Aviation stocks rise amid expected industry recovery

State-owned Vietnam Airlines JSC (HVN) closed the week at its ceiling price in its third session in the green, returning to its mid-October price range of around VND11,750 ($0.50).

Vietjet (VJC), the country’s only blue chip airline, gained 5% last week to close at VND111,500.

Tan Son Nhat Airports Services Co. (SAS) and Taseco Air Services (AST), which mainly provides services at Noi Bai International Airport in Hanoi, all gained three sessions in a row to close at VND22,000 and VND54,000 respectively.

These stocks rose after China relaxed its Covid-19 restrictions and several Vietnamese airlines, including Vietnam Airlines and Bamboo Airways, announced the resumption of flights to cities in China.

Analysts with brokerage house VNDirect said earlier this month that the biggest obstacle to the recovery of Vietnam’s tourism and aviation industries was China’s zero-Covid policy, which has been strictly imposed for 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 rise 20% early next year before returning to the previous levels in early 2024, they added.

"As the earnings of Vietnamese aviation companies have a high dependency on international traffic," said VNDirect . "We believe that their figures will surge starting next year."

Another reason for the surge in aviation stocks is the increasing number of investors buying the dip after plunges, VNDirect said.

The brokerage also warned that risks such as high oil prices, heavy competition and weakening travel demand due to a global economic slowdown might have an impact on the recovery of aviation stocks.