By Park Hyong-ki
Shares in cosmetics, tourism and car companies, among others that had been hit by a diplomatic row over the deployment of a U.S. anti-missile system here, are expected to post a rebound on improving investor sentiment, analysts said Tuesday.
AmorePacific, Orion, Hana Tour and LG Household & Health Care stocks have recently bounced back on expectations the Moon Jae-in government might settle the dispute with the Chinese government.
AmorePacific performed weak on Tuesday on profit-taking, correcting recent gains. The stock closed down 2.37 percent at 350,500 won. Hana Tour also lost 0.87 percent at 91,300 won. The benchmark KOSPI closed up 0.33 percent or 7.71 points to 2,311.74 points.
Despite the correction on Tuesday, analysts are turning positive about cosmetics and tourism stocks.
Moon had taken issue with the process of installing the Terminal High Altitude Area Defense (THAAD), saying the country should have sought social consensus before the former government’s unilateral deployment decision. He proposed South Korea develop its own indigenous weapons system, known as the “kill chain,” as initially planned for defense against North Korea.
With the Moon government addressing uncertainties, sentiment over cosmetics shares such as AmorePacific and Korea Kolmar have improved, Taurus Investment & Securities analyst Jeon Sang-yong said.
AmorePacific, a cosmetics giant, climbed about 43 percent after bottoming out in March. Korea Kolmar, an original developer and designer of cosmetics, rallied more than 50 percent since January, according to Taurus Investment.
“Positive news has driven the rebound of those cosmetics shares that had been hit by the THAAD row especially after the Moon administration sent its special envoy to China,” Jeon said.
President Moon recently sent his envoys to China to mend ties, as well as to Japan as part of preparations to start renegotiation of a deal over Japan’s wartime sexual slavery.
China’s Alibaba, an e-commerce giant, introduced tourism packages to Seoul, Busan and Jeju Island late last month.
Also, some travel agencies in China restarted their Korean travel visa services.
Chinese carriers such as China Southern Airlines are expected to resume flights between China and Korea.
These indicate China is taking steps to wind down its retaliatory measures against Korea.
Analysts say the improved relations will boost Chinese tourism in the summer, boosting shares in tourist companies such as Hana Tour.
“There is a chance to see a rebound in Chinese tourism to Korea in July and August as China could move to ease its measures and further allow sales of tourism packages to Korea,” said Sung Joon-won, an analyst at Shinhan Investment.
Korea saw an almost 70 percent decline of Chinese tourists to 227,811 in April from a year earlier, following a 40 percent drop year-on-year in March.