(Bloomberg) – Asian travel and retail stocks fell amid concerns about the latest wave of Covid in China as well as a possible slowdown in the US economy.
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Shares of luxury brand Prada SpA and Macau casino operator Sands China Ltd. fell 6% each in Hong Kong. Cosmetics maker Shiseido Co. and operator Tokyo Disney Oriental Land Co. fell more than 5% in Tokyo. The regional benchmark MSCI Asia Pacific fell 0.7% as the prolonged debt ceiling standoff in Washington hurt sentiment.
Familiar themes resurfaced as vaccine makers surged in the United States overnight after news broke that China expects virus infections to peak at around 65 million a week by the end of June. Meanwhile, European luxury stocks wiped out more than $30 billion in market value amid concerns over US growth.
Concerns over the latest wave of coronavirus in China “triggered the selling we’re seeing in casino and travel stocks today,” said Alvin Ngan, an analyst at Zhongtai Financial International Ltd. “The slower-than-expected economic recovery in China has also clouded consumer sentiment on luxury spending.”
Still, Ngan remains positive on the long-term reopening story and sees the drop as a good buying opportunity for casino stocks. Stock performance among stocks benefiting from tourism demand has been mixed this year, with Prada still up more than 20% while Shiseido was little changed.
Much of Japan’s recent inbound tourist traffic has come from Singapore, Korea and Taiwan, as well as Westerners “taking advantage of the weak yen”, said Amir Anvarzadeh, strategist at Asymmetric Advisors Ltd. “This correction will provide a big buying opportunity” for investors who missed previous rallies as stocks reopened, he said.
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