'Living with COVID-19' to further boost travel and leisure stocks

'Living with COVID-19' to further boost travel and leisure stocks

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By Anna J. Park

Despite their recent selling spree, major local institutional investors, including asset managers and pension funds, continue to net-purchase domestic stocks related to travel and leisure activities, as they expect the so-called “living with COVID-19” themed stocks to lead possible upward movement in the near future.

According to the Korea Exchange (KRX), local institutional investors turned to net-selling 3.46 trillion won ($2.93) worth of domestic stocks from September 1 to 24. Their most sold stocks were Samsung Electronics at 751 billion won, followed by Kakao Bank at 739 billion won, Kakao at 441 billion won and SK Bioscience at 304 billion won.

Their top pick net purchase during this period was Korean Air at 433 billion won. S-Oil and Hana Tour were two other highly net-purchased stocks at 117 billion won and 52 billion won, respectively.

Led by the strong buying power by the major investors, travel, leisure and retailer stocks continued their bullish moves this month.

Korea Air’s share price rose 10.12 percent this month, while Asiana Airlines rose 17.2 percent. Hana Tour and Mode Tour stock prices also jumped 16.9 percent and 14.6 percent, respectively.

“The country’s demand for international flights will gradually increase, as the safety of overseas travel will mostly be secured by the second quarter of next year,” said Park Sung-bong, an analyst at Hana Financial Investment.

Oil refinery and gas distribution stocks, such as S-Oil and GS Holdings, also enjoyed recent upward moves, with increases in global oil prices.

“The demand for petroleum products is obviously improving in developed countries with high vaccination rates,” Yoon Jae-sung, an analyst at Hana Financial Investment, pointed out. “The increase of vaccination rates in Asian countries will also lead to heightened demand for petroleum products,” he added.

Distribution businesses such as retailers are another sector expected to see further growth in their share prices. Shinsegae saw its stock net-purchased by institutional investors to the tune of over 40 billion won, while Hyundai Department Store’s shares also rose amid rosy forecasts.

Shinhan Financial Investment’s latest report said now is the time for investors to focus on specific sectors and shares, as they’re expected to be able to enjoy a rise in these shares.

“During the past month, local stocks related to travel and leisure logged an average increase of 8.4 percent, which is an exceedingly better performance than the market index increase rate ― at minus 0.4 percent for the KOSPI and 2.4 percent for the KOSDAQ.” Noh Dong-kil, an analyst at Shinhan Financial Investment, stated in a report.

The analyst added the cosmetics, clothing, hotel and consumer goods sectors are expected to see a further boost in the near future, as these sectors haven’t yet fully recovered from the pandemic shock.

“From the perspective of the recovery rate, most domestic sectors have recovered to the level of the pre-pandemic situation, while the mentioned industries have not,” Noh said.

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