Japan, South Korea tourism stocks rise on prospect of Chinese visitors
NEWS that China is resuming outbound group tourism to Japan and South Korea, among other destinations, sparked a flurry of buying on Thursday (Aug 10) in retail, cosmetics and travel stocks in Tokyo and Seoul.
Shares in Japan ranging from cosmetics maker Shiseido to department store operator Takashimaya climbed after the Nikkei said China would allow group tours to the country from Thursday.
Shares in South Korean firms with large exposure to Chinese travel demand also jumped on the news, among them Korean travel-related stocks including Hana Tour Service. Casino operators Grand Korea Leisure and Paradise’s shares rose 21 per cent and 17.4 per cent respectively, as they cater to foreign visitors.
Cosmetics firms such as AmorePacific Group and Cosmax and retailers such as Shinsegae saw shares jump on the prospect of increased sales to Chinese travellers.
Besides the two countries, outbound tours will also resume to Australia, the United States, Germany and Britain, China’s culture and tourism ministry said on Thursday.
The news cheered China’s outbound travel operators, which have struggled since 2020 with more than three years of pandemic-induced border closures before China finally dropped Covid-19 curbs late last year.
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“It’s a milestone for the full resumption of the outbound travel, and will also strongly push the resumption of international flights, especially for Japan, Korea, the US,” said Zhou Weihong, deputy general manager at Spring Tour, the travel arm of Shanghai-based Spring Group.
In the first quarter, Chinese tourism agencies recorded 318,600 outbound trips, with Thailand, Hong Kong, Macau, Singapore among the top destinations. Though outbound travel only accounted for 1.58 per cent of the overall tourism market in terms of the number of people who travelled, official figures showed.
The release of this third list of destinations for outbound group tourism follows approvals in January and March this year. The first batch included 20 countries such as Thailand, Russia, Cuba and Argentina, while the second included 40 countries, among them Nepal, France, Portugal, Brazil.
The hopes for an increase in visitors come even as tensions between Beijing and its neighbours simmer. China warned Japan on Wednesday against “being led astray again” after a former prime minister said the country and its allies must show their “resolve to fight” to deter any possible invasion of the island.
Japan’s current leader Fumio Kishida and South Korean President Yoon Suk-yeol are preparing for a summit with US President Joe Biden at Camp David next week, at which China is expected to be high on the agenda.
For the time being, investors are focused on how a rebound in tourism from China would help sectors that have suffered from a plunge in visitors since the start of the global pandemic. Travellers from China to Japan totalled 208,500 in June, which was about 24 per cent of the level four years ago, according to data from the Japan National Tourism Organization.
“Investors will likely enjoy this rally for a while,” said Yu Jung-Hyun, an analyst at Daishin Securities in Seoul. Many firms had been hurt by disappointment over China’s economic slowdown and the fact that not many Chinese people were travelling overseas, she said.
An increase in visitors will help Japanese sectors such as retail, transportation and cosmetics, JPMorgan Securities Japan strategists Rie Nishihara and Yong Guo wrote in a note. An increase in Chinese visitors would add to positive momentum that has built up as earnings in the sectors come out better than expected amid a stronger economy, they wrote.
“On average, 10 per cent upside potential remains between current stock prices and our price targets for inbound demand-related names,” the strategists wrote. BLOOMBERG, REUTERS
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