China travel rebound bets turn toward airports, away from airlines

Investors hoping to cash in on a boom in Chinese travel after nearly three years of pandemic lockdowns are shifting into airports, hotels and duty-free operators and away from airlines subject to fluctuating fuel prices and more intense competition. The first wave of bullishness as China began abandoning its zero-COVID policy in December lifted airline stocks and online travel agencies like Trip.com Group. But with global airlines being slow to add capacity to connect China with the US and Europe and Chinese travellers preferring trips closer to home, a new set of stocks is benefiting. Thailand has re-emerged as a favourite destination for Chinese travellers, and also for investors. "We were active earlier in terms of domestic travel, lodging space and airports, where we've done quite well," said Elaine Tse, portfolio manager at Allspring Global Investments. Tse said the firm has locked in some profits from those bets. "We are optimistic on a rebound in regional and international travel and continue to get exposure through airports and airplane leasing." Shares of airports, such as Airport of Bangkok and Shanghai International Airport have underperformed the big three Chinese airlines Air China, China Eastern and China Southern since the start of November, leaving room for further gains in the former. Investors say airline stocks are not only expensive, but their earnings tend to be volatile and susceptible to swings in oil prices.<br/>