11 months ago • 1 min
China’s relaxation of its Covid restrictions has investors excited, not least because it turns the ignition on an important engine of growth just as the global economy’s been sputtering. The Shanghai Composite Index (SSE) is now up 9% from its lows in November. But if you’ve missed out on that rally, there are lots of other ways to benefit from China’s recent border reopening.
Strict lockdowns tied the hands of the Chinese consumer for a long time. When local restrictions were lifted, the domestic economy was (logically) the first beneficiary. But with borders now open, Chinese tourists, flush with cash, are back – with a vengeance. The chart above shows the countries most likely to benefit from this resurgence. Pre-Covid, Chinese travel spending made up at least 6% of Hong Kong’s economy and 3% of Thailand’s. And with Chinese people pulling their suitcases out of storage, these economies could see an even bigger boost from all that pent-up travel demand. And it’s not just the usual travel categories (like hotels and airlines) that are likely to get a wanderlust bump: luxury bags and cosmetics are likely to be winners too.
To play the China reopening trade, you could consider investing in foreign listed luxury and cosmetic names like LVMH, Richemont, Burberry, Shiseido, Estée Lauder, and L'Oreal. Or, you could consider buying a fraction of the Hong Kong (HSI) or Thailand (SET) composite stock market index through ETFs. And if you invest in currencies, the Thai baht (THB) may be worth a look now.
Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.
/3 • Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.