[비즈한국] With the peak vacation month of July just a month away, investor interest in travel stocks is on the rise. This is due to growing expectations that more people will travel once the presidential election ends on June 3 and political uncertainty clears. Adding to the optimistic outlook are factors that stimulate overseas travel, such as China’s visa-free policy introduced last year and the recent decline in the won-dollar exchange rate. In particular, the “golden holiday” scheduled from October 3 to 9 is also seen as a positive factor.
Hana Tour039130, a leading domestic travel agency, saw its stock price drop to as low as 46,200 won during trading on April 9, but it has since recovered to the 50,000 won level. Mode Tour080160 has been on a steady upward trend since hitting a low of 9,210 won during trading in February. On the 2nd, it hit 12,250 won, its highest intraday price so far this year.
The won-dollar exchange rate is also having a positive impact on the investment climate. The exchange rate, which soared to 1,486.50 won on April 9, has now fallen to the 1,370-won range, easing the burden of travel costs.
While domestic factors such as the martial law situation contributed to the undervaluation of the won, the uncertainty following the tariffs announced after U.S. President Donald Trump took office acted as the biggest negative factor.
Choi Ye-chan, a researcher at Sangsangin Securities, analyzed, "Starting with the 90-day exemption from reciprocal tariffs for countries other than China on April 10, concerns over trade policies have eased significantly, including U.S.-U.K. trade negotiations and agreements on reducing U.S.-China tariffs."
Byun Jun-ho, a researcher at IBK Securities, explained, "The dollar has shown a significant weakening trend, peaking roughly when a short-term panic hit the financial market due to Trump's imposition of reciprocal tariffs in early April. It is estimated that as the U.S. began trade negotiations with various countries following the imposition of reciprocal tariffs, negotiations regarding foreign exchange markets were also conducted simultaneously, leading to the strengthening of currencies in major U.S. export countries such as the EU, China, and South Korea against the dollar."
Travel stocks are among the sectors expected to benefit from policies to revitalize domestic demand after the presidential election. Recently, signals of a domestic economic recovery have appeared in line with the snap election. The Consumer Sentiment Index (CSI) for May was 101.8, up 8.0 points from April (93.8). The increase compared to the previous month was the largest since October 2020 and reached its highest level in seven months since last October (101.8). By surpassing the baseline of 100, it has recovered to levels seen before the emergency martial law situation.
Ji In-hae, a research fellow at Shinhan Securities, stated, "Demand for travel package products (PKG), which had been suppressed by negative news, accidents, and political instability, is expected to recover after the election, with pent-up demand concentrating in October, the peak season." She added, "The exchange rate has also turned in a favorable direction; now is the time to start buying gradually."
Along with this, airline stocks, which are prime beneficiaries of a stronger won, are also expected to see a gradual recovery. Due to the high exchange rate and intensifying U.S.-China trade conflicts, the stock price of Korean Air003490, which accounts for about 70% of the airline industry's market capitalization, fell 11% between March and April. However, it rebounded by 8% in May as the dollar weakened sharply and U.S.-China reciprocal tariffs were eased. In the case of low-cost carriers (LCCs), the rebound is smaller due to the aftermath of flight accidents and a lack of expectations for cargo, but signs of recovery are being detected.
Lee Seo-yeon, a researcher at Sangsangin Securities, said, "It is no exaggeration to say that recent stock price movements in the airline industry have been driven by macroeconomic volatility." She added, "While the factors that led to the recent stock price rebound are clearly favorable for the airline industry and some short-term concerns have been resolved, macroeconomic volatility remains in the medium to long term, so it is necessary to continue to observe the situation."
However, some point out that a conservative approach to this year's earnings outlook is necessary, as there are variables such as infectious diseases and natural disasters in some parts of Southeast Asia. It appears that one should approach the market by comprehensively considering the exchange rate, consumer sentiment indicators, and the flow of trade negotiations for the time being.