The reopening in Asia stimulates travel, fashion brands; pandemic winners take the backseat

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SINGAPORE / SYDNEY, October 28 (Reuters) – Fashion brands and airlines return to the good graces of investors in Asia as lockdowns loosen and vaccinations increase, boosting travel and leisure activities, shining some pandemic pillars such as supermarkets and gadget makers.

Results reports show people spend less time watching TV or shopping online when they resume dining at restaurants or planning vacations after stepping outside the coronavirus curbs. Luxury purchases by Chinese big spenders, still unable to travel abroad, are also rebounding.

Asia-Pacific airlines are offering more flights as some countries resume domestic travel, and some like Singapore allow travel without quarantine for some vaccinated visitors. Australia’s planned reopening of national and international borders has resulted in an increase in bookings.

“There is a massive demand for loved ones who want to get together for Christmas,” Alan Joyce, CEO of Qantas Airways in Australia said last week. “There is a demand for people who want to take that vacation they have been eagerly awaiting for almost two years.”

Certainly, a recovery in Asia’s tourism sector is months away and China’s huge domestic travel market remains on the move. In addition, companies, including McDonald’s, continue to struggle with frequent and temporary restrictions countries impose to control outbreaks.

But airline shares in the Asia-Pacific region have climbed nearly 5% in the past three months, while global airlines have fallen 6% due to a slower-than-expected return of international travel. ‘business.

The broader MSCI All Country Asia Pacific price index rose by around 2% over the same period.

European fashion houses like LVMH and Kering posted exceptional results in China, as appetite for luxury items not waned, despite power shortages and a crisis in the real estate sector that hurt the economy .

“The Chinese population and its middle classes are increasing and their appetite for beauty is not satisfied,” L’Oréal CEO Nicolas Hieronimus said last week.

Hieronimus expects a recent change in Chinese government policy to narrow the gap between rich and poor to boost the middle class, a sentiment echoed by LVMH.

Japan’s Fast Retailing posted record profits in China in the last quarter, where it will open its first flagship store next month. Japanese cosmetics giant Shiseido Co believes that next summer will be a “turning point” with the return of Chinese tourists from China.

FIRST WINNERS

Businesses around the world are grappling with severe labor shortages, bottlenecks and shipping bottlenecks as economies rebound from pandemic lows, causing costs to rise sharply here. A long-standing chip shortage has disrupted the auto industry.

For supermarkets, among the early winners in the pandemic when people rushed to stock up on food and toilet paper, rising inflation is expected to offset some of the post-pandemic slowdown.

Australian grocer Woolworths said on Wednesday food sales began to slow in October. Its shares have fallen 10% since mid-August, when the pace of vaccinations began to accelerate. The stock has risen nearly 40% over the previous 17 months, when restrictions on coronaviruses were in place.

“The big question now is how many people will be returning to offices, how will that be in terms of home consumption?” Said Morningstar retail analyst Johannes Faul.

However, the winners of a pandemic are unlikely to become losers overnight, said Jason Teh, chief investment officer at Vertium Asset Management in Sydney. But work-from-home trends that have benefited companies like Australian electronics retailer JB Hi-Fi were fading as vaccination increased, he said.

Third-quarter smartphone sales in China fell 9% from a year earlier, according to Counterpoint Research.

As pent-up demand due to supply bottlenecks is likely to support a strong seasonal holiday quarter, sales are starting to slow at chipmakers and component suppliers such as Samsung Electronics and LG Display in Korea. from South.

“LCD panels for televisions are expected to see further declines in the fourth quarter as people vaccinated have started spending less time in front of screens,” said Park Sung-soon, Seoul-based analyst at Cape Investment & Securities. (Reporting by Sayantani Ghosh in Singapore and Byron Kaye in Sydney; Additional reporting by Tom Westbrook in Singapore, Jamie Freed in Sydney, Heekyong Yang and Joyce Lee in Seoul, Rocky Swift in Tokyo; Editing by Ana Nicolaci da Costa)


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