Portfolio | Changes in habits of richer Chinese tourists pushing aside casino, retail stocks

The changing habits of Chinese travellers have shunted aside casinos and Hong Kong retailers as top-of-the-line stock darlings for punters in the resurgent stock market.

That role has been taken over by mid-scale hotels, duty-free shops, cosmetic producers and online travel agencies who are now the stars of the show, a Credit Suisse report pointed out.

Chinese now prefer independent travel and new destinations, a product of ballooning personal wealth inspired partly by a rally in Hong Kong and Shanghai shares to the loftiest in 7 years, with more gains likely in the works. This is offering fresh opportunities for money managers.

The Swiss bank estimates that tourism spending in China has reached US$150 billion and the market will nearly double to US$280 billion by 2020.

“Some factors become less important, such as language, group travel, and political situation due to a higher education level that leads to higher language skills, higher independence, higher interests in customised products, and being more open-minded towards other countries,” noted Credit Suisse analysts led by Sophie Chiu.

With an easier visa application process and a weakening in their domestic currencies, the countries of Korea, Taiwan, Japan and Thailand are becoming the most popular destinations to Chinese travellers, and this could provide strong earnings potential for some stocks, the bank said.

For instance, the outbound fervour for Japan may benefit shares of Kao, a household maker of items such as disposable diapers. Kose, a mid-sized cosmetics manufacturer whose brands are popular among Chinese girls, is also a potential buy for investors.