Stocks of Vietnam Airlines, Vietjet and other companies in the aviation industries have surged as the resumption of flights to China amid its relaxed Covid-19 policy boosted investors’ sentiment.
HVN of state-owned Vietnam Airlines closed last week at a ceiling price in its third session in the green and returned to the mid-October price range of around VND11,750 ($0.50).
Meanwhile, VJC of budget airline Vietjet, the only airline blue chip, gained 5% to close at VND111,500.
SAS of Tan Son Nhat Airports Services and AST of Taseco Airs, which mostly provide services at Noi Bai International Airport, all gained three sessions to close at VND22,000 and VND54,000, respectively.
These stocks gained after China relaxed its Covid-19 restrictions and several Vietnamese airlines, such as Vietnam Airlines and Bamboo Airways, announced a flight resumption to Chinese cities.
Analysts of brokerage VNDirect said earlier this month that the most damaging factor for Vietnam’s tourism and aviation recovery is China’s zero-Covid policy which has been strictly imposed in most of the last three years.
Chinese tourists accounted for 35% of total foreign tourists in Vietnam before the pandemic, and the figure is forecast to reach 20% in early next year before returning to the old level in early 2024, they added.
“As the earnings of Vietnamese aviation companies have a high dependency on international traffic, we believe that their figures will surge starting next year.”
Another reason for the surge in aviation stocks is an increasing number of investors buying the dip after the plunges.
It also warned that risks such as high oil prices, heavy competition and weakening travel demand due to a global economic slowdown might have impact on the recovery of aviation stocks.