Travel Stocks Running in Unison... New High Rally

Chamjoheun Travel, Hana Tour, Modu Tour All Show Simultaneous Rise
'Post COVID-19' Optimism... Up to 87% Increase in One Month
Vaccine Developed but Distribution Needs Time... Too Early to Predict Normalization

On the 29th of last month, the domestic terminal of Gimpo International Airport in Gangseo-gu, Seoul, was crowded with passengers preparing to depart. [Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] Travel stocks are rising sharply. Despite ongoing concerns about the resurgence of COVID-19, optimism has increased due to continuous news about the development of vaccines and treatments.

As of 9:53 a.m. on the 2nd, Modetour's stock price rose 10.97% from the previous day to 22,250 KRW. This is not only a 52-week high but also the highest price since the end of May last year. Chamjoeun Travel is also on the rise. At the same time, its stock price increased 7.92% from the previous day to 10,900 KRW. During the previous trading session, it even rose to 11,000 KRW. Hanatour also rose 9.47% from the previous day to 60,100 KRW, surpassing 60,000 KRW for the first time since May 2019.

The upward trend of travel stocks began in early last month. Chamjoeun Travel had struggled to break out of the 5,000 KRW range since April but started rising last month. Compared to the closing price of 5,820 KRW on the 2nd of last month, it has risen about 87% up to now. Hanatour is similar. It rose to the 42,000 KRW range in mid-October but fell back to the 30,000 KRW range at the beginning of last month. Since then, it has shown a steep rise, increasing more than 53% up to now. Modetour also rose about 58.5% during this period. This outperformed the KOSPI's 14% increase nearly fourfold during the same period.

This is interpreted as growing expectations for the resumption of travel after COVID-19 due to progress in vaccine development. Despite the resurgence of COVID-19 and the raising of social distancing levels, the 'rosy outlook' for the post-COVID-19 era has overshadowed these concerns. According to the Central Disease Control Headquarters, as of midnight on the 2nd, 511 new COVID-19 cases were reported. Although the number had stayed in the 400s for three consecutive days since the 29th of last month, it has risen back to the 500s.

The financial investment industry analyzes that it is still too early to be reassured. Since vaccine development is not yet complete, more time is needed until the end of COVID-19. It is also necessary to consider the time lag until distribution even after vaccine development is complete. Junwon Sung, a researcher at Shinhan Financial Investment, said, "Even if the COVID-19 vaccine is produced quickly, it is highly likely that vaccinations will start in South Korea in the fourth quarter of 2021," adding, "Full-scale overseas travel is expected to increase from 2022."