Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Hopes for reopening lifting Korean leisure, travel stocks
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By Lee Min-hyung
By Lee Min-hyung
Growing hopes for global borders reopening are lifting Korean leisure and travel stocks, with major exchange-traded funds (ETF) related to the industry reporting double-digit growth this month alone.
According to data from the Korea Exchange, the TIGER Tour Leisure ETF reported a growth of 15.4 percent this month, the second-highest among local ETFs. The fund product, operated by Mirae Asset Global Investments, invests in major leisure and travel stocks such as Asiana Airlines, Hotel Shilla and Lotte Tour Development.
Its jump was driven by a robust rally of each share. Shares of Asiana Airlines hit this year's low point in late January, but then went on a robust rally for the past few weeks on expectations of international travel resuming despite the pandemic. The stock price of the airline failed to defend the 17,000 won mark about three weeks ago, but has since jumped by more than 20 percent as of last Friday. Hotel Shilla and the Lotte subsidiary also reported double-digit growth during the same period.
The stock growth is outstanding, in that the benchmark KOSPI inched up by only around 1 percent during the same period, while the secondary Kosdaq reported a slight decline.
Market analysts expect travel and leisure stocks here and abroad to pick up more steam throughout the rest of the year, with more countries adopting border reopening strategies amid rising vaccination rates.
“Given that some 85 percent of the population from G20 member countries have received the first dose of a COVID-19 vaccine, expectations are the figure will reach 100 percent sometime in the second quarter of 2022,” Meritz Securities analyst Jung Eun-soo said.
“Twelve countries which have reopened borders to travelers have reached a social consensus over doing so when their vaccination rate topped around 70 percent. This increases the likelihood that the countries will embark on a specific discussion on the resumption of travel and tourism between the second and third quarter of 2022.”
According to data from market tracker FnGuide, the earnings outlook on Mode Tour ― one of the nation's major travel agencies ― remains bright this year. The company is set to achieve a major earnings rebound with an estimated sales growth of 685 percent this year from a year earlier. The company is also estimated to report a turnaround with an operating profit of 1.9 billion won.