U.S. Global Jets UCITS ETF (JETS) adds two Chinese holdings; coinciding with the country reopening for travel

  • On 15th March China lifted the final restrictions on air travel reopening its borders for the first time in over three years.
  • Air travel is expected to see a “delayed rebound” as countries lift COVID restrictions later than initially anticipated.
  • U.S. Global Jets UCITS ETF (JETS) recently added two Chinese travel companies in its quarterly rebalance meaning it could be poised to benefit from the full resumption of travel in China.

March 2023 London

U.S. Global Jets UCITS ETF (JETS) added two Chinese travel companies in its latest quarterly rebalance leaving it potentially better poised to benefit from lifting of travel restriction in China.

Last Wednesday China reopened its borders to foreign tourists for the first time since the start of the COVID-19 Pandemic which could kickstart a “delayed rebound” for the travel sector. It’s been over three years since the onset of the Pandemic in December 2019 which halted travel worldwide. Following strict lockdowns and the eventual creation of a vaccine travel restrictions relented in most countries. In China however foreign visitors still faced barriers to entry up until last week until borders were fully reopened on 15th March.

China hopes to boost its economy and revitalise its domestic tourism industry&mdashcross-border migration in 2022 was down by 82% compared to 2019. The decision to fully reopen the country’s borders could therefore kickstart the recovery of China’s travel sector.

This demonstrates the unevenness of the travel sector’s recovery&mdashthe US was allowing fully vaccinated tourists to enter the country back in November 2021 over a year before China would eventually follow suit. Many believed that post-COVID worldwide borders would reopen around the same time which would in turn give a huge boost to the travel sector. Instead it has taken a lot longer for borders to reopen and longer for the travel sector to recover.

Hence there is a growing sense of a “delayed rebound”. The travel sector recovered to around 65% of pre-pandemic levels in 2022 and now that the world’s second-largest economy has retaken its place among the travel sector giants we may have added the final piece of the puzzle in the rebound story.

This month the Airlines ETF underwent its quarterly rebalance in which it added Air China and Tongcheng Travel. The addition of these two Chinese stocks could mean that JETS is well-positioned to benefit from the resumption of travel to China.

JETS also has a US listed sister fund which has accrued over $1.7 billion in AUM. HANetf has so far turned over a dozen US-domiciled funds into UCITS ETFs and listed them across Europe’s largest exchanges including London Stock Exchange Deutsche Borse and Borsa Italiana.

Tom Bailey Head of Research atHANetf comments:“Before the pandemic China held the title of the world’s largest outbound travel market with over 150 million outbound travellers. Three years of tough COVID restrictions bought that number down to practically zero. However with China now opening up both internally and externally the country’s tourism sector looks set for a rebound. According to McKinsey if China’s air travel follows a similar recovery pattern to that of Hong Kong the country could see four million air passengers a month by April 2023.

The addition of Air China and Tongcheng Travel to the JETS ETF therefore is timely. However it should be noted that while the China reopening coincides with the ETF’s quarterly rebalancing it was not the driving factor for this addition. JETS is a rules-based ETF that screens for fundamental factors and rules defined in the Index methodology. These two stocks made the cut because they met the screening factors.

Please remember that the value of your investment may go down as well as up and past performance is no indication of future performance. When you trade ETFs your capital is at risk.

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