“Stocks linked to the entertainment and tourism sectors are likely to benefit from allowing the Chinese government to travel to more destinations by allowing group tours,” suggests Douglas Kim, an analyst presenting commentary on the Smart Karma platform.
Mainland Chinese authorities said Thursday they would allow group travel to more destinations, including Japan, South Korea, Australia and the United States, a potential benefit for their tourism industry.
Japanese Prime Minister Fumio Kishida and tourism ministers from South Korea and Australia welcomed the easing of group tours, saying it would help boost their economy.
Foreign-only casinos in South Korea have historically received a portion of their income from customers outside of mainland China.
In pre-COVID times, Japan was a popular destination for Chinese tourists, despite sometimes political tensions between the two countries. Although the first and only project ever approved for Osaka is unlikely to take place until 2030 at the earliest, Japan is creating its own casino gaming market.
Since the beginning of this year, China’s Ministry of Culture and Tourism has announced the approved list for group tours of 60 countries in two separate times. The list has now been expanded to 78 destinations.
Before the COVID-19 pandemic, mainland Chinese tourists spent more abroad than any other country’s. Mainland Chinese tourists spent a total of US$255 billion in 2019, with group tours estimated to account for about 60% of that, according to Reuters.
However, observers recently noted that it will still be some time before outbound Chinese tourism picks up again in the group’s countries, as international flights to and from China recovered to 53% of 2019 levels as of July, according to official data.
In a commentary, analyst Kim said a total of 19 South Korean stocks were “most likely to benefit” from travel easing by Chinese travel groups. They included several companies that run foreigner-only casinos in China.
“The recovery in South Korean casino operations in the second half of 2023 should help Chinese visitors, especially customers in the mass market, return home,” Brokerage NH Investment & Securities said in a note in late May.
Group tours from China to Korea have been suspended since 2017 in connection with a dispute over Korea’s deployment of the U.S. missile defense system. China has never publicly acknowledged restricting group tours to Korea.
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