Heart-breaking news appeared yesterday night: Malaysian Airlines’ Flight MH17 had crashed in Eastern Ukraine with 298 people on board.
For those who are unaware, the area is currently engaged in civil war between Pro-Russian rebels and the Ukraine government. Accusations over the culprit of the plane crash are flying all over the place with the Russian-faction accusing the pro-Ukraine side and vice-versa.
With last night’s tragic events, it seems that geopolitical tension is higher than ever between Russia and Ukraine.
A company right in the cross-hairs
The market in Singapore has reacted negatively since the opening of today’s trading session. As of the time of writing (11:25 am, 18 July 2014), the Straits Times Index (SGX: ^STI) is down by 0.23% to 3,299 points.
In particular, Food Empire (SGX: F03), a food and beverage company operating mainly in Russia and Ukraine, has fallen by 5.0% to S$0.375 since the market opened. The company is actually the largest instant coffee distributor in both Russia and Ukraine. With the current tense situation in the area where MH17 met its demise, any of the company’s operations there would very likely be severely impacted. For some perspective, Food Empire was already facing operational troubles in the Crimea region of Ukraine (there’s a considerable distance of around 200 miles between the Crimea area and where MH17 crashed), which was allegedly taken over by Russia during the start of the political conflict between the two countries in February 2014.
A company that might indirectly be affected
Broadly speaking, with the recent incident, air travel outfits such as Singapore Airlines (SGX: C6L) might have to deal with higher operational costs and/or lower demand for air travel; SIA’s staff union might demand better protection or insurance for the company’s employees while travellers might postpone their travel plans for the foreseeable future. Any long-term impacts (if any) to the air travel industry remains to be seen though.
In any case, the most important thing here is the fact that 283 passengers and 15 crew members of Flight MH17 have tragically perished. This is an incredibly unfortunate incident that might have been prevented. My heart – and I’m sure I can speak for the rest of my colleagues as well at The Motley Fool Singapore – goes out to the friends and families of those affected.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim owns Food Empire.