"Expecting Further Stock Price Increase in Hotel and Airline Industries Upon Vaccine Effectiveness Confirmation"

On the morning of the 27th, when Pfizer vaccine administration began for medical staff treating COVID-19 patients, medical personnel are preparing doses of the Pfizer vaccine into syringes at the sterile workstation (clean bench) inside the Central Vaccination Center of the National Medical Center in Jung-gu, Seoul. Photo by Joint Press Corps

[Asia Economy Reporter Park Jihwan] Shinhan Financial Investment forecasted on the 1st that if the effectiveness of the COVID-19 vaccine is confirmed, further stock price increases can be expected in face-to-face sectors such as hotels and airlines.

Researcher Kim Dami of Shinhan Financial Investment said, "From the second half of this year, we can expect a consumption rebound effect due to the expansion of vaccinations and easing of lockdowns," adding, "The increase in consumption, so-called 'revenge consumption,' will be clearly seen in face-to-face service sectors that were severely impacted by COVID-19."

Researcher Kim explained, "In the Consumer Sentiment Index (CSI), the consumption outlook for face-to-face services has gradually recovered to the level of February 2020," and added, "Since the CSI is an indicator showing subjective expectations six months ahead, this means that more people expect face-to-face activities to be possible around summer when general vaccine distribution begins."

It is analyzed that in advanced countries accelerating vaccination, stock prices in face-to-face sectors have recently been aligning. Researcher Kim said, "In the United States, where COVID-19 vaccinations started earlier, the decline in personal service expenditures slowed down after bottoming out in the second quarter of last year." In the U.S., restaurant and apparel retail sectors have already surpassed pre-COVID stock price levels in the second half of last year. The stock prices of hotel and airline sectors, which had continued to suffer from poor performance due to a sharp drop in travel demand, surged by 35.7% and 33.2% respectively just last month.

Researcher Kim emphasized, "Face-to-face sectors have shown returns of less than 10% compared to early 2020, so compared to growth stocks that rose from 50% to over 100% during this period, there is significant room for further increase." He added, "If the effect of reduced confirmed cases is confirmed after the start of vaccinations at the end of February, face-to-face sectors are expected to recover investor sentiment."