[Market Focus] Travel Stocks Rally as China’s "Don’t Go to Japan" Stance Boosts Domestic Tourism Shares

On November 19, travel stocks are showing strong performance. This is the result of expectations that domestic tourism companies will benefit as tensions between China and Japan intensify.

As of 9:40 a.m. on this day, Yellow Balloon is trading at 7,130 won, up 1,110 won (18.44%) from the previous trading day.

Other travel stocks are also strong, with Very Good Tour up 14.61%, Modetour up 4.31%, and Hanatour up 1.61%.

Lotte Tour Development, which surged nearly 12% over the past two days, is currently down 2.74% as investors move to realize profits.

The strength of domestic travel stocks is attributed to expectations that domestic tourism demand will increase due to the conflict between China and Japan. There is a forecast that if the number of tourists traveling to Japan-one of China's top tourist destinations-declines, the related benefits will shift to the domestic market.

In fact, according to the travel industry, there has been a recent wave of cancellations of group tours to Japan by Chinese travelers. This is interpreted as a result of the Chinese government effectively implementing a 'Hanilryeong (Japan Restriction Order)' by advising its citizens to refrain from traveling to Japan starting on the 14th.

Relations between China and Japan have rapidly deteriorated following remarks by Japanese Prime Minister Sanae Takaichi regarding possible intervention in Taiwan during a contingency. On November 14 (local time), China’s Ministry of Foreign Affairs issued a travel advisory urging its citizens to avoid traveling to Japan in the short term. On November 16, the Chinese Ministry of Culture and Tourism also advised citizens to refrain from visiting Japan for the time being.