islands. Conversely, other parts of Spain have been more spared the potential effects of this bankruptcy on the tourism sector. Hotel companies have been the hardest hit by this event, to the point that they will have to wait some time to collect the debts they owe to Thomas Cook. And it is expected that these payments will not be for 100% of the total amount owed , but rather for a portion that may be minimal.
This fact can weigh on the interests of hotel groups listed on equity markets. With a very significant cut in its valuation in the stock market and that can give new entry guidelines, but later. Not at this time since they are considered as conflicting values ​​due to the general context in which the tourism sector is listed at the moment. You cannot forget that you have other sectors ahead of you with a much more suggestive technical aspect than in this one. More sensitive so that you can make purchases with greater guarantees of success in trading on the stock market.
European area companies
As expected, the collapse of Thomas Cook has created new business opportunities in the financial markets. Airlines are among the biggest beneficiaries, poised to capture the business niches left by the British tour operator. One of the major beneficiaries is IAG , whose share price has risen in recent days, attracting new buyers to the flag carrier's positions. Similarly, other companies operating in Great Britain have benefited greatly from the demise of the aging tour operator, with a real possibility that their shares will appreciate in the coming days.
On the other hand, the collapse of Thomas Cook has led to a restructuring of the tourism sector and will undoubtedly bring changes towards the end of the year. Despite this, it's not a particularly attractive sector to keep on your radar right now. On the contrary, it's only suitable for very specific, short-term investments . This is because price fluctuations can be constant and easily confuse many small and medium-sized investors. Volatility will be one of the most significant common denominators for any investment strategy.
The hotels most affected
Another aspect to consider following the announcement of Thomas Cook's bankruptcy and its subsequent impact on the Spanish tourism stock market is that the financial statements of some of these listed companies will be analyzed in much greater detail. This is especially true for those in the hotel group segment, which have ultimately been the hardest hit by this corporate collapse. This is precisely one of the most important sectors in the country, representing nearly 15% of all foreign visitors— ahead of German and French tourists—and this is one of the reasons why alarm has taken hold in the Spanish tourism sector.
On the other hand, we cannot forget at this time that the companies affected by the Thomas Cook bankruptcy may have a downward trickle that could hinder operations on the stock market by small and medium investors. Not with very violent falls, but at least with a longer-than-normal stay. It will be something that you yourself will have to count on from now on. Both to open and close positions in some of these securities of the Spanish tourism sector. All this, after the national equity index, the Ibex 35, closed last week with a rise of 0,50%.
The general outlook is not too optimistic to face possible trading on the stock market. But in some cases they can represent real business opportunities that we should not miss out on at this time. Regardless of what it actually looked like these days. With all the risks that this class of stock operations entail despite the good health of tourist flows in almost all the world. So that in the end you make the best decision of all.