Travel And Fashion Brands Benefit From Reopening Of Asia While Pandemic Winners Take Backseat

With the easing of lockdowns and improving rates of Covid-19 vaccinations, fashion brands and airlines are regaining investor favor in Asia, as there has been an increase in travel and leisure activities while stripping off some of the luster off the beneficiaries of the epidemic like supermarkets and gadget makers.

After emerging from coronavirus restrictions, people have resumed dining out or planning trips, even as they are spending less time watching TV at home or purchasing online for groceries, show earnings reports of companies.

There has also been a growth in the purchasing of luxury products by China’s high spenders even though they are currently unable to go overseas. As some nations restart domestic travel, Asia-Pacific airlines are offering additional flights, and some, like Singapore, allow quarantine-free travel for certain immunized visitors.

A surge in bookings has also resulted from Australia’s planned reopening of state and international borders.

“There is a massive demand for loved ones wanting to get together for Christmas,” Alan Joyce, CEO of Australia’s Qantas Airways said last week. “There is demand for people wanting to take that holiday that they have been looking forward to for nearly two years.”

However, it needs to be mentioned that a re-emergence of the tourism sector in Asia is still months away and there is still volatility in China’s massive domestic travel market. Additionally, regular and temporary restrictions that governments apply to prevent Covid-19 outbreaks are still causing issues for companies such as McDonald’s.

However, airline stocks in the Asia Pacific area have risen roughly 5 per cent in the previous three months, while global carriers have fallen 6 per cent owing to a slower-than-expected return of business travel.

Despite power shortages and a property sector crisis in China, European fashion giants such as LVMH and Kering have reported continued robust demand in China, indicating that the taste for luxury products remains largely unaffected.

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

Last quarter, record profits in China was reported by Japan’s Fast Retailing, and the company plans to open its first flagship store next month in the market. With the return of inbound tourists from China, next summer will be a “turning point”, believes Japanese cosmetics giant Shiseido Co.

Companies throughout the world are dealing with significant labor shortages, supply bottlenecks, and maritime logjams as economies recover from epidemic lows, leading in a sharp increase in costs. A long-running chip shortage has disturbed the auto industry and slowed output at the world’s largest automakers. more info

Rising inflation is expected to counteract some of the post-epidemic slowdowns for shops, which were among the early winners of the pandemic as consumers hurried to hoard food and toilet paper.

“The big question now is how many people will return to the offices, how will that play out in terms of at-home consumption?”, said Morningstar retail analyst Johannes Faul.

(Adapted from TechInvestorNews.com)



Categories: Economy & Finance, Regulations & Legal, Strategy, Sustainability

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