The spread of Asia's deadly bird flu virus has investors scrambling to assess which products or commodities will benefit at the expense of others, with pork producers and drugmakers attracting the keenest focus.
Among the areas that could be hurt, should the virus mutate and cause a global pandemic, are crude oil prices and certain currencies such as the Chinese yuan. A pandemic would generally hurt economies, lessen demand for energy and disrupt trade and travel, analysts said.
The high-risk H5N1 strain of bird flu, or avian flu, has killed 64 people and infected more than 100 others in Asia since late 2003. The disease has also been found in Europe, but is not in the United States.
Countries with the disease, such as China, Thailand, and Vietnam, have killed chickens and other birds to curb its spread.
The disease has spread from birds to people but scientists are worried a global pandemic would occur if the virus mutates and spreads from person to person. The United States does not have the disease, but President George W. Bush said he will request $7.1 billion in funding to stockpile drugs and vaccines should a pandemic occur.
Recent gains in hog prices at the Chicago Mercantile Exchange have been attributed in part to expected bird flu-related demand for pork, the analysts said.
"If consumers reduce their consumption of chicken because of the product safety issue and there is not an equivalent risk involved in pork, then you would expect a shift away from poultry," said Jacinto Fabiosa, technical director at the Food and Agricultural Policy Research Institute at Iowa State University.
A shift to pork occurred in Japan when its cattle were detected to have mad cow disease in 2001, he said.
"The company that could be seen in an obvious positive position with no negatives would be Smithfield," said Ron Plain, University of Missouri agricultural economist.
Smithfield, Virginia-based Smithfield Foods Inc, is the world's largest pork producer. The benefits to US chicken companies, such as Tyson Foods Inc, Pilgrim's Pride Corp and others, are less clear. Such companies could be helped if countries afflicted with bird flu must import more chicken to replace destroyed flocks.
Asian countries and Russia could increase imports 10 to 15 percent as local production there falls due to the flu, Pablo Zuanic, J.P. Morgan food analyst, said in a recent research report.
However, the concern is that overseas consumers could turn away from chicken altogether, which could be negative.
US beef exports may not be greatly affected because of beef's higher price relative to pork and chicken. Also, some countries still ban American beef because of mad cow disease here.
During Europe's foot-and-mouth disease outbreaks, incoming tourists passed through decontamination centres.
A similar programme could occur with the bird flu, which could help companies that make those systems, said Harry Baumes, managing director for agriculture at Global Insight, a food industry consulting firm.
"If I've got the money and the disease keeps spreading, whatever these monitoring systems are is where I would dump some money," he said. "Certainly any pharmaceutical or animal health company that has a substantial business in the poultry sector would be another."
Swiss drug firm Roche Holding AG produces Tamiflu, a drug that is seen as a means of fighting the bird flu. The company said recently it expects agreements with nations to produce the drug.
"Anything that throws China off its growth path would affect commodities, especially crude oil. Look what Sars did to China for just a couple of quarters," said Bill O'Grady, assistant director of market analysis at A.G. Edwards and Sons.
Severe Acute Respiratory Syndrome or Sars in 2003 led to a sharp reduction in civilian airline schedules in Asia as demand for tourist and business travel declined.
If there is a bird flu pandemic, the dollar could benefit as people make a flight to quality, O'Grady said.
"During any pandemic you have political instability, and I think you would have people looking for safety and stability," he said.
Currencies of countries with the disease could suffer.
"If this flu strain were to start infecting a greater number of people, the first economic problem would almost certainly be Asia's, with travel restrictions and frightened investors threatening a reversal of the capital flows," said Chip Hanlon, president of Global Advisors Inc, a firm that specialises in global equity markets and currency trading.
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