Revenge Spending and Compensation Desire Explode in 'Leisure'... "Let's Selectively Invest in Travel and Casino Stocks"

[Asia Economy Reporter Lee Seon-ae] As COVID-19 vaccination rates increase, the securities industry is focusing on markets driven by the previously suppressed 'revenge consumption' and the 'compensatory desire' to make up for lost time. Revenge consumption and compensatory desire have so far led to increased demand for high-priced consumer goods such as home appliances and interior products. If the economy proceeds toward normalization, it is expected that this demand will concentrate in leisure markets such as travel, casinos, hotels, and theaters.

On the 25th, the securities industry identified the leisure market as the main area where revenge consumption is concentrated. Although the biggest recent trend in consumption is 'revenge,' leisure activities have been forcibly restricted due to the inability to gather, resulting in a longer period of suppressed demand. With the government's eased social distancing measures, travel bubbles (special agreements between certain countries for free exchange), and quarantine relaxation measures for vaccinated individuals expected to materialize within months, it is necessary to prepare for the possibility that the previously pent-up leisure consumption will return as the highest level of revenge consumption ever recorded.

Hana Financial Investment named travel and casinos as the most preferred sectors and recommended investing primarily in leading companies within these industries during the recovery phase. Travel will likely begin with limited countries and travel bubbles, maintaining supply constraints that create a favorable price environment while undergoing significant restructuring. Hana Tour has suspended operations at SM Duty Free and carried out restructuring affecting 15-35% of its employees. Mode Tour also sold its stake in Freedom Tour. Researcher Lee Ki-hoon of Hana Financial Investment stated, "Hana Tour is the most preferred stock, but the stock price trends of Mode Tour and Interpark are not expected to differ significantly."

Casinos are expected to see stock price increases driven by demand recovery around July 1, the 100th anniversary of the founding of the Chinese Communist Party. The most important short-term momentum is whether quarantine exemptions will be granted to Sinopharm vaccine recipients. Lee said, "The new integrated resort, Jeju Dream Tower, is about to open. Based on past experience that supply soon creates demand, a sharp rebound is expected for Paradise City and Jeju Dream Tower, which have suffered from the Luhan restrictions and COVID-19 misfortunes." He added, "Paradise is the most preferred stock, and attention to Lotte Tour Development is also necessary."

Sangsangin Securities also forecast that the stock strength in travel, casinos, and hotels?areas where compensatory desire is concentrated?is reasonable. Kim Jang-yeol, head of the Sangsangin Securities Research Center, said, "Although variables such as variant viruses, the possibility of relaxed quarantine measures before and after summer vacations, and uncertain recovery timing in India, emerging markets, and low-income countries exist, the overall trend is the resumption of suppressed demand and economic reactivation." He emphasized, "Although stock prices have already steadily risen, the strength of leisure-related stocks should be evaluated by comparing the 2022 earnings normalization timeline with those of 2019 and 2018 to determine if there is additional upside potential."

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