Cosmetics stocks fall on China’s suspension of short-term visas for Koreans

[Photo by Yonhap]

South Korean cosmetics and duty-free-related stocks dropped Tuesday after China announced it will temporarily halt issuing short-term visas to Koreans in retaliation for Seoul’s strict Covid measures on Chinese travelers.

Shares of Korean cosmetics giant Amorepacific Corp. fell 3.45 percent to 140,000 won ($112) on Tuesday and those of AmoreG 2.77 percent, LG Household & Health Care Ltd 3 percent, and Hankook Cosmetics Manufacturing Co. 6.04 percent.

Duty-free-related stocks such as Hotel Shilla Co. also fell 2.22 percent, and Shinsegae 1.27 percent.

Both cosmetics and duty-free stocks had gained ground earlier in the week when China scrapped most of its travel restrictions starting from Monday after maintaining nearly 3 years of zero-Covid policy.

The financial investment industry had projected earnings of cosmetics companies and duty-free store operators to improve this year on the back of China’s reopening of borders. But the latest suspension of short-term visas issued to Koreans is expected to pour cold waters on local cosmetics giants and duty-free store operators.

Industry insiders also noted that Chinese consumers and travelers could reduce spending due to the sluggish economy.

There are also concerns about falling demand for Korean cosmetics items in China as they compete with foreign luxury brands in high-end market and local rivals in budget market.