[MarketING] Travel Stocks Soar Ahead of Seollal Holiday

Travel Stocks Rise on Expectations of Increased Travel Demand
KOSPI Continues Weakness for Second Day

[Image source=Yonhap News]

[Asia Economy Reporter Song Hwajeong] As the KOSPI takes a breather after its early-year rally, travel-related stocks are showing notable strength ahead of the Lunar New Year holiday, fueled by expectations of increased travel demand.

Travel-Related Stocks Strengthen Ahead of Lunar New Year Holiday

On the 18th, travel and airline stocks showed strong performance. On that day, Modetour rose 3.9%, Hanatour 2.24%, and Norangpungseon 3.53%. All of these continued their four-day consecutive rise. Alongside these, Korean Air increased by 1.23%, Asiana Airlines by 5.12%, Jeju Air by 4.47%, Jin Air by 3.13%, and T’way Air by 6.85%. Jeju Air rose for six consecutive trading days, while Asiana, Jin Air, and T’way Air maintained a four-day consecutive upward trend.

The expectation of increased travel demand ahead of the Lunar New Year holiday has driven the rise in these sectors. Kim Seokhwan, a researcher at Mirae Asset Securities, said, "Thanks to the weak yen effect, the airline industry showed strength due to forecasts of increased travel demand to Japan during the Lunar New Year holiday."

According to the related industry, Hanatour analyzed the reservation status of planned travel products (excluding airline tickets and hotels) for the Lunar New Year holiday period (based on departures from January 20 to 24) and confirmed that about 15,000 people had made reservations. This represents a 70-fold increase compared to the previous year's Lunar New Year holiday. By region, reservations were concentrated in Southeast Asia (54%), Japan (30%), and Europe (7%). Modetour's overseas package reservations for the Lunar New Year holiday reached 13,000, a 90-fold increase compared to last year’s Lunar New Year holiday, recovering to 58% of the level before COVID-19 during the 2020 Lunar New Year holiday. In the case of Norangpungseon, the overseas package dispatch rate during the Lunar New Year holiday period increased more than 40 times compared to the previous year’s Lunar New Year holiday.

For Modetour and Hanatour, it is expected that just the Japan market alone could achieve breakeven in the first quarter. According to Hana Securities, both companies saw a surge in reservation rates in January compared to December, which is presumed to be due to the resumption of travel demand mainly for short-haul routes to Japan. Lee Kihoon, a researcher at Hana Securities, said, "The number of package travelers for Hanatour and Modetour in January is expected to be around 75,000 and 55,000 respectively, and growth through February is also certain. It seems possible to achieve breakeven (BEP) on a quarterly or monthly basis in the first quarter. Additionally, the anticipated reopening of China’s economy in the second half of the year is progressing faster than expected, which is positive."

Kim Jongmin, a researcher at Samsung Securities, said, "Outbound travel demand has recovered to about 60% of pre-COVID levels, and travel reservation rates for Modetour and Hanatour from January to March are surging." He added, "Expectations for the removal of indoor mask mandates announced on the 20th are also being factored in."

KOSPI Closes Lower for Two Consecutive Days... KOSDAQ Rises

On the day, the KOSPI closed at 2,368.32, down 11.07 points (0.47%) from the previous day. After falling below the 2,380 level the day before, it dropped further to the 2,360 level. Meanwhile, the KOSDAQ closed at 711.75, up 2.04 points (0.29%).

Institutions pulled the KOSPI down for two consecutive days. On the day, individuals and foreigners net bought 148.7 billion KRW and 72.6 billion KRW respectively, while institutions sold off 215.5 billion KRW.

On the day, the Bank of Japan (BOJ), Japan’s central bank, decided to maintain its large-scale monetary easing policy, which led foreign investors, who had been selling during the session, to turn to net buying at the end. Immediately after the BOJ announcement, the yen’s value dropped, causing the yen-dollar exchange rate to surge and the won-dollar exchange rate to rise to 1,246.5 KRW during the session. However, as uncertainty over BOJ’s monetary policy was resolved and the bank did not shift to tightening, relief spread, and the won-dollar exchange rate gave back its gains to close near the opening price. Moon Junghui, a researcher at KB Kookmin Bank, said, "With Japan deciding not to shift to tightening and maintaining an easing stance, risk appetite in the market was sustained."