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Sunday, Jan 29, 2023

Bombs Fail to Shake Local Markets

Globalization may have flattened the world, but the terrorist attacks in London last week are expected to have limited impact locally.

Investor jitters temporarily rocked the stocks of some local companies in the oil and hospitality industries, but they rebounded after it became evident that the attacks wouldn’t disrupt the global economy.

“The market basically gets spooked very quickly,” said Fadel Gheit, an energy analyst with Oppenheimer & Co. “Initially, people thought the impact would be similar to Sept. 11, (but) this is more like the Madrid bombing. It is not really going to curb economic growth.”

On July 7, the day of the attacks, shares of Los Angeles-based Occidental Petroleum Corp. and San Ramon-based Chevron Corp. each rose. So did shares of El Segundo-based Unocal Corp., the target of competing bids from Chevron and China’s CNOOC Ltd.

With terrorist bombings, Gheit said that oil companies usually suffer a blow in the market as worries mount that supply lines could be potential targets. But he added that those fears subside as time passes without a subsequent attack. “Countries must be paying tremendous attention to security, and so far, they have been successful in doing that,” he said.

Hospitality stocks fell slightly, including Bethesda, Md.-based Marriott International Inc. and Starwood Hotels and Resorts Worldwide Inc., based in White Plains, N.Y. Beverly Hills-based Hilton Hotels Corp. saw a slight one-day dip.

Will Marks, a hospitality analyst at JMP Securities, said Hilton’s corporate separation of its domestic and international operations will shield it from the impact of a terrorist incident outside this country. Marc Grossman, a vice president at Hilton, added that Hilton doesn’t anticipate a travel slowdown.

Virtually the only sector that stands to gain from the terrorist attacks is security. Hawthorne-based OSI Systems Inc., which makes X-ray baggage scanners, and South Pasadena-based Cogent Inc., a fingerprint identification systems firm, benefited from speculation that governments would ramp up security investment as a result of the bombings.

Joel Fishbein, an analyst with Janney Montgomery Scott LLC, expected that Cogent’s earnings to increase with “more countries looking to employ more biometric solutions.”


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