Shares of local tour agencies get some lift

Finance

Published: 02 Jun. 2021, 19:37 Updated: 02 Jun. 2021, 20:01

Shares of local tour agencies get some lift

Staff of Hana Tour participate in a meeting about tour packages to Guam and Saipan at the company headquarters in Jung District, central Seoul, on Wednesday. Local airlines are preparing to resume travel to Guam and Saipan this summer. [YONHAP]

Investors are rediscovering tour agencies and leisure-related companies as vaccinations lead to a resurrection of the travel industry.

Shares in Hana Tour, the country's largest travel agency, closed at 92,600 won ($83.19) on Wednesday, up 4.75 percent from the previous trading day. That represents a whopping 43 percent increase from its 64,800 won share price on May 3, a mere month ago.

Hana's share price plunged to as low as 26,600 won in March 2020 from over 56,000 won in January 2020 due to the first wave of the Covid-19 pandemic. Its shares are rising on hopes that international travel will begin again soon.

Shares of other tour agencies listed on the Kosdaq followed Hana's, which are traded on the main Kospi bourse.

On Wednesday Mode Tour closed at 30,900 won, up 5.82 percent from the previous trading day and up 36 percent from a month ago. Mode shares had fallen to as low as 7,170 won in March 2020.

Smaller tour agency Yellow Balloon Tour closed at 30,800 won Wednesday, up 1.48 percent from the previous trading day and up 9.8 percent from a month ago. Its shares had fallen to as low as 5,430 won in March 2020.

Airline shares are getting some lift as well.

Korean Air Lines shares rose 6.15 percent to 33,650 won Wednesday. That represents a dramatic recovery from 8,299 won in March 2020.

Jeju Air shares rose 7.43 percent to close at 26,750 won and smaller carrier T'way Air soared 21.3 percent to 4,015 won. Compared to their lowest prices in March 2020, Jeju Air surged by 168 percent and T'way Air by 250 percent.

Travel and leisure businesses were severely hit by the pandemic as government imposed mandatory social distancing measures. International travels collapsed.

Vaccinations are promising a big comeback.

In the United States, over 40 percent of the population has been vaccinated, and in the United Kingdom, the figure is 38 percent. In Korea, about 11 percent of the population had received one dose of a Covid-19 vaccine as of Monday, while some 4 percent of people have been fully vaccinated.

"In 2020, the travel market contracted due to restrictions in international travel to contain Covid-19," said Lee Nam-su, an analyst from Kiwoom Securities. "With vaccinations speeding up globally, expectations are high as ever for international travel.

"Vaccination progress in Japan, China and Southeast Asia, which account for roughly two thirds of outbound travel from Korea, will be the key to recovery."

Analyst Oh Kang-ho from Shinhan Financial Investment said that if uncertainties regarding Covid-19 are cleared, demand for travel and leisure activities are likely to increase explosively.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]