Trading opportunities with the upcoming Chinese New Year

Overview

The Chinese New Year (CNY) season is a time of festive celebration that not only brings families together, but also creates significant economic activity across various sectors. From increased consumer spending on family reunions, shopping and gifting to a surge in travel and tourism, the seasonal demand associated with the festival may offer a temporary boost to businesses and investors alike.

Here are how you may capitalise from the Chinese New Year season with trading opportunities:

Family reunions (Consumer staples stocks)

Chinese New Year celebrations often involve feasting with families and relatives, which generally sees an increase in spending around food and beverage during this period.

Locally, supermarket Sheng Siong Group and DFI Retail Group (which operates brands like Giant and Cold Storage) may experience higher sales around the festive season, which may offer a temporary lift in their stock performance. Other companies to watch in the consumer staple space include Thai Beverage (spirits, beers), Fraser and Neave Ltd (soft beverages), Neo Group (food catering) and Wilmar (cooking oils, flour, rice, sugar).

Travel and tourism (Transportation stocks)

The festive season tends to be met with significant increase in travel, as people return to their hometowns or take advantage for the long holiday to go on vacations.

Airline stocks, railway services, and ride-hailing services may potentially see a spike in demand. Locally, transportation companies to watch may include ComfortDelGro Corporations, SBS Transit Ltd and Singapore Airlines. Not to forget Grab Holdings, a popular ride-hailing and food-delivery app in the region.

Globally, companies like China Southern Airlines, China Railway Group, and travel booking platforms eg. Trip.com, Booking Holdings, Airbnb, Expedia Group may benefit from a travel surge.

Shopping and gifting (Retail and e-commerce stocks)

As consumers often buy gifts for family-visiting and new clothing for the holiday, increased spending may offer a boost to some of the retailers. With the popularity of e-commerce platforms in blending entertainment and shopping, some of the prominent platforms to watch may be Alibaba, JD.com, and Pinduoduo.

Locally, major shopping malls may include CapitaLand Integrated Commercial Trust, Frasers Centrepoint Trust, Mapletree Pan Asia Commercial Trust and Lendlease Global Commercial REIT, which are usually a go-to for food and entertainment in between family visits.

Gambling (Casino stocks)

Chinese New Year is usually a time to welcome good fortune, prosperity, and success for the coming year. Therefore, gambling, either through Mahjong or card and dice games, is generally common for one to test his or her luck and invite fortune into their lives.

During the holiday season, Genting Singapore, which operates Resorts World Sentosa, tends to see increased number of visitors. Marina Bay Sands (operated by Las Vegas Sands) is another major entertainment venue in Singapore that benefits from regional festive tourism.

Auspicious gifting (Gold)

In Chinese culture, gold is a symbol of wealth, success, and prosperity. Therefore, It is common for people to purchase gold jewellery or gold-related gifts during Chinese New Year. Demand for gold jewellery and coins could offer a boost to gold prices, which may be an opportunity for short-term traders, although the direct impact on price movements may be less pronounced than macroeconomic factors such as geopolitical events and central banks’ decisions.

Traditional sweets and desserts (Sugar)

Chinese New Year celebrations are marked by the consumption of a wide variety of traditional sweets and desserts, many of which may require sugar as a key ingredient such as Nian Gao (sweet rice cakes). Many households and businesses also bake or prepare festive pastries such as pineapple tarts and Chinese almond cookies. The short-term seasonal demand may put pressure on sugar supplies, potentially helping to support sugar prices in the weeks leading up to the holiday season.