2 Companies That Would Benefit From Big Spending By Chinese Tourists

Many investors are worried about the slowdown in China. But, I believe there are many who misunderstand what the slowdown really means: The Chinese economy is still growing; it’s just doing so at a slower rate.

In 2015, the country’s economy expanded by 6.9%, the slowest pace seen in 25 years. Yet,  6.9% is still a remarkable figure and China remains one of the fastest growing economies in the world. Together with the rise of its economy comes an increase in the wealth of its citizens.

According to a recent news report from the South China Morning Post, Chinese tourists are already the largest spenders on overseas travel in the world. But, that is set to nearly double over the next decade. The news outlet, which cited a study from the credit card company Visa Inc, wrote that Chinese tourist spending could jump from US$137 billion in 2015 to US$255 billion in 2025.

Given the numbers above, it might be worth thinking: What companies in Singapore might be well-positioned to benefit from the rise of Chinese tourists?

The integrated resort

One of the key attractions of Singapore would be Resorts World Sentosa. The current crown jewel of Genting Singapore PLC (SGX: G13), the asset depends greatly on tourism spending.

Genting Singapore has been hit hard in recent years due to the reduction in the number of inbound Chinese tourists to Singapore that resulted partly from the tragic incidents involving two Malaysia Airline flights in recent years and the clampdown on corruption in China.

But, as I had mentioned earlier, it would seem like the long-term prospects for Chinese tourist-spending is still bright. If Singapore can attract more tourists, it’s likely that Genting Singapore would benefit.

No one buys a watch to tell time

Hour Glass Ltd  (SGX: AGS) is an established retailer of luxury watches in Singapore and in the region. As luxury products such as watches and jewellery are generally pricier within mainland China, many Chinese tourists tend to spend on these big-ticket items when they’re overseas. A trend of growing spending from Chinese tourists could thus be a tailwind for the company.

Foolish Summary

Long-term growth trends may not happen on a smooth path. The slowdown in the Chinese economy does seem to cast some doubts on the sustainability of the Chinese growth story. But, with the Chinese government focusing more and more on consumers in the country, the growing wealth of the citizens of China is hard to ignore.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn't own shares in any companies mentioned.