Stocks See Double-Digit Gains
South Korean casino and hospitality stocks have surged in the past month. The boost comes from optimism about rising Chinese tourist numbers, thanks to South Korea’s upcoming visa-free policy for Chinese group tours set for launch in Q3.
Lotte Tour Development, a foreign-only casino operator, jumped 37.4% in share price between June 12th and July 11th. This performance easily beat the KOSPI index’s 9.24% gain over the same period in South Korea.
Other casino operators in South Korea also saw significant growth. Paradise Co. rose 35.6%, while GKL advanced 17.35%, according to Chosun Biz.
Policy Expansion Under Consideration
The government may extend the visa-free policy beyond its initial expiry at year-end. Officials are also discussing opening the program to individual Chinese travelers. The goal is to boost domestic spending and accommodation demand as Chinese tourism recovers.
Kim Hye-young, a researcher at DAOL Investment & Securities, noted that relations between Korea and China have improved since China allowed visa-free entry for Koreans last November. She said consistent increases in tourist numbers could benefit foreign casino operators managing integrated resorts in South Korea.
Summer Travel Peaks and Currency Tailwinds
The surge comes during peak travel season in South Korea. Japan’s Obon holiday arrives in August, while China prepares for October’s Mid-Autumn Festival and National Day holidays.
Major airlines, including Korean Air, have expanded routes to destinations like Macau, Bangkok, Taiwan, and China. They’ve also increased flight frequencies on popular routes to handle the expected demand.
Currency shifts are also helping casinos. The stronger yen compared to last year makes travel to South Korea cheaper for Japanese tourists. Park Soo-young of Hanwha Investment & Securities explained that this has kept Japanese VIP customers coming, as their spending power remains strong.
Securities firms have adjusted forecasts upward, raising target prices for major casino stocks.
Tourism Recovery Lifts Broader Sector
The hospitality sector in South Korea stands to benefit from this recovery. Korea Tourism Organization data shows that as of May 2024, Korea recorded 7.21 million visitor arrivals. This marks a 14.7% increase from last year and a 103.5% recovery compared to pre-COVID levels in 2019.
