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Monday, September 02, 2019, 15:01
DBS says HK protests to benefit Singapore tourism stocks
By Bloomberg
Monday, September 02, 2019, 15:01 By Bloomberg

A general view of Resort World Sentosa is seen from Mount Faber hill in Singapore on July 16, 2019. (ROSLAN RAHMAN / AFP)

Singapore’s hotels, entertainment venues and restaurants could be the prime beneficiaries of increased tourism in the city-state as the Hong Kong protests rage on, according to DBS Bank Ltd analyst Derek Tan.

Singapore may benefit twice as much from the Hong Kong fallout as both these destinations share similar traits, ie offering tourists a wide variety of entertainment, food and culture

Derek Tan, DBS Bank Ltd analyst

The unabating protests over the past 13 weeks have hurt Hong Kong’s tourism sector, with visitor arrivals falling by 12 percent over June and July to about 5.2 million, according to the Hong Kong Tourism Board. Several countries, such as the US, UK, Japan, Ireland and Singapore, have issued travel advisories.

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If 30 percent to 50 percent of travelers from key markets such as Chinese mainland, the UK and US now divert their trips to other Asian cities, “there could be 5 percent to 8 percent boost to monthly tourist arrivals,” according to Tan. He sees Singapore, in particular, as primed to reap the rewards. “Singapore may benefit twice as much from the Hong Kong fallout as both these destinations share similar traits, ie offering tourists a wide variety of entertainment, food and culture,” Tan wrote in a note.

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Stocks such as CDL Hospitality Trusts Unit, Far East Hospitality Trust and OUE Hospitality Trust in particular could benefit because of their exposure to Singapore. Ascott Residence Trust, Genting Singapore Ltd. and Jumbo Group Ltd. could also see more business given that they offer key entertainment, food and beverage venues for tourists, according to DBS.

“Feedback on the ground already points to a stronger third quarter and occupancy and room rates could continue to trend up at a higher momentum if Singapore enjoys some of the spillover of tourist arrivals,” Tan said.

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