South Korean casino and hospitality stocks have experienced remarkable gains over the past month, driven by anticipation of increased Chinese tourist arrivals following the government’s visa-free entry policy for Chinese group tourists, which is scheduled to launch in the third quarter of the year.
Foreign-only casino operator Lotte Tour Development led the surge with a 37.4 percent stock price increase from June 12th to July 11th, significantly outperforming the KOSPI index’s 9.24 percent rise during the same period.
The rally extends across the casino sector, with Paradise Co. shares climbing 35.6 percent and GKL advancing 17.35 percent over the same timeframe, according to South Korean news outlet Chosun Biz.
The government is considering indefinitely extending the visa-free policy for Chinese group tourists, originally scheduled to expire at the end of this year. Officials are also exploring expanding the program to include individual Chinese travelers, aiming to stimulate domestic consumption and accommodation demand as Chinese tourists resume travel activities.
Kim Hye-young, a researcher at DAOL Investment & Securities, noted that since visa-free entry for Koreans to China was allowed last November, relations between the two countries have improved. She suggested that if tourist numbers steadily increase, foreign casino operators running integrated resort businesses may benefit.
The timing coincides with peak summer travel season, with Japan approaching its Obon holiday in August and China preparing for the October Mid-Autumn Festival and National Day golden holiday period. Major airlines including Korean Air have responded by expanding routes to destinations like Macau, Bangkok, Taiwan, and China while increasing flight frequencies on key routes.
Currency movements are providing additional support for the casino sector. The strengthened yen compared to last year reduces exchange rate burdens for Japanese tourists visiting Korea, potentially increasing their gambling expenditure. Park Soo-young, a researcher at Hanwha Investment & Securities, stated that the rise in the yen’s value is contributing to maintaining stable Japanese VIP customer attraction.Securities firms have raised their expectations accordingly, with collective target price increases for major casino stocks.
The broader hospitality sector is also positioned to benefit from the tourism recovery. Korea Tourism Organization data shows that as of May 2024, cumulative visitor arrivals reached 7.21 million, representing a 14.7 percent increase compared to the same period last year and a 103.5 percent recovery compared to pre-COVID levels in 2019.
