Chinese Tourists: Profit From the New Globe-Trotters by Samuel Taube, Staff Writer, Investment U Market Trends
In a recent post, I explained how China’s growing middle class is shaping global markets. Chinese tourism is a great example.
It’s a large consumer trend that is ripe for Western investment.
China is the world’s fourth-largest source of tourists. That’s after the U.S., the UK and Germany. And it’s climbing that list. 2015 saw 120 million outbound Chinese tourists, a 12% increase from 2014. These globe-trotters spent more than $100 billion in their destination countries, a 16% yearly increase.
For now, most Chinese tourists still travel within Asia. South Korea, Taiwan and Japan remain their top three destinations. But Chinese tourism to the West is quickly rising. France, Italy and Switzerland made the top 10, as shown below.
The best news for American investors? China’s two largest airlines both trade on U.S. exchanges.
China Southern Airlines (NYSE: ZNH) carried more than 109 million passengers in 2015. The Cantonese airline has a fleet of 500 aircraft. It serves almost 200 domestic and international destinations.
The country’s second-largest airline is China Eastern Airlines (NYSE: CEA). This Shanghai-based company carried almost 94 million travelers last year. It has a smaller fleet of 437 planes. However, it has a wider reach than its southern rival, serving 217 destinations.
Over the past six months, Chinese airline stocks have handily outperformed the S&P 500.
(As a side note, domestic airlines have had a great year as well. If you want to learn more about that trend, check out Sean Brodrick’s article on the new U.S. Global Jets ETF (NYSE: JETS) here.)
Chinese tourism is heavily seasonal. Popular vacation times include the Chinese New Year and May Day. The latter is one of the biggest holidays in the nominally socialist country.
As we’ve mentioned before, China’s GDP growth has slowed recently. However, what hasn’t slowed is the growth of its middle class.
Chinese consumers are poised to dominate many international markets. And, as you can see, they already hold considerable weight in the travel industry.
In our next segment on Chinese consumer trends, we’ll look at how China’s urban professionals are impacting the world of fashion.
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