Just as it seemed to recover... 'Aviation and Travel' Take a Direct Hit

Jeju Air Hits 52-Week Low Amid New Coronavirus Impact
Duty-Free Shops, Hotels, Casinos Face Inevitable Blow

[Asia Economy Reporters Oh Ju-yeon and Lee Min-woo] As the government has banned foreign nationals entering from Hubei Province, China, and is considering suspending the issuance of short-term visas for Chinese tourists to prevent the spread of the novel coronavirus infection (Wuhan pneumonia), airline, travel, and casino stocks, which had been attempting a rebound, have once again taken a direct hit.

[Image source=Yonhap News]

According to the Korea Exchange on the 3rd, airline stocks have fallen more than 10% since the beginning of the year. Last year, the deterioration of Korea-Japan relations in the second half led to worsening performance and stock prices, but signs of recovery appeared from the end of the year. However, this time, the decline in Chinese tourists due to the novel coronavirus has emerged as a new obstacle.

On this day, Jeju Air hit a 52-week low, breaking below the 20,000 KRW mark to 19,900 KRW during trading. It has plunged 26.43% since the start of the year. Korean Air and Asiana Airlines also fell by 14.90% and 16.94%, respectively, based on closing prices on the 31st. Other airlines such as T'way Air (-17.39%), Jin Air (-6.21%), and Air Busan (-10.26%) also declined.

Duty-free shops, hotels, and casino operators are also on high alert. In particular, anxiety is growing as confirmed coronavirus patients have reportedly visited duty-free shops and hotels in Seoul and Jeju Island. According to the Jeju Tourism Statistics from the Jeju Special Self-Governing Province Tourism Association, the number of foreign tourists entering Jeju Island yesterday was 23,685, less than half of the 48,362 recorded on the 24th. The number of foreign tourists decreased even further to 1,937, which is about 35% of the previous month's peak of 5,530 on the 23rd. Considering that Chinese tourists accounted for 98% (797,300) of visa-free arrivals in Jeju last year, further declines are expected.

It is anticipated that stocks of hotels, duty-free shops, and casinos targeting foreign customers will inevitably be hit. Hotel Shilla, which posted a surprise earnings beat in Q4 last year, had sharply risen from the 90,000 KRW range to 110,000 KRW this year but plunged to 86,800 KRW as of 10:10 AM on this day. Shinsegae International also dropped to 197,500 KRW during trading, wiping out the gains from January when it had risen to the 260,000 KRW range.

Paradise, which plans to expand the Jeju Grand Casino starting in May, fell 24.1% to 16,700 KRW as of 9:30 AM on this day from its 52-week high of 22,000 KRW on the 14th. Grand Korea Leisure (GKL) also traded at 17,550 KRW, down 23.4% from its three-month high of 22,900 KRW recorded on the 20th. Lotte Tour Development, which is building the Dream Tower complex resort including a casino in Jeju, is also on a downward trend. After hitting a 52-week high of 15,750 KRW on the 20th, it traded at 12,300 KRW on this day, down 22.2%. Additionally, crowded places such as marts and cinemas have decided to partially close, leading to declines in stocks like E-Mart (-11.2%) and CJ CGV (-23.69%) since the start of the year.

Ji In-hae, a researcher at Hanwha Investment & Securities, said, "Considering that the number of tourists to Jeju, which averaged 4,000 to 6,000 per day last year, has decreased and that 60% of all foreign arrivals to Jeju are Chinese, the impact is inevitable," adding, "Concerns about short-term stock price adjustments or volatility are expected to continue for one to three months."

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