Soaring 'Zhong Consumer Stocks' Lifted by Warm Breeze from China

Trade Dispute Eases and Expectations for Xi Jinping's Visit to Korea... Foreigners and Institutions Rush to Buy

[Asia Economy Reporter Song Hwajeong] Foreign and institutional investors are flocking to buy Chinese consumer-related stocks amid easing US-China trade tensions and anticipation of Chinese President Xi Jinping's visit to South Korea. As 'big hand' investors continue their buying spree, stock prices are also showing strong momentum.

According to the Korea Exchange on the 6th, the stock most purchased by foreigners last week was Hotel Shilla. Foreign investors bought 200 million KRW worth of Hotel Shilla shares last week, maintaining a buying streak for five consecutive days.

Institutions bought the most Amorepacific shares last week, with net purchases totaling 24.3 billion KRW. Since the 10th of last month, institutions have continued buying Amorepacific shares almost every day except for two days. Following Amorepacific, institutions net purchased 21.3 billion KRW worth of Hotel Shilla shares. Other Chinese consumer-related stocks such as Shinsegae International, Paradise, Hyundai Department Store, and LG Household & Health Care also ranked high in institutional net purchases.

As big investors continue buying, stock prices are also on the rise. Hotel Shilla has risen for four consecutive days recently, gaining 13.7% during this period. Shinsegae International also maintained a strong upward trend for four consecutive days. Amorepacific rose 6% over the past month, and Paradise increased by 9%.

Mi-jin Cho, a researcher at NH Investment & Securities, analyzed, "The cosmetics sector index rose 2.2% compared to the previous week," adding, "This increase is due to expectations of improved business conditions and performance driven by the US-China trade agreement leading to recovery in China's domestic demand and consumption, as well as President Xi Jinping's visit, which boosts duty-free and export performance."

Improved earnings are also expected due to increased sales from Chinese customers. Jong-dae Park, a researcher at Hana Financial Investment, said, "The duty-free industry growth rate in the fourth quarter of last year is estimated to reach 32% year-on-year," adding, "With the addition of individual travelers last year, sales from Chinese customers increased by more than 40%, while competition eased compared to the third quarter, so the duty-free companies' fourth-quarter earnings last year are expected to improve significantly beyond initial forecasts."

With progress in US-China trade negotiations and moves to ease China's ban on Korean cultural content, stock prices are expected to gain further momentum. The US and China are scheduled to sign the Phase 1 trade agreement on the 15th. President Xi's visit to South Korea is expected in the first half of this year. Researcher Park forecasted, "If President Xi's visit is confirmed this year, additional earnings and stock price momentum for duty-free companies can be expected due to the easing of inbound package tour regulations."

This content was produced with the assistance of AI translation services.