Last Call! Pub Curfew Means High Hospitality Volatility

October 7, 2020

The Prime Minister recently announced he was making the long-threatened move to enforce a curfew for pubs in England. In new sweeping measures, hospitality venues will be restricted purely to table service and will need to shut their doors at 10 pm to curb the rising cases of coronavirus in the UK.

A cursory glance might lead one to think that hospitality shares will immediately capitulate into short-selling heaven, however evidence already shows it’s not that simple.

Volatile Prices

Infamous cheap pint giant JD Weatherspoon £JDW sunk twenty points in the first ten minutes of trading, but within the next fifteen had already passed its previous closing point, before ski-sloping back down again. Why? Because while the new curfew may be bad news for thirsty brits, it’s not necessarily bad news for business.

The hospitality industry has been hungover since coronavirus made it harder to get a Corona Extra. While Eat Out To Help Out saw venues fully booked, news that it may have played a large part in the recent spike came just as the scheme ended.

Chancellor Rishi Sunak has already proved he’s no enemy of ‘better regulation’ tactics and the savvy speculator may likely note that an extension of the scene or another big round of Furlough-Esque injections into the hospitality industry will be a likely follow up to this move, meaning any crashing hospitality shares could see a fast and very profitable turnaround soon.

Incidentally, AB Inbev €ABI, the company that makes Corona (the drink; the virus isn’t man-made despite conspiracy theories!) also saw an increase in volatility on Tuesday morning. Diageo £DGE, Carlsberg €CARL-B and other European alcohol companies also took a quick dive despite opening up.

Does early doors on pubs really mean low profits for drinks companies though? Take a trip to Dublin on a typical year and watch the crowds queuing outside off-licenses ahead of the annual Good Friday shutdown to see pubs closing can mean GOOD news for alcohol sales.

As such, one might be wise to pick up a couple of cheeky shares in these dropping stocks instead of a six-pack next time you feel like a cold one.

Drink up, folks. It’s going to be a bumpy road. As always trade carefully, and don’t expose yourself to too much risk.