Member Article

Carnival plunges on Costa Concordia disaster

Improving US economic data and an increasing perception that monetary easing will soon occur in
China ensured a relatively buoyant festive period for financial markets. With S&P’s multi-eurozone
downgrade on Friday night however, Europe and is debt crisis were firmly back in focus.

Investors learnt over the weekend that France and Austria were the highest profile victims of the
ratings agency’s reassessment, down by one notch to lose their AAA status. They were among seven
other nations to be affected, although the action was telegraphed on Friday ensuring losses on
European markets were minimal this morning as the moves had already been priced in.

In fact equities posted some respectable gains throughout the day, major European indices higher
by around 1% whilst the FTSE 100 closed the day 0.4% higher at 5657. The US indices were closed for
Martin Luther King Day.

On a stock specific basis, the only stand out performance was that of Carnival Group although
unfortunately this was for the wrong reasons. The cruise company was under pressure following
the grounding of one of its ships, the Costs Concordia, off the coast of Tuscany over the weekend. In
addition to the tragic human cost of the disaster (at least five deaths are known at this stage), it is
estimate that the company will lose up to £95million in revenue with the carrier out of action, with
lost revenues and further costs associated with insurance and legal liabilities, very much unknown.
The shares lost 370p, 16.5%, to finish at 1878p, a move that saw nearly from £1 billion wiped off the
company’s value.

This was posted in Bdaily's Members' News section by John Dance .