As South Korea grapples with the outbreak of Middle East Respiratory Syndrome, so do tourism and leisure shares that had rallied earlier this year on hopes for a rising influx of Chinese travelers to the nation.
Although the government has vowed all-out efforts to contain the disease since the first outbreak on May 20, worsening sentiment following two deadly cases have sent leisure, airlines and cosmetics shares tumbling on the Seoul bourse over the past two weeks.
According to the state-run tour promotion agency, the number of trip cancellations jumped from 2,500 on Monday to 7,000 on Tuesday, mostly by people from China and other Asian regions.
Industry watchers said more cancellations will likely follow down the road unless South Korea gets the disease under control at an early date.
Tour agencies and airlines have taken a direct hit from an expected fall in the number of inbound travelers during the peak summer season.
Shares in Hana Tour Co., the nation’s biggest tour agency, and No. 2 Mode Tour dipped 15.1 percent and 14.9 percent, respectively, as of Wednesday compared with May 20.
Leading carrier Korean Air Lines Co. dropped 11.5 percent and its smaller rival Asiana Airlines Inc. retreated 10.9 percent during the same period.
Cosmetics and casinos, which have generated most of their profits from Chinese travelers, were also battered.
Amore Pacific Co., South Korea’s top cosmetics maker, sank 10.7 percent, and Grand Leisure Korea Ltd., a state-run operator of casinos for foreigners, shed 10.2 percent.
Analysts say the stock market usually reacts faster than the actual spread of the symptom when it comes to a contagious disease on concerns over its ripple effect in the related industries.
“People may likely avoid crowded shopping areas in the wake of MERS, which could hurt shares related to consumption,” Yang Il-woo, a researcher at Samsung Securities, said. “However, its impact on stocks is not expected to last long as shown in the previous cases of globally infectious diseases.” (Yonhap)
