Chinese tourists turning to travel in Singapore may boost local tourism concept stocks | Lianhe Zaobao

The escalating tensions between China and Japan have led many Chinese tourists to cancel their trips to Japan, with some travelers potentially shifting their plans to Singapore, providing a boost to the local tourism industry and improving the performance of related concept stocks in hotels, retail, and tourist attractions in the short term.

On November 7, Japanese Prime Minister Sanae Takaichi made remarks in the National Assembly regarding "Taiwan's situation," which sparked strong dissatisfaction from Beijing and prompted many Chinese tourists to cancel their trips to Japan. Market participants estimate that by the end of this year, Japan could lose up to $1.2 billion (approximately SGD 1.57 billion) in tourist spending.

China is Japan's largest source of tourists, and if these travelers change their destination, Singapore may become one of the options considered.

The research team at DBS Group noted in a report that the cancellation of trips to Japan by Chinese travelers brings short-term benefits to Singapore's tourism industry. It has been observed that new bookings to Singapore have increased by about 15% in recent days.

Among them, DBS analysts are optimistic about Far East Hospitality Trust, CapitaLand Integrated Commercial Trust (CICT), and Genting Singapore benefiting from the shift of Chinese travelers.

From January to October this year, China was the largest source market for local tourism, with a total of 2.7 million Chinese tourists visiting Singapore.

FSMOne Singapore's research and portfolio management analyst, Gao Yuanhui, stated in an interview with Lianhe Zaobao that with China having become Singapore's largest source market following visa-free arrangements and border reopening, Singapore naturally becomes an ideal alternative choice.

Several Singapore-listed companies are expected to benefit from this wave of traveler shifts. Among them, Genting Singapore, which operates Resorts World Sentosa, will be a major beneficiary, as the increase in Chinese tourists typically drives overall spending on mass-market gaming, hotels, and surrounding dining.

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In addition, with the increase in travelers, Singapore Airlines and Scoot may also benefit, supporting the stock price of Singapore Airlines. In the hotel sector, City Developments Limited Hospitality Trusts (CDL Hospitality Trusts), Ascott Residence Trust, and Far East HTrust are expected to profit from the increase in hotel occupancy rates.

However, Gao Yuanhui also reminded that this potential boost effect still carries uncertainty. Not all canceled trips will shift to bookings in Singapore; factors such as travelers' preferences, price sensitivity, and the refund policies of various travel agencies may all affect the final transfer of bookings.

Strong Singapore Dollar May Deter Chinese Tourists

Zheng Weiquan, an analyst at China Galaxy Securities, believes that the cancellation of trips to Japan by Chinese tourists may bring some spillover effects, but the impact is still quite limited.

He said, "Firstly, some tourists travel to Japan for winter snowboarding, and their next best option is more likely to be South Korea rather than Singapore. Additionally, cost factors may lead more price-sensitive travelers to choose other countries in the region, such as Malaysia, which also offers shopping and leisure experiences like Kuala Lumpur."

Nevertheless, considering that the Formula 1 Singapore Grand Prix coincides with China's "Golden Week," the performance of the local tourism industry in the fourth quarter this year may still outperform last year, along with factors such as the Korean girl group Blackpink and Hong Kong singer Jacky Cheung performing locally in November, and the opening of new attractions at Resorts World Sentosa.

Vijay Natarajan, an analyst at RHB Singapore, believes that the likelihood of Singapore benefiting from Chinese tourists changing their travel destinations is low. As the situation remains fluid, the positive impact on the tourism industry is still unclear. Additionally, a stronger Singapore dollar may prompt tourists to choose other regional destinations, such as Thailand or South Korea Looking ahead to 2026, the outlook for local tourism-related stocks is expected to be more optimistic due to improved economic prospects, reduced hotel supply, and an increase in large conferences, incentive travel, and exhibition events