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Travel & Hospitality Stocks Advance on International Travel Progress

Posted October 11, 2021 at 11:30 am
Singapore Exchange
  • With Singapore in the stabilisation phase of its transition to COVID-19 resilience, eight more countries will be added to Vaccinated Travel Lanes (VTLs). Similarly, Malaysia announced earlier in the month it is looking to reopen its borders to international travel once 90% of its adult population is fully vaccinated.
  • This has seen Singapore’s 10 most traded Travel and Hospitality related stocks advance 4.1% on 11 Oct. International travel-related plays, SIA, SATS and SIA Engg gained 7.6%, 3.8% and 3.3% respectively, while ComfortDelGro, one of the largest global land transport companies, gained 1.3%.
  • Genting Singapore gained 4.8%, while three stapled trusts – Ascott Residence Trust, CDL Hospitality Trust and Far East Hospitality Trust gained 5.9%, 6.3% and 3.2% respectively on 11 Oct, while Mandarin Oriental which has been a comparatively more defensive play since the end of 2019, added 0.4% over the session.

With one of the highest vaccination rates in the world, Singapore is presently pursuing a ‘Living with COVID-19’ strategy as it seeks to build a COVID-resilient nation. Given the disease has become more manageable with a higher vaccination rate, the government said over the weekend that it should now “drastically simplify” health protocols, including procedures on what should be done if people tested positive or came in contact with infected persons. While Singapore’s Prime Minister reiterated the need to protect the vulnerable, he said we must also “connect ourselves back to the world”, in particular continuing to re-open the country’s borders safely.

Singapore has also announced that eight more countries will be added to Vaccinated Travel Lanes (VTLs), and with more such arrangements expected this will keep us connected to global supply chains and help to preserve the country’s hub status. Similarly, Malaysia has announced earlier in the month it is looking to reopen its borders to international travel once 90% of its adult population is fully vaccinated.

This has seen Singapore’s 10 most traded stocks that represent the travel and hospitality industries, average a 4.1% gain on 11 Oct.  Together the 10 stocks have contributed 8% of the day-to-day turnover of all stocks listed on SGX, with 11 Oct gains taking their average 2021 to date total return to 7.0%. The 10 stocks include Singapore Airlines which was the strongest performer of the 10 stocks on 11 Oct, with a 7.6% price gain. Other STI constituents among the 10 stocks include Genting Singapore, ComfortDelGro Corporation and SATS.

Most Traded Transport & Hospitality Related Stocks in 2021Code2021 YTD Avg. Daily T/O S$MMkt Cap S$M11 Oct Session2020 Total Return %2020 Net Insti Flow S$M2021 YTD Total Return % *2021 YTD Net Insti Flow S$M
Genting SingG1323.98,7474.8-4.7112.4-9.6-131.6
Ascott TrustHMN5.33,0775.9-17.8-3.4-3.7-44.2
CDL H TrustJ851.91,3766.3-17.8-57.5-2.7-14.5
SIA EngineeringS591.52,3573.3-28.3-19.010.2-2.9
Far East H TrustQ5T1.21,2233.2-13.2-
Man Oriental USDM040.53,6230.4-8.25.328.42.4
Total 105.1   -1,081.2 -577.4
Average   4.1-19.1 7.0 

 Source: SGX, Refinitiv, Bloomberg. *Data as 11 October 2021, T/O, Mkt Cap and Flow Data as of 8 October.

Globally, recent global border re-openings to facilitate international travel for business and leisure purposes have impacted stocks. For the week ending 24 Sep, when the United States announced it would re-open borders for vaccinated travelers in November, United Airlines ended the week up 10.0%, while Singapore Airlines, SIA Engineering and SATS averaged 4.3% gains for the week. Pre-pandemic, the United States was home to 80 million visitors a year, with 100 million outbound travelers, with the reduction in global travel also significantly impacting airlines and adjacent industries.

In Singapore, international travel and tourism has impacted shopping, accommodation, food and beverage, sightseeing and entertainment activity. Overall, Singapore’s annual tourism receipts took a significant decline in 2020, after growing gradually from S$13 billion in 2009 to S$28 billion in 2019, the receipts came to S$5 billion in 2020. As Mandarin Oriental International noted in July, a return to profitability will be dependent on the removal of barriers to international travel, particularly in Asia. This was echoed by the CEO of SPH REIT who noted last week that ‘notwithstanding the rollout of vaccinations, both in Singapore and globally, which will lead to the relaxation for international travel restrictions, full recovery for leisure travel will still take some time’. As tabled above, the 10 stocks averaged 19.1% declines in total return in 2020, with S$1,081 million in net institutional outflow, with 7.0% average total returns in 2021 year to date, on S$577 million in net institutional outflow.  Back on 15 Sep, Singapore Airlines noted the Group’s passenger capacity (measured in available seat-kilometres) remained steady month-on-month at around 32% of pre-Covid-19 levels in August 2021, while passenger traffic (revenue passenger-kilometres) grew 7.4%.

Originally posted on October 11, 2021 – Travel & Hospitality Stocks Advance on International Travel Progress

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