What: In spite of a timid situation in tourism, leading to ailing duty free businesses, both Shinsegae and Hyundai posted encouraging results.

Why it is important: Just like in Europe, Chinese tourists might be the cherry on the cake once they return to a country very much in need of them.

Shares of major South Korean retailers Shinsegae Co. and Hyundai Department Store Co. are on the rise, with increasing optimism about their sales growth due to the return of Chinese group tours to Korea. Despite experiencing a drop in the second quarter earnings, both companies showed potential for recovery, with an improvement in operating margins. Notably, foreigner sales accounted for 4% of department store sales in Q2, a rise from 2% in Q1. Shinsegae recorded a decline in duty-free sales, but increased its operating profit by 40% after making adjustments in merchant commission fees. Hyundai's duty-free business also saw reduced operating losses in Q2. Experts predict that the resumption of Chinese tours will boost the profitability of duty-free shops. Additionally, Hyundai G.F. Holdings Co. plans to integrate its core affiliates, including Hyundai Department Store, streamlining its governance structure.

Hyundai and Shinsegae shares are up following encouraging results