Travel Stocks Disheartened by With-Corona Policy

[Asia Economy Reporter Junho Hwang] Contrary to expectations, the stock prices of travel and leisure sectors have frozen due to the first phase of social distancing relaxation, known as ‘With Corona.’ At the beginning of this month, there was great anticipation for a recovery in travel demand and a boost in related stocks following the return to normal life, but after about a month, the outlook on these stocks has turned cold.

According to the Korea Exchange on the 22nd, the ‘TIGER Travel Leisure Exchange Traded Fund (ETF)’ managed by Mirae Asset Asset Management, with a market capitalization of 140 billion KRW, has fallen 9.51% from the 1st to the 21st of this month. Except for the ‘TIGER 200 Energy Chemical Leverage’ (-14.14%), which offers double returns when energy chemical stocks rise, this ETF has experienced the largest decline so far this month.

This ETF was heavily purchased by individual investors at the beginning of the month due to expectations of reopening following the implementation of With Corona. However, it only rose on four days this month. It holds representative domestic travel and leisure stocks such as Hanjin KAL (10.96%), Kangwon Land (9.99%), Hotel Shilla (9.72%), Asiana Airlines (9.62%), and Hana Tour (8.61%), but their stock prices have failed to gain momentum, leaving the ETF stuck in a slump.

In particular, as the number of new confirmed COVID-19 cases expanded to the 3,000 range after With Corona, expectations for stock prices have also diminished. With European countries that had adopted With Corona tightening lockdown measures again, current stock prices can no longer be guaranteed. Choi Go-woon, a researcher at Korea Investment & Securities, stated, "In the airline industry, only Korean Air’s revenue on North American routes in the third quarter of this year increased by about 29% compared to normal times, while low-cost carriers saw only a 2% increase," adding, "Due to the resurgence of COVID-19, domestic route revenues have also decreased."

Ji