Anticipation of Hanhanryeong Lift... Chinese Consumer Stocks Stir

[Asia Economy Reporter Koh Hyung-kwang] Chinese consumer stocks are stirring with expectations of the lifting of China’s Hanhanryeong (Korean Wave ban). Attention is focused on whether they can revive as before the COVID-19 pandemic.

According to the Korea Exchange on the 5th, Amorepacific, the leading cosmetics stock, closed at 167,000 won on the 3rd, down 0.6% from the previous trading day. Amorepacific’s rise this month is 15.9%, surpassing the KOSPI increase of 7.11%.

LG Household & Health Care also continued its upward trend for two consecutive days recently. It’s Hanbul closed at 17,900 won, soaring 21.3% from the previous day, and Hankook Cosmetics closed at 14,100 won, up 4.0%. Coreana and Tony Moly closed at 5,140 won and 11,150 won, up 11.0% and 7.2% respectively from the previous trading day. On the 30th of last month, the stock prices of six cosmetics companies including It’s Hanbul, Hankook Cosmetics Manufacturing, Coreana, Hankook Cosmetics, Tony Moly, and Leaders Cosmetic surged to the price limit (30%).

Recently, as news spread that the Chinese government is formalizing the lifting of the ban on the sale of Korean group tour products, expectations have risen for Chinese consumer stocks in cosmetics, duty-free shops, travel, and entertainment industries, causing stock prices to rise again. However, even if group tour products resume with the lifting of Hanhanryeong, some analyses suggest that the actual benefits will not be significant due to the severe impact of reduced travelers caused by COVID-19. Jeon Young-hyun, a researcher at SK Securities, pointed out, "The earnings outlook for the cosmetics sector is still likely to be continuously revised downward in the 2nd and 3rd quarters," adding, "Due to traffic contraction caused by COVID-19, absolute sales centered on offline channels are decreasing, and profitability is also declining."

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