Travel Stocks Smile at Reopening and Entry Quarantine Exemptions... But Performance Is 'So-So'

[Image source=Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] Travel stocks are gaining attention due to reopening expectations and the exemption of self-quarantine for overseas arrivals. However, experts point out that it will take more time for travel stocks to show improved earnings.

According to the Korea Exchange on the 28th, Hana Tour closed at 83,300 KRW in the previous trading day, up 11.06% compared to the beginning of this year. Modetour recorded 23,150 KRW at the previous close, rising 4.28% from early this year.

Travel stocks have been favored due to expectations for overseas travel and anticipated pent-up consumption once travel resumes. There is also potential for price increases in travel products, as travel expenses are expected to restart mainly in developed countries due to concerns about COVID-19 infection. The fact that companies are not only adjusting manpower but also selling off underperforming subsidiaries is considered a positive factor.

The news that self-quarantine is no longer required for overseas travel also acted as a positive catalyst. On the 11th of this month, the government announced that overseas arrivals who have completed COVID-19 vaccination would be exempt from quarantine, which triggered a rise in stock prices. This measure was implemented starting on the 21st of this month. Countries including the US, Canada, and France also exempt self-quarantine upon vaccination. Hana Tour and Modetour rose 5.29% and 8.31%, respectively, on the 11th. Chamjoeun Travel and Redcap Tour also increased by 6.48% and 7.1% on the same day.

Although travel stocks are gaining attention and their prices are rising, there are concerns that this will not translate into improved year-end earnings. Kim Hyun-yong, a researcher at Hyundai Motor Securities, said, "With reopening and overseas travel routes opening, travel stocks are attracting interest from an investment psychology perspective," but added, "The number of overseas travelers is still low compared to pre-COVID-19 levels." He further explained, "Most domestic travel stocks are package travel agencies, but currently, those traveling overseas tend to be younger people, who relatively do not prefer package tours, so structural demand recovery still seems distant."

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