Coronavirus: 2 Chinese Tourism Stocks to Sell
Chinese authorities are worried about a second wave of the coronavirus after detecting new infections centered around a market in Beijing. While the situation seems to be under control, this isn't good news for tourism companies that are highly exposed to the pandemic.
Chinese tourism stocks are under pressure from strict government travel restrictions and poor consumer sentiment toward travel. Here are two Chinese tourism companies that may have a hard time surviving a potential second wave of the coronavirus because of their lack of geographic diversification outside of China.
The first is Melco Resorts (NASDAQ:MPEL), an Asia-based casino operator with significant exposure to the struggling Macau market. The second is Trip.com Group (NASDAQ:TCOM), a China-focused travel service provider with plummeting revenue amid the pandemic. Investors should avoid these stocks until the crisis is over.
Melco Resorts is a casino operator that makes its money from gaming, restaurants, and resort facilities. Melco's operations are focused in East Asia and the Pacific region, with most of its properties in Macau and Manila, Philippines. The company has a small footprint in Europe through satellite properties in Cyprus, but these only accounted for around 3% of first-quarter revenue.
Macau has grown to become the largest gaming market in the world, taking the crown from Las Vegas in 2007. The special administrative region is the only part of China with legalized gambling, and that means it enjoys a virtual monopoly on the vast Chinese market. However, Macau's special relationship with mainland China has ...
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