Tourism boom drives industry stocks

Thursday, Feb 01, 2018 15:02

Tourism remains a very promising sector this year. — VNS Photo

Viet Nam’s tourism industry boasts huge development potential and the Government has rolled out a raft of policies to develop the industry now and in future years.

As a result, the stocks of companies in the industry are attracting plenty of attention from investors though, according to experts, investors also need to study carefully and pick good ones and at good prices.

Stock prices up steeply

Viet Nam was ranked sixth fastest growing tourism destination in the world by the United Nations World Tourism Organization last year, when it received 12.9 million international visitors, an increase of nearly 30 per cent over 2016.

The determination to develop tourism into a sector that spearheads economic growth has been concretised under the Politburo Bureau’s Resolution No.08.

The industry is intensifying its restructure to accomplish this strategic goal.

These mean there is every chance tourism stocks will gain this year.

Jay Ellenby, chairman of the American Society of Travel Agents (ASTA), has hailed the Vietnamese Government’s efforts to issue policies to boost tourism, restructure the industry and improve conditions for international visitors.

"We will bring more American tourism companies to Việt Nam to do market research to boost the number of visitors."

According to industry insiders, the figure of 12.9 million international visitors last year was a miraculous one for the tourism industry.

Travel experts said relaxing visa policies has helped make Viet Nam more attractive in visitors’ eyes.

The trial of electronic visas for citizens of 40 countries and visa waiver for citizens of five Western European countries enhanced the country’s competitiveness in attracting foreign visitors.

Tour operators said the Government’s effort to resolve difficulties related to visas is good for tourism, but the visa waiver period of 15 days is too short, which is an obstacle for businesses.

But overall, tourism remains a very promising sector this year.

Thus, not only local investors but also many foreigners are interested in tourism stocks.

A foreign investor said tourism has great potential and its target in Việt Nam since it promises high growth rates in the coming years.

But the stock market is often a battle of wits between buyers and sellers, and it is important for investors to identify good stocks for buying.

Tourism stocks were recommended by some market participants when asked about investment opportunities.

Stocks of companies in the leisure and travel sectors increased by 20-30 per cent and aviation by 60-100 per cent in the second half of last year.

Travel stocks continue to be the darlings of stock analysts as well as foreign investors thanks to the Government’s policies to boost the sector. But to repeat the warning, investors need to choose good stocks.

Need to identify good companies

In 2018 the stock market is expected to remain strong after the VN-Index, against all expectations, surged past 1000 points last year.

Stocks in the food, consumer products, retail, and tourism sectors have good growth potential, especially tourism.

Stocks in the tourism industry are expected to surge thanks to its huge development potential and, especially, the Government’s desire for it to spearhead the economy.

The sector will make strong and co-ordinated efforts in 2018 to achieve the target of 15-17 million international arrivals and revenues of VNĐ620 trillion (US$27.3 billion).

The Ministry of Culture, Sports and Tourism said this year it would focus on five main missions, with a focus on those that would help develop the tourism industry.

Nguyen Thi Hang Nga, deputy director of investment at Vietcombank Fund Management Company, said in 2018 stocks with good growth potential and set to benefit from the country’s economic growth would be the investment choice.

With the country having a population of more than 90 million, and consumption driving its economy, food, retail, distribution, and tourism stocks are bound to be investors’ favourites, especially tourism, thanks to the sector’s good prospects.

In addition to travel companies, stocks that benefit from the development of the tourism sector, like airlines, hospitality property, retail, also offer investment opportunities.

Of tourism stocks listed on the country’s three exchanges, only three, VNG, DAH and OCH, see large trading volumes.

TTC Hospitality (VNG) volumes have increased recently and there is steady trading of 250,000 shares daily.

Of all listed businesses in hospitality, VNG sees the most appreciation and liquidity.

Based on its business performance last year, VNG can be considered the leading stock in the hospitality industry.

In terms of property ownership, VNG is building hotels in some key tourism destinations like Da Lat, Can Tho and Binh Thuan.

It is also focused on improving management and developing close links between its hotels to support and share information.

TTC Group’s goal is to have a presence in most tourism destination across the country and enhance its competitiveness by expanding its chain of hotels.

TTC has more than 20 hotels and amusement sites with more than 1,000 rooms mainly in the four-star segment, two convention centres, three resorts and a travel centre.

With its development potential in the tourism sector, especially with its TTC World – Doi Mong Mo that is spread ​​over 200 hectares, VNG has been a focus of attention for investors since the start of this year.

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