The journey towards recovery is underway and though it might be rocky, it is always wise to keep your eyes on the road ahead. As borders continue to reopen gradually with the announcement of more vaccinated travel lanes, let us look at the impact on the markets.
Airline stocks are widely viewed as major beneficiaries of a global reopening. “Shares of aviation and hospitality counters Singapore Airlines (SIA), SATS, SIA Engineering, ST Engineering and Genting Singapore jumped on Monday (Oct 11) after it was announced on Saturday (Oct 9) that Singapore will launch eight Vaccinated Travel Lanes (VTLs) with countries in Europe and North America.” Some analysts have noted the surge in volume of users on SIA and travel websites following the announcement and distinct uptrend in air fares as strong indicators of robust fundamental demand. Travellers who are eager to slake their wanderlust also appear willing to splurge on their next trip.
Before you decide to jump onto the bandwagon and put all your money on airline stocks, it might be wise to step back and clear your head. It is predicted that passenger volumes are unlikely to return to pre-pandemic levels until 2024 at the earliest. Even as travel demand gradually gets back on track, you would have read reports on how airlines have had to retrain pilots and hire staff to meet rising demand. The costs for airlines to regain their momentum are high, and that could eat into your dreams of lucrative returns.
In short, aviation stocks are not for everyone (attention: bargain-hunters) and especially now might not be the right time if your risk appetite is too mild to stomach the ups and downs. If your vote of confidence is soaring high, it would still be in your better interest to go for best-in-class names; they are often the safest way to profit from any positive market sentiment.
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