Skip to content

BORDERS OPEN: 11 investment opportunities

The Federal Government has announced Australian borders will reopen to international tourists on 21 February after being closed for two years.

The announcement is great news for the struggling tourism industry, but what other sectors and stocks are likely to benefit?

Here are some investment tips.

 

Sectors

The travel and tourism sector will obviously get a boost from an increase in tourism. Areas like the Gold Coast have struggled badly throughout the pandemic.

Another sector likely to benefit will be the hospitality sector, chief economist at BetaShares David Bassanese told Yahoo Finance.

“The influx of international tourists is not just good news for the travel and tourism markets, but also many sectors that have generally faced labour constraints,” he said.

“To the extent that backpackers, for example, will be able to fill labour shortages in the hospitality and service sectors, will benefit many small businesses right across Australia.”

Head of distribution at ETF Securities Kanish Chugh also agreed that hospitality was set to benefit in a big way.

“People probably forget things like hospitality,” Chugh said.

“Whilst the current restrictions have allowed some workers to come back, you will likely see venues open up more to get back to how they used to be.

“Then there are the industries that generally employ tourists, like agriculture. So, I think you’ll also see a boost in those sectors.”

Another area set to benefit from tourism is retail, Chugh said. More tourists means more shopping so some Aussie retailers will likely see a boost as well.

“Tourists are coming back in and they’re going to be going to shops. They’re going to be going around to look at things and buying them,” he said.

Finally, the education sector will also likely get a boost, Bassanese said.

“The education market will also benefit once travel restrictions are also inevitably eased for foreign students,” he said.

SYDNEY, AUSTRALIA - AUGUST 10:  The Estee Lauder store display in the new International Airport Terminal's Duty Free Shopping area is viewed on August 10, 2010 in Sydney, Australia.  Sydney's International Terminal underwent a $500 million renovation this year. (Photo by George Rose/Getty Images)
Duty Free Shopping is one sector likely to see a boost when tourist return. (Source: Getty)

ETFs

So, exchange traded funds (ETFs), which have holdings in these sectors, are likely to do well.

Chugh said while there were no ETFs in Australia dealing specifically with the Australian tourism sector, that didn’t mean there wasn’t opportunity.

“One thing to think about with international travel is duty free. So, those luxury products people buy duty free at the airport,” he said.

“We have a European Equity Fund (ASX: ESTX) that invests in a lot of those luxy brands that people would be buying in airports.”

Bassanese said the BetaShares Small Cap ASX Fund (ASX: SMLL) was also another option. It has a holding in consumer discretionary items of more than 27 per cent.

“One potential beneficiary will be smaller-cap stocks in general, diversified exposure to which is possible through the SMLL ETF,” he said.

Basanese also revealed BetaShares would be launching a new ETF in the coming weeks called the Online Retail and E-commerce ETF, launching on the market under the ASX ticker IBUY.

“This new ETF will provide exposure to online retail and travel companies, including Airbnb, Booking.com and Expedia,” he said.

Stocks

Senior analyst at Forager Funds Management, Alex Shevelev, said the move to open tourism again continued the reopening of Australian borders to the world.

“Tourism operators, large and small, will now have more confidence to begin preparing for international arrivals,” he said.

“While the recovery will be gradual, the industry will be hoping that the initial trickle of tourists will be followed by a torrent of arrivals.”

Importantly, many operators have lowered their cost bases and will be more profitable when arrivals approach pre-COVID levels, Shevelev said.

“Companies like skydive and Great Barrier Reef tour operator Experience Co (ASX: EXP) and recreational vehicle owners Tourism Holdings (NZX:THL) and Apollo (ASX: ATL) have struggled through the COVID travel decimation for two years while working to improve their businesses,” he said.

“When tourists return, they will be well-positioned to finally benefit.”

 

Article from: au.finance.yahoo.com