Stocks linked to entertainment and tourism sectors are likely to benefit from the Chinese government allowing group tours to travel to more destinations, suggests analyst Douglas Kim who publishes commentary on the Smartkarma platform.
The mainland China authorities announced on Thursday that they will allow group travel to more destinations, including Japan, South Korea, Australia and the United States, a potential boon to their tourism industries.
The decision on group-tour easing was welcomed by Japan’s prime minister, Fumio Kishida, as well as tourism ministers in South Korea and Australia, who said it would help boost their economies.
South Korea’s foreigner-only casinos have historically received a portion of their earnings from customers out of mainland China.
In pre-Covid times, Japan had been a popular destination for Chinese tourists, despite occasional political tensions between those nations. Japan is in the process of creating its own casino gaming market, though the first and so far only approved project – for Osaka – is unlikely to open until 2030 at the earliest.
Starting from the beginning of the year, China’s Ministry of Culture and Tourism had announced – in two batches – a 60-country approved list for group travel. The list has now been expanded to 78 destinations.
Prior to the Covid-19 pandemic, mainland Chinese tourists spent more than any other country’s tourists when abroad. According to Reuters, mainland Chinese tourists spent in aggregate US$255 billion in 2019, with group tours estimated to account for about 60 percent of that.
But observers have noted that it would still take time for outbound Chinese tourism to bounce back for the latest group of countries. That is because international flights in and out of China have recovered to only 53 percent of 2019 levels as of July, according to official data.
In his comments, analyst Mr Kim said an aggregate of 19 South Korean stocks were the “most likely to benefit” from the easing of travel for Chinese tour groups. Among those are several companies that operate foreigner-only casinos in that country.
Brokerage NH Investment & Securities Co Ltd said in a memo in late May that casino business recovery in South Korea should be helped in the second half of 2023 by the return of Chinese visitors to the country, particularly mass-market customers.
Group tours from China to South Korea have been suspended since 2017, linked to a dispute over Seoul’s deployment of a U.S. missile defence system. China has never publicly acknowledged limiting group tours to South Korea.
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